If buzz words like “data” and “analytics” make you want to plug your ears and scream “I’m not listening,” you’re in denial about how to improve your agency’s performance in personal and small commercial lines.

Using data and analytics can help your agency not only identify profitable segments in personal and commercial lines, but also target potential customers within those segments—and that drives producer efficiency while providing an opportunity to write business with higher profit margins.

According to the controversial 2013 McKinsey & Company report on the future of the independent agent distribution channel, “winning agents will deliver tailored and relevant expertise and excel at multichannel marketing while increasing their scale and operational efficiency.” Reasonable enough. But how? A variety of tools can assist agents in improving risk selection and predicting performance in personal and commercial auto, homeowners, commercial property and casualty lines, including workers compensation. The data, analytics and predictive modeling supporting those segments provide agents with lead management tools and risk management intelligence that, when used effectively, may add more profit to the bottom line.

Such approaches often provide fresh perspective on how to create a win-win scenario for the agency and the insurance carrier partner: The agent is now both producing new business and using risk science to steer production efforts toward new business with higher profit margins. As a result, the carrier may reduce loss costs while the agency earns higher contingent commissions.

To remain competitive and provide value, particularly in personal and small commercial lines, agents need to add these sophisticated methodologies to their arsenal. Selling to customers who are increasingly using multiple channels (phone, online self-service, click-and-chat and more) to investigate their insurance options will require agents to increase their investment in technology and decision-supported assets.

A key component of successfully adopting this strategy is maintaining a healthy flow of business while migrating to a more technical- and analytic-dependent business model. For example, as agents evaluate the best way to deploy capital to improve their infrastructure and operating efficiency, analytics reveal the phone is the connection mode most used to speak with a customer service representative. In research just released from a NICE Systems’ Global Customer Experience Survey, 88% of the approximately 1,200 consumers responding said they prefer to pick up the phone to contact businesses. For customer service interactions, the survey indicates even millennials give lower preference to social media channels, preferring to speak to a live rep via the phone or use website self-service capabilities.

Between 2003 and 2011, according to research from A.M. Best and the Big “I,” independent agents lost 3 percentage points of premium in the personal auto segment but controlled a steady percentage in both homeowners and small commercial lines (38% and 77%, respectively). With some carriers expanding their disintermediation efforts, agents are trying to gain share in homeowners and maintain market share in commercial lines. Consequently, using more sophisticated tools to identify, market to and acquire new customers has become an increasingly important business imperative for agents.

While it’s important to effectively manage personal lines business with enhanced data and analytics, it’s an undeniable business imperative to expand the tools used to target, produce and underwrite profitable commercial lines business. With margins (measured by EBITDA) on personal lines business more than 85%better than that of commercial lines in 2013, according to Reagan Consulting, an improvement of just a few percentage points could have a significant gearing effect on an agency’s annual profit.

Using commercially available data and analytic tools can directly contribute to increased operational efficiency—driving improvements in scale within the agency and, ultimately, organic growth. Such production of better-performing business with improved margins can also efficiently leverage both the human capital and financial assets of the agency. And an agency producing more profitable business for its insurance carrier is a more valuable partner.

Data and analytics not only help agencies grow their bottom line—the powerful combination can also enhance annual cash flow and add long-term value for the business, should the principals decide to sell the agency in the future.

Steve Di Peri is managing principal for enterprise risk intelligence at Verisk Analytics (Nasdaq:VRSK).