How do you measure success at your agency?

At its core, success is the favorable accomplishment of an aim or a purpose. To know if your agency is a success, you must first identify the aim(s) or purpose(s) of your agency and create meaningful, measurable goals towards that end.

Next, you’ll need to identify corresponding key performance indicators (KPIs) for each goal. KPIs provide quantifiable measurements of performance over time. They include milestones to gauge progress and are used to determine if an organization is on trajectory to achieve their goal by a specified time.

You will also need to identify your current performance in these areas to identify areas that need to be improved to meet your goals.

Once you have identified the important goals and KPIs you can use them as the building blocks to create a successful strategy for the future.

Here are some common KPIs used to measure success:

1. KPI: Monthly Income
   Income versus Expenses
   How much money is currently coming into your agency versus how much money is being spent (on rent, utilities, staff, taxes, etc.)? Understanding your balance sheet is important for setting income growth goals for the future.

2. KPI: Retention Rate
   On average, how many policies renew each month?
   Knowing this number, you can estimate your commission income from renewals and determine how many new policies need to be written to compensate for those that do not renew.
   If you have a very low renewal rate, it is important to find out why and adjust to increase your retention rate going forward. A low retention rate could be a sign of a poor client experience or too much focus on clients buying on price and not value.

3. KPI: Average Commission per Policy
   What is the average commission you are receiving per policy written?
   Breaking this down further can give you a more insight on what lines of business are most profitable to your agency and focus your selling efforts. For example:
   1. What is the average commission on Commercial lines versus Personal Lines?
   2. What is the average commission on personal auto policies versus homeowners?

You can use this information to create guidelines on what type of policies/clients you plan to pursue going forward.

4. KPI: Average Number of Policies Written
   How many policies do you need write each month?
   Once you have done some investigating and created your guidelines you can determine how many policies your business need to write to achieve your income growth goals.
   For example, you may discover each month you need to write:
   1. 10 commercial lines policies
   2. 15 personal lines policies, or
   3. 5 Commercial and 8 Personal lines policies
5. KPI: Conversion Ratio
   Basically, this is how many of your prospects write a policy with you – is it 1 out of every 10? 3 out of every 20? To calculate this, you will need to know how many leads you contact each month, and how many policies you bind.
   1. KPI: Hit Ratio
      Of the prospects you gave quotes to, how many of them ended up binding a policy? A low hit ratio could mean you are not targeting high-hit classes of business. Review what carriers you are working with and ask them for their top 10 hit classes.
6. KPI: Leads Contacted
   How many leads do you need to contact each month?
   Previously you have determined how many policies you need to write each month and how many leads become clients – this step combines the two into an actionable goal.
   For example: If 1 out of every 10 commercial leads becomes a client, and you need to write 10 commercial policies to meet your income goal – you can determine you need to contact 100 leads each month.

Armed with this information you can now create an action plan that you can monitor and adjust to make sure your agency is a success!

Additional Numbers to Know:

• Mix of Business – A well-balanced book of business is most profitable.
• Policies per Client – More lines of business equals better retention.
• Service Center Utilization – Placing business with Carrier Service Centers can allow your clients to receive service on their own terms and free up your staff for more complex service needs and/or for sales focused efforts. Keep track of how much business you place in carrier service centers and ask your carriers to provide you with data on client usage regularly.

Where is business being placed?

Is business in your agency being placed with your top service and compensation insurance companies? Educating and monitoring where your staff places business is essential to maximizing revenue and assuring that clients’ needs are being met. Know your commissions schedules and incentive plans. Rank your insurance companies based on service and compensation. Share the rankings with your staff. When coverage and value are equal for the client then business should be placed with your best carrier partner.