How many times have we heard it? But it’s a hundred thousand. But it’s a $200,000 account. But it’s $300,000 in premium. Guys, you can’t let yourself get blinded by premium. That’s what I’m going to talk to you about today. Come on.
You’ve heard me talk before about having a minimum revenue threshold, and that’s one way that you can make sure that you’re not producing business that isn’t going to make you any money. But here’s another one. Don’t get blinded by premium. I can’t tell you the number of times that I talk with agents and even my producers sometimes where they’re so worried about how big they perceive the size of the account to be that they miss the fact that this thing is a pig with lipstick.
You have to have processes in place. Let me make it very, very clear to you: Premium is not profit. They are two completely different things. Premium does not pay the bills. Revenue pays the bills, and what’s leftover is profit. You might have an account that’s $100,000, $200,000, $300,000 in premium, and you think it’s the most significant account that you’ve ever written. After a year, you have servicing nightmares, constant issues that you’re dealing with, nonpayment follow up, lack of buy-in to loss control initiatives, all of these things. Then you realize, “Holy cow, we might’ve brought in 10, 20, or $30,000 in revenue, but we spent 20, 30, or 40,000, and we’re completely upside down on this thing.”
You must be careful when you go out prospecting. It’s one of the reasons why we tell you you need to make sure you identify your ideal prospect. If you know who your ideal prospect is, then you know that it is business you can make a profit on in your agency. If you’re going to abandon that, don’t waste time to try and dial it in because you’re not going to differentiate yourself from anybody else on the street. You’re going to go after whatever presents itself to you. You’re probably going to quote it and try and get the business on price, and that’s not what we subscribe to here. If you’re going to do it the right way, identify your ideal prospect, keep laser-like focus, and don’t ever deviate from that.
I would be willing to bet you that 95% of the producers that are out there right now can’t even tell you what their ideal prospect is. They haven’t taken time to analyze their current book to help themselves replicate the best accounts in that book. They haven’t done the market research to see where the opportunities lie in the marketplace. They haven’t had conversations with underwriters or carrier marketing reps to see what their carrier partners want to write. They continue to put their head down and ram it against the door. And guess what? Eventually, if you call on enough people, somebody is going to buy from you.
I’ve never wanted to be the guy who makes ten calls to get one appointment. I want to make one call and get ten appointments. So my challenge to you is this: don’t get blinded by the premium; focus on profitability. To do that, identify who your ideal prospect is. If you were to ask me today, “David, who’s your ideal prospect?” I would very clearly tell you it’s a service contractor, preferably a plumber, HVAC, or electrician with 25 or more vehicles in their fleet, 40 or more employees, $5 million a year in sales, and a 1.0 or higher experience mod on the worker’s comp.
Why does David want this? Well, because it’s profitable business and I know my value proposition plays there. A:Â Â if they’re residential service contractors, they don’t have GCs and certificate tracking places that are continually monitoring the mod, so I know that there’s a better than average chance that the mod has slipped on these accounts. They’re going to get in that 1.0 or higher range. I also know that they’re doing the majority of their work with residential places, so they’re not needing certificates of insurance left and right like a new construction contractor would where somebody who’s doing a lot of commercial work. So we’re not wasting a bunch of time on the service end. For the people who do need certificates, we have a self-service portal, so our service staff isn’t getting blasted at that point. The other thing is everybody requires their services, so I know that we don’t have to worry about them going out of business anytime soon, and these companies are big enough, they don’t have problems paying their bills.
That’s an example of an ideal prospect profile. My challenge to you is to figure out three or four of those. The prospects don’t have to be all the same thing or in the same industry. I like light manufacturing in addition to service contractors. Why? Well, let’s see. Light manufacturing requires very minimal certificates, not a lot of vehicle changes on the fleet, chances are that they don’t have to worry about paying their bills, but because they do not get monitored, guess what happens? That mod can creep up, and that’s when we slide in. We do our mod audit, we explain where they’re wasting money, and we have a client for life.
If you take the extra time on the front end to identify your ideal prospect, my goodness, you’re going to kill it in commercial insurance.
Until next time:Â Kill or get killed!
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