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2022 Agency Growth Study: Digital Agencies Grow Faster

In 2021, low and medium digital adopters grew their revenue an average of 10% year over year, but high digital adopters grew 17% year over year, according to the study.
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2022 agency growth study: digital agencies grow faster

Highly digital agencies grew faster than their less digital counterparts in 2021, according to the Liberty Mutual and Safeco Insurance “2022 Agency Growth Study," continuing the growth gap trend seen in 2020's study.

The Agency Growth Study divided agencies into three groups: low, medium and high digital adopters, based on the number of digital tools they used. In 2021, low and medium digital adopters grew their revenue an average of 10% year over year, but high digital adopters grew 17% year over year—a 70% higher growth rate than other agencies.

And the difference in growth has increased since the previous year. In 2020, low digital adopters' revenue grew 7.4%, while high digital adopters saw 12%, a more than 60% higher annual growth rate for highly digital agencies. 

However, this year's study did uncover a slowdown in digital adoption. As coronavirus pandemic worries eased, agencies returned to old ways. In late 2020, 58% of agencies said that adding new digital capabilities was part of their five-year growth plans. In late 2021, that dropped to 47%.

Meanwhile, the study's “Agent for the Future Index," which scores high and low digital adopters on a 10-point scale based on the average number and complexity of digital tools used, demonstrated that both high and low digital adopters were using approximately the same number of digital tools in 2021 as they were the year before. In 2020, high digital adopters scored a 6.76 on the index, and a 6.78 in 2021. Low digital adopters scored 2.76 in 2020, and 2.82 in 2021.

Some specific digital tools did show decreases. For example, 82% of agencies said they used social media in 2020, but that declined to 73% in 2021. And 72% said they used digital marketing in 2020 compared to 63% in 2021. While the same number of agencies reported having social media accounts, fewer reported using paid social ads.

Many agencies aren't tracking which digital tools drive business growth, the study found, with less than half of respondents who contribute to agency marketing activities saying they track the source of new business from digital marketing. But among agencies who do track digital marketing efforts, the agency Facebook account, email marketing and unpaid SEO activities were the most effective new business generators.

“This suggests that agencies may be missing out on some digital opportunities that could help drive new business," the report noted. “Tracking the impact of digital marketing efforts can help agencies decide where to focus and invest for the most impact."

The report also identified respondents that said their agency was aiming for aggressive growth. Those growth-oriented agencies—approximately one-third of survey respondents—were more likely to be high digital adopters and invest in digital tools. Of agencies that identified as growth-focused, 52% use a self-service portal, compared to 43% of agencies that are aiming for slow and steady growth. And 49% of growth-focused agencies use video calls, compared to 29% of slow and steady agencies. Live online chat, video quotes and policy reviews, paid Facebook ads and chatbots or artificial intelligence (AI) were also tools that growth-focused agencies were more likely to have than their slower-growth peers.

Those aggressive-growth agencies grew their annual revenue at a rate more than double that of agencies planning for slow and steady growth—and they don't plan to slow down. When asked about their five-year agency growth plans, 60% of growth-focused agencies said they planned to invest in new digital capabilities, as opposed to 42% of slow and steady growth agencies. Fifty-five percent said they planned to increase their marketing investment, as opposed to 35% of slow and steady agencies. And 30% planned to hire a dedicated marketing specialist, compared with just 11% of slow and steady agencies.

“When independent agents invest in digital, they are investing in the future of their business," said Tyler Asher, president of independent agent distribution, Liberty Mutual and Safeco Insurance. “Digital can create business efficiencies, improve customer satisfaction, and—as this research shows—benefit the bottom line."

“As agencies look ahead to 2023 and consider how a potential economic downturn may impact business, digital can and should be at the forefront," Asher added. “Now is the time for agencies to invest further and get more strategic about digital transformation to ensure the business is built for resilience."

AnneMarie McPherson Spears is IA news editor. 

16854
Tuesday, November 22, 2022
Technology
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