For many agency owners, tracking and accountability are at the top of their list of hills to climb, however, it can be overwhelming understanding what to track and what to do with the information. More times than not, in order to obtain the vital data your agency needs, you have to make an effort to clean up what is in the management system just to get started. With the year ending, now is a great time to take charge and start that process. In this blog we will help you identify what KPIs to track and what to do with the information once you obtain it.
“KPIs” is not a standard insurance term, but being aware of them is vital. KPIs are “key performance indicators.” Keeping track of them allows your agency to determine whether you are above or below industry standards so you can make adjustments to your business strategy. The key performance indicators can be different for each agency and may need to be modified, but we will work to review the top ones that work for most agencies.
Beginner KPIs
If you’re just getting started on measuring your agency’s performance, these are the baseline numbers we want you to focus on. Remember that it is not uncommon for the data to need a bit of massaging, and that you might need to address team member workflows to modify them for success.
- Book of Business Growth: Each month it’s a good idea to review whether your book of business grew. You need to look at this by person and department to get a true review of the agency. The book of business shows everything from endorsements and remarkets to rate increases, new business and cancellations. I like to think of it as “Chutes and Ladders for Your Agency.” You can look at this by policy, customer, revenue and premium.
- New Business: The bottom line is that every business should be in tune with what they wrote for new business each month. We need to identify trends in seasonality and production. The key is if you do the sales activity, you will get the opportunities, and the new business will grow.
- Lost Business: All too often your cancellation report may be inaccurate due to rewrites which overcode your cancellation reasons. However, that doesn’t mean that we shouldn’t work to make it right! You need to understand where you are losing customers and, most importantly, why. Knowing the reasons for cancellations is critical to your success.
- Activity Reports: When your team says they are too busy, what’s your response? Do you ask what they are busy doing? Work to view activity reports so you can see what people are spending their time on. It’s also amazing to really see how the team is documenting everything!
The best practice is to start reviewing these numbers to first understand what you are working with. The next step is to share the agency metrics with the team just for informational purposes. As the team gets used to seeing the numbers, they can start modifying their behaviors based on them.
Advanced KPIs
After you have been reviewing the numbers for a while, it’s time to get advanced! Numbers are power, so let’s take it to the next level.
- Advanced Book of Business: Once you can see book growth up and down, you can tie in incentives with your team. We advocate for the team to get a percentage of book growth. For example, if over the quarter an account manager’s book grows $10,000 in revenue, you can compensate the account manager 15% of the growth.
- New Business: Where is the business coming from, and what is the closing ratio? Now that you have a handle on new business, get detailed on the closing ratios for each person. Do you need more leads or a better closing ratio? These are all questions that you can keep investigating!
- Lost Business: Have you ever thought about running your lost business report each week to see who has lapsed? This is a great strategy because 1) you can fire the frequent flyers and 2) you may be able to save some accounts due to mistakes in payment or win them back!
- Backlog Reports: Every agency should be consistently checking their team’s backlog. This is a great way to identify the best workflows and also to catch things before they explode.
We all know that metrics can be difficult. However, making a commitment is a big step to working on the business, not just within it. If you are struggling in this area, consider our agency assessment.
