To get an idea of how the Best Practices process can benefit your agency, start by picking one metric, review the results, and then use the proper tools or seek education to address the performance gaps.
The Best Practices Study is released annually by the Big “I" and Reagan Consulting. It is based on the data received from agencies that have demonstrated real, measurable success. Best Practices data is gathered through a data collection process and scored objectively. The highest performers are deemed “Best Practices agencies."
Agencies of all sizes can utilize the report's 3,000 data points to compare their agency's performance with Best Practices agencies and create a performance dashboard to measure future success and create benchmarks toward growth.
Measuring your agency against Best Practices agencies can yield valuable insights. The Best Practices framework helps agencies understand if the right information is being tracked, where they are successful and whether the agency is spending time and resources in the areas that provide the most benefit and increase agency value.
Best Practices agencies are split into six revenue categories, which means agencies can compare themselves to the right category to measure and manage business—and look ahead for scale and growth.
To get an idea of how the Best Practices process can benefit your agency, start by picking one metric, review the results, and then use the proper tools or seek education to address the performance gaps. Then, move from one priority to the next. By following this process, you will turn potential into significant improvements.
What should be your first priority? Reagan Consulting has determined that growth is twice as important as profitability in the valuation equation. Without consistent and sustainable growth, an agency will never reach its valuation potential and will likely fail to deliver appropriate investment returns to its owners. So, starting with the sales velocity metric can ease an agency into the Best Practices process.
Expressed as a percentage, sales velocity is calculated by dividing the new business written in the current year by the prior year's commissions and fees. By using the Best Practices Study and benchmarks, you can determine where your agency stands against firms in the same revenue category.
Sales velocity is one of the most important indications of an agency's ability to succeed and perpetuate over the long term. Through the Best Practices process, principals and managers can focus on what an agency can do to impact the specific metric and drive results based on new business activity.
Additional metrics are available to measure agency performance, including an organic growth rate formula. Also, weighted average shareholder age (WASA) and weighted average shareholder producer age (WAPA) indicate if an agency is prepared for perpetuation. Meanwhile, to evaluate your new talent investment needs, use the net investment in unvalidated producer pay (NUPP) metric.
Looking for a place to begin? Download a free Excel Comparison Workbook from the Big "I" Best Practices webpage. Use the spreadsheet to compare your most recently completed year-end results with the results obtained by the Best Practices Agencies and then calculate any performance gaps between the two. Areas to explore include revenue, growth, expenses, profit, finance, staffing and producer metrics.
If your performance is aligned with the Best Practices results, consider participating in the Best Practices Agency process. Share your interest with your local Big “I" state association or complete the self-nomination form. The opportunity to become a Best Practices agency only occurs every three years and is taking place now.
The process is an excellent agency management exercise that can reveal success, validate decisions and reveal areas of opportunity. For those who are nominated, participate and achieve Best Practices status, inclusion provides the prestigious status of “Best Practices agency" and opens the doors to many benefits.
Jennifer Becker is Big “I" senior director, agent development, research and education.
Get your copy of the Best Practices Study or learn how to apply to become a Best Practices agency.