Chuck Blondino of Safeco Insurance recently authored an article published by the Agents Council for Technology (ACT), Grow Your Agency & Improve Your Marketing by Tracking Key Metrics. Chuck found that a key differentiator of "high growth agencies" was that they track metrics around marketing and know what's effective and what's not for their agency.
Chuck says, "marketing an independent agency is different from marketing an insurance company. Large insurance companies need to drive greater name recognition. But like all small businesses, insurance agencies need to be more efficient, more cost effective. Simply put, marketing efforts should be the result of knowing where your new business comes from, and how much revenue you make from the new business, so you can focus on how to drive in more and keep more."
Read Chuck's article for a full list and complete understanding of each metric. Outlined below are 5 metrics you can use to gain a better understanding of where your business is coming from. Tracking these numbers could be the difference between aimlessly spending marketing dollars and having a focused marketing plan that can be consistently checked for progress. AgencyBloc makes it especially easy to find the necessary data from your book of business.
This is a simple, yet important metric that every agency should be tracking. You can make a lot of marketing decisions by simply tracking where each new client came from. AgencyBloc allows you to customize your lead sources to whatever your agency needs. Using the metrics outlined in this blog post you'll be able to decide which lead sources are generating the highest and lowest revenue to help you decide where to best allocate marketing dollars and which centers of influence to keep strong relationships with. The last metric on this list is average revenue per client - this is a metric you can come back to lead sources with and determine which are giving you the best and worst results based on agency revenue.
Average premium per policy
To find the average premium per policy in your book of business you'll first find the total premium of all of your policies. This can be done in AgencyBloc by running an unfiltered policies report as it includes the premium for each policy. From this same report you can get the total number of policies in your book of business. With those two numbers on hand, here's the calculation:
Total premium $
Total # of policies
Average number of policies per client
This metric uses the total number of policies as well as the total number of clients. By keeping clients, prospects, and general contacts labeled, it's easy to run a report of all clients. If your agency focuses a good amount of effort on cross-selling, our Cross-Sell report will generate a list of clients who have X coverage type, but not Y. The average number of policies per client is found with the following calculation:
Total # of policies
Total # of clients
However you track commissions, average commission can be found by taking net commission divided by the total commission received. A quick way to find your agencies average commission in AgencyBloc is to use the Commission Received/Paid report. Some simple manipulation of the data in this report will give you average commission.
Total net commission
Total commission received
Average revenue per client
Using the three previous metrics, the following equations can be completed to give you the average revenue per client:
Avg. premium per policy x Avg. policies per client = Avg. premium per client
Avg. premium per client x Avg. commission = Average revenue per client
For example, if your average premium per policy is $1000, and your average policies per client is 1.5 then your average premium per client is $1500. Multiply that by your average commission of 40% to get an average revenue per client of $600.
Now go back and look at the average revenue per client by lead source. Which of your lead sources has the highest average revenue per client? Which has the lowest? Any surprises? Let us know what other performance indicators your agency is tracking and if you're using AgencyBloc to help.
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