For leaders with the fortitude to implement a true sales culture — the results of planning and strong team commitment can be double-digit organic growth that significantly enhances value over time.
In 2021, the Best 25% of firms in MarshBerry’s proprietary database, Perspectives for High Performance, grew organically at 15.5% vs. the average firm at 6.1%. Equally important is that the difference in leakage between the average and high-growth firms was minimal (2% difference between high growth and average). The overwhelming conclusion is that high-growth firms are selling more new business and not letting uncontrollable market factors control their future.
The 5 key strategies to drive double digit growth
Is your firm looking to drive double digit growth? If yes, here are five key strategies of the Best 25% of firms who are winning in key industries.
1. Annual New Business Goal Setting
Setting individual producer goals requires historical reflection on several years of production, strategic planning and potentially a sales planner. A sales planner can provide components including:
- Quantifying the number of appointments needed throughout the year
- Closing ratios
- Target average account sizes
- Historical new business numbers
- Historical number of accounts sold
- Identifying targeted top accounts
Categories of Goal Setting
- Minimum Goal: Minimum amount of new business to maintain producer status. Also used for enforcing negative consequences
- Individual Goal: Producer’s stated personal goal
- Organizational Budget Goal: Firm’s budget goal for projection and growth budgeting purposes. This number is typically not communicated to the producer.
- Stretch goal: Best case scenario goal typically used for closed business scoreboards.
2. Reward the Hunter Mindset
High-growth firms have a variance of approximately 14% between new business commission and renewal commission percentages. The lower renewal commission percentage is accepted because of the investment by the firm in an experienced and sophisticated service staff.
Firms with the greatest organic growth (top 25%) generate 34% more total new business dollars per production person compared to the average firm. This indicates that high revenue generating firms are better incentivizing Producers to focus on new business.
A compensation model should have both an upside and downside related to compensation based on production — commonly termed as “carrot and stick model.” It is important to note that compensation restructuring is very comprehensive and involves several critical areas, including small business thresholds and minimum account thresholds.
3. Pipeline Management
A pipeline system enables your producers to stay engaged in every step of their sales process, drives accountability around prospecting activity, and ultimately increases closing probability on targeted accounts. Producers must track and monitor their successes on closing accounts — as well as detail what has not worked. Results show that producers adequately using a pipeline consistently sell more new business than those who do not.
Additionally, as a book of business becomes more complex, producers need focus on true differentiation and a unique value proposition. Finding opportunities to train your team to navigate complex selling scenarios, as well as finding niche opportunities, can create better results for you and your firm.
4. Established Minimum Account Thresholds
Small business units are accounts comprised of accounts below a certain commission dollar amount that are handled by a dedicated service staff. Firms striving for growth should establish a minimum account threshold for which producers are not paid renewal commission. According to MarshBerry’s PHP:
- 88% of high-growth firms have a small business unit — compared to 82% of average firms.
- 81% of high-growth firms have a minimum threshold established compared to 75% of average firms
5. Incentives and Rewards
Producers receive most of their incentives through compensation. Usually, a larger book equals larger compensation, but some firms classify producers based on book size. MarshBerry has four classifications of producers:
- New Producer = Less than three years of experience
- Senior Producer = Less than $500k book of business with more than three years of experience
- Executive Producer = More than $500k but less than $1M, with more than three years of experience
- Million Dollar Producer = More than $1M book of business
Drive Growth Organically: Bringing it all together
Along with these recognition levels, incenting and rewarding producers for reaching milestones, such as profit sharing, guaranteed renewal commissions or increased expense accounts, is paramount. These rewards and incentives help the firm continue to grow by driving the right producer activity that leads to results.
The fastest growing agencies and brokerages are consistently driving double-digit organic growth — but it did not happen overnight. Strong commitment and systematic, strategic planning leads the way to help your firm build a culture that encourages all employees, from executives to support staff, to focus on increasing new business production, generating profitability and driving growth.
If you have questions about Today’s ViewPoint, or would like to learn more about how you can efficiently search for and recruit talent to drive growth acceleration for your firm, email or call Brandon Hardesty, Vice President, at 440.769.0320. For general inquiries, you can also get in touch with our team.
Producer Academy – Reserve Your Spot in Nashville November 1-3, 2022!
It takes skilled people to accelerate your firm’s growth. Designed for insurance agency/broker new hires and producers looking to sharpen their skills, MarshBerry’s Producer Academy helps get producers on track to validate and increase new business production. Space is limited for this 1.5-day session that begins on November 1. Register today!