2018 Best Practices Study

Components of Organic Growth

Sales Velocity Calculation:

This year’s written new business

New Business (Agency Driven)

Key Differentiator Metric

Last year’s commissions and fees

Retention Rate (Agency Driven)

Sales Velocity

32.7%

23.8%

Exposure Changes (Market Driven)

22.4%

21.4%

18.8%

17.5%

16.6%

14.6%

14.5%

14.2%

12.3%

11.7%

Pricing Changes (Market Driven)

<$1.25M $1.25-$2.5M $2.5-$5M $5-$10M $10-$25M >$25M

Average Top Quartile

The ages of the producers generating an agency’s Sales Velocity can provide critical insight into an agency’s future long- term growth potential and perpetuation readiness. Age banding Sales Velocity helps clarify which producer age groups represent relative strengths or weakness for an agency. Sales Velocity results that have very little contribution by young producers or very heavy contributions by mature producers may experience material growth difficulties in the future as older producers retire.

Age Banding of Sales Velocity

Reagan Consulting’s research indicates that it is common for agencies with historically high Sales Velocities to have significant new business contributions from multiple generations of agency producers. To highlight this, the Best Practices Study breaks down Sales Velocity results in four different producer age bands: Freshmen (up to age 35); Sophomores (36-45); Juniors (46- 55); and Seniors (over 55). A balanced Sales Velocity is a leading indicator of a healthy sales engine that is poised to deliver strong growth into the future and support organization, future organic growth and perpetuation readiness.

16.6%

14.6%

14.5%

14.2%

4.7%

12.3%

2.2%

11.7%

2.8% 3.4%

2.7%

3.4%

5.7% 4.2%

3.9% 4.3%

2.4%

4.1%

3.2% 4.3%

4.4% 4.6%

4.7%

2.3%

3.4% 3.4%

2.8% 2.9% 2.2%

2.0%

<$1.25M $1.25- $2.5M

$2.5- $5M

$5- $10M

$10- $25M

>$25M

Up to age 35 Age 36-45 Age 46-55 Over age 55

 21