Where is the BIG MONEY in insurance? Clearly, the MODEL you choose helps answer that question. The downloadable TOOL in this site will guide you to your decision.
1️⃣ The first question is: What is the optimal Growth Model for your agency? For organic growth, you can choose:
<aside> ⚠️ ☠️ Do NOT do what is too common among agencies: a haphazard, sloppy and inattentive approach to answering this question. That will inevitably result in much slower growth and serious damage to ongoing profitability. Your decision should be strategic, deliberate and intentional.
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2️⃣ The second question is: line-by-line, what should your expenses be to achieve maximum productivity for the model you choose? This tool shows you the answer. (You’ll also quickly discover how far off you are from where you can and should be. Buckle up! 🏎️)
Average net profitability varies widely among the models. With owner comp, benefits and related expenses removed:
Marketing Model: 40-50%.
Sales Model: 25-35%
Blended Model: 30-40%
At first blush, the greed glands may shout: ‘Let’s go for the Marketing Model! It has the most profit!’ Why not?
Clearly, marketing drives huge returns. But, you may choose the Blended Model - where sales and Customer Lifetime Value are supported and complemented with marketing - in order to accelerate growth. That makes sense, to trade off some income so that producers can speed-up top line revenue.
Why should an agency choose a Sales Driven Model? Only if it stubbornly holds on to ‘old school’ methods or simply lacks the initiative to add new skills and capabilities. If it has producers, clearly they’d perform better with the kind of support they can get from well-executed marketing.