Want to triple your top line revenue? In five years?
Dumb question? Maybe.
But I’m as serious as onions. I know it can be done. By the time you finish reading this, you’ll agree. (Because I’ll show you the math, and it’s hard to argue with math.)
But, triple in five? That can’t be easy, right? Right.
Tripling means that you’re absolutely focused. You’re committed. And you’re willing to invest in the tools that make it easy.
But DOUBLING your agency in five years? That’s “easy-peasy”.
And I will show you how to do that, too.
And, I’m still going to ask you to be focused, committed and willing to invest in your business. If you’re good with that, let’s get started.
(And at the end of this blog, I’m going to give you a planning tool that thousands of agencies & brokerages have already used to help them plan their growth.)
First of all, aggressive growth requires planning. We ALL agree on that, right? Businesses plan. That’s what they do.
Then why don’t more agencies plan the future they want?
Do agents really think they’ll ‘bump’ into rapid revenue increases? Excuses dress up to pretend they are reasons. They’re not. These are the two most common ‘reasons’ agents don’t plan:
- ‘We want to, but…we just don’t seem to have the time.’ I’d be shocked if creating your growth plan consumed as much as 1% of your year. (3.6 days? No way!) But, for starters, I’m about to ask you to do ONE THING that will take about 30 minutes. I’ll wager that after you do that one thing, nothing will hold you back from creating a plan. You’ll be that excited.
- “We want to, but…we don’t really have a good planning system.” Fair enough. And common enough. Keep reading.
The key to rapid growth for insurance agencies and brokerages
It must be obsessive attention to new customer acquisition, right?
Wrong. Dead wrong.
Customer acquisition matters. But, in a retail insurance agency, obsessive attention to acquisition can make you lose focus.
Massive growth comes from the COMPOUND EFFECT of three numbers, over time.
Acquisition is important. But of all of those three numbers, it’s the most expensive number to get – and requires a major investment in time, staff and resources.
The other two? Compared to acquisition, easy-peasy.
And, much, much higher leverage. Comparatively, massive ROI.
What are the three numbers that growth oriented agents must pay attention to?
- New customer acquisition. Can’t be ignored. But, here’s the big problem with an over-emphasis on customer acquisition. Not only is it the most expensive of the three growth strategies, it’s wildly inefficient. If you don’t take care of the next two items, you’re bringing new customers into a wasteful system that doesn’t extract nearly the customer lifetime value.
- Revenue per customer. This number should go up every year. Whether you want to segment it by class of business, or aggregate it, you must be committed to getting this number up every year. (There are two reliable ways to do this: get more policies per customer – or get ‘better’ customers. The ones who pay you more.)
- Customer retention. “But our retention is really good.” If it’s not in the high 90’s, it’s not good. If it is good, having a plan to get that extra point or two is still a terrific investment. (Again, we’ll look at the math in a moment.)
Now, let’s see what happens when we begin to adjust your performance in each of these three areas.
Start planning your fast-growth year here…
First, you need to know where you are starting your plan. With your own numbers.
(If you don’t know them, you’re not alone! Far too many agents don’t, well, run their business like a business…and they don’t know their critical numbers. If you don’t, make your very best guess.)
Let’s start with an example. Let’s say you’ve got a million-dollar revenue agency. And, let’s start with a ‘bad case scenario’ – that your growth this year was flat.
We’ll assume that you’ve got a:
- (tragically low) 86% retention rate
- A 14% customer acquisition rate. (In other words, you lost 14 out of every hundred clients – and that you got 14 more to replace them).
- And that your revenue per client is the same as it was a year ago.
At that rate – flat growth – you’ll be the same size in a year that you are today. And, in three years…five years…and so forth
Now let’s start planning. . .
Let’s begin to create the future you want.
We’ll bump your retention and your new client acquisition by a modest three points – to 89% and 17% respectively.
And we’ll boost your revenue per client by 5 points.
What happens? At the end of one year, you’ll add $113,000. Maintain that pace, and, by your fifth year, you’ll add an extra $707,953.
Modest bumps. Compounded over time. Big increases.
But, we’re just getting started!
We’re committed to real growth, right?
So, let’s bump you up one more time.
Another (fairly modest) four points for retention and three points for new client acquisition. So, now, you’re up to a not-embarrassing 93% retention and 20% new client acquisition.
This is a bit more aggressive – but when you get some reliable nurturing and cross sell campaigns, it’s within reach. Let’s push your revenue per customer up another 10 points. (In this case, you’re getting another $33 dollars per client per year.)
BOOM! Now you’ve added just a tick under a quarter-million in new revenue (in year one!) and, at the end of five years, your (little) million-dollar agency is a $2,967,260 revenue agency. ($2,740 less than triple…sorry!)
If doubling in five years is more your speed, like I said, that’s ‘easy-peasy.’ Follow the formula: 5-4-5. Boost retention five points, new client growth by 4, and rev-per-client by 5. In this case, 91% retention, 18% new client growth and 5% growth in rev-per-client.
Before we move on, three serious suggestions:
- To start your plan, you must start with your own numbers. (My friend, Dan Sullivan, often says, ‘All progress starts with telling the truth.’ If you don’t know your precise numbers, don’t let that road-block your planning process. Start with what you know, to the best of your knowledge.)
- Create – as I did above – two scenarios. A realistic growth scenario and a stretch.
- After (or while) you’re playing with those numbers, share them with key members of your team. (Teams are designed to win, and they need to know what the goal is to win.)
By the way, you may think that calculating those numbers required a complex computation and a sophisticated spreadsheet. Nope. It took me seconds.
And that brings us to the Growth Analyzer. We’ve been frustrated for years that agents & brokers lacked an easy way to visualize and experiment with ‘bigger futures.’
The Growth Analyzer solves that problem. For agents & brokers, it is the simplest and most powerful way to start, guide and inspire your planning process.
Check it out here.