The following is part two of our five part series developed for your insurance agency to learn more about growth. If you missed last week, be sure to check it out here before you dive in.
One common figure that insurance agencies review is the number of new policies sold, or revenue bound each month. While these are great stats we need to dive deeper to get a bigger and better picture of new business activities. Insurance agencies spend a great deal of time and effort quoting new business; however, remember: we make NO MONEY quoting business! In fact quoting insurance costs the agency money. We need to be able to drill down and understand the closing ratio of the agency.
Here are the key questions to research the numbers on this week:
- How many opportunities is your agency working on?
- How many quotes did your agency give last month on new business, by policy count and revenue?
- How many of those quotes bound coverage, by policy count and revenue?
These simple questions will help you understand your agency’s pipeline and help predict revenue. These numbers should also be broken down by:
- Agent
- Department
- Source of the opportunity
By determining these metrics you can quickly understand your agency closing ratio.
Are we spending too much time on quotes that don’t close? Does the sales team need to sharpen their closing skills so the agency can drive higher profit? Who is the top closer in our agency and how can we replicate them?
The numbers allow us to determine how many opportunities you need each month to drive your goal revenue. They also allow you to identify core training opportunities to better equip your sales team to take on revenue generating activities!
Additional Considerations: Lead Sources
Looking at the opportunity source is also critical. There is no such thing as a bad lead. Each lead needs to be vetted for sure, but someone who needs insurance will have to purchase it somewhere! Once you can vet the opportunity you may need to change your approach.
- A referral has a different sales strategy and closing ratio than an organic search internet lead.
- A purchased lead has a different closing ratio than someone who found you on Facebook.
The point is all leads are good. You need to vet them and change your approach to drive the highest closing ratio. Insurance agencies can no longer sustain strictly on referrals. Why? Your referrals are shoppers now too! They investigate several agencies before purchasing!
It is very common in the insurance industry to use rating software or go direct to a carrier website and only put prospect business in your management system when the policy downloads or you get the binder. We need to start immediately tracking all new business in your management systems or you will never have the ability to track any closing ratios! The Zywave VPC has all of these metrics and reports built in.
At the end of the day, understanding where your agency is generating leads from helps you to predict revenue. Once you can adequately understand your revenue sources you can better build your book of business. But you don’t have to do it alone – use your insurance marketing and sales platform to help. Use the tools, and always review the numbers when it comes to closing ratios so you can best understand how to be the best you can be.
Now that you understand that, check back next week and we’ll discuss rounding out the accounts you close!