Planning the future of an agency starts with goal-setting today

Planning the future of an agency starts with goal-setting today | Insurance Business America

Planning the future of an agency starts with goal-setting today

The beginning of a new year marks a good time to get your house in order, whether it’s a cluttered garage that needs some streamlining or an insurance agency planning its next moves. In the short-term, determining an agency’s marketing strategy can set it up for success in the coming 12 months. Over the long-term, laying out a succession plan for an agency can ensure a smooth transition once the time comes for an owner to depart.

The marketing game plan

Mapping out an effective marketing strategy starts with outlining an insurance agency’s broader objectives.

“The first step is to establish whatever goals that agency has for the coming year because that’s going to guide in large measure what they are going to do in regards to their marketing,” said Tyler McConvill, vice president of marketing at FMG Suite, an automated marketing platform aimed at financial professionals.

“Is the goal to retain and maintain the size of the current business or is it to grow the business and then, by how much? If the determination is such that the agency wants to maintain their current book of business and not necessarily focus on the growth of that book of business because they’re satisfied with the current state of the business, then I think a high degree of focus on relationships is extremely important. In that case, what we’re really trying to achieve is constant contact with the book of business to make sure that we’re nurturing those relationships, leaving open the possibility for renewal, but also the potential for those clients to grow naturally with the business.”

If an agency is new to the market or there are other reasons for why it would want to expand its business, then developing new relationships should be the focal point of the marketing strategy. Once the goals of the strategy are on the page, there are tactical ways that agencies can approach marketing to a group of individuals they’ve determined are important, McConvill told Insurance Business.

“That includes communicating with those clients how they want to be communicated with, so primarily via events and emails, and then secondarily, via social media through engaging content,” he said. “A combination of those specifically focused around events is a good way to structure a marketing plan for a small to medium-sized agency that has the resources to put on things like client events.”

Some agencies might already have a clear marketing strategy in place from previous years. Re-evaluating that strategy is a good starting point for determining the next steps.

“For agencies that are looking to deepen their capabilities, both in the digital and traditional marketing fronts, it’s extremely important that they look at whatever activities they’ve engaged in the previous year and be able to assess the success of those activities,” said McConvill.

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What often happens is an agency finds that it didn’t do a good job of tracking the efficacy of its marketing efforts, and could be hindered from figuring out how to move forward.

“Sometimes, the first steps for those organizations are committing to getting better at tracking and analytics in order to ensure that they’re able to define success over the course of the next year,” said McConvill. “If that’s in place already and there’s a high level of confidence in terms of what was successful the previous year, [they need] to double-down on those efforts, look at the ways in which they can improve them, make them better, and grow them.”

Agencies that are confident in their ability to track the efficacy of the previous year’s marketing efforts can meanwhile identify laggards and other aspects of the marketing strategy that could improve. If a channel, such as social media, was not a successful way for that agency to market, there should be honest and transparent conversations about why that wasn’t the case, explained McConvill, and then leaders should determine how to improve the performance of that channel. For channels that over-performed, an agency might want to consider putting more energy into marketing through them.

In some cases, it’s a matter of having someone in the organization that is generally versed in social media and is able to execute a strategy around it.

“This is one of the biggest challenges that people run into, is they under-resource this. Having somebody that’s experienced in an industry like this and understands what type of content is going to generate engagement is really important, whether it’s an internal or external resource,” said McConvill.

Succession planning strategies

A marketing strategy is one game plan that agencies should be considering for 2019, but if an agency owner is planning to step down from the business in the coming years, they should already be thinking about what’s going to happen to their agency once they leave.

“It’s a very emotional decision for most. These are individuals that have built an agency, a lot of them from scratch, or they’ve been working for a long period of time so they know the employees, they know the customers, and they’ve got a position in the community as a leader of this organization. So, when they’re developing a succession plan, the emotional attachment to that agency and the ability to release it is hard for most people,” said Rick Dennen, president and CEO of First Commercial Finance, a division of First Financial Bank, which operates under the brands of Oak Street Funding and First Franchise Capital Corporation.

Besides preparing for the exit emotionally, other points to consider include whether the management team is ready for the next steps, if the agency has been growing or not, is it in good markets, and if it has good relationships with carriers and customers.

“Those are some factors that we look at when we’re evaluating whether to provide credit on a succession plan,” explained Dennen, adding that the longer that an agency can prepare for this eventuality, the better. “If you plan to retire in five years, start to make sure that you’ve got the management team in place to either buy you out and make sure that they’re aligned with the transition [by] having discussions with them – those are the best and the friendliest and the least invasive transactions that occur.”

Many agency owners keep their business in the family, and plan to pass it down to their next of kin. Getting the incoming leader ready to take on that role should be top of mind for the current owner – do they have the respect of the management team, do they have good relationships with customers, and do they have the management skills required to lead?

No matter the owner’s plans for their business, having a definitive strategy in place will help make the transition as smooth and transparent as possible, with everybody involved aware of what’s going to happen.

“The less moving parts you have, the better, so if you can do those and you create an alignment between the buyer and the seller on that succession – whether that’s external, internal, family or not family – if you get that alignment with ‘I’m going to transition out over three years, I need to get these things off my plate, I need to transition customers, then I need to transition all of the administration of the business,’” said Dennen, “to see a friendly transition like that always gives us great comfort.”