30 March 2015
Category: Agency Management
30 March 2015,

In order to manage a successful business in today’s marketplace, you have to realize that your agency is both a sales and marketing business. By viewing your agency this way, you are able to cut straight through to the bottom line.

There are two different types of profit centers in your agency. If you can tap into both, you will enhance the bottom line. The first type is profit centers generated from products and the second type is profit centers generated from employees.

Each product and every employee must be its own profit center.

Every product that you sell must generate more revenue than it costs to market. Each employee must generate revenue for your agency greater than his or her compensation.

Any product or employee that does not meet this requirement is a cost center. You need to examine your cost centers and take action to convert them into profit centers.


The typical multi-line agency has a large portion of its revenue that comes from the auto lines of business. In fact, many agencies generate 50% of their yearly revenue from autos.

If an agent has a retention rate of 85%, that means he/she will need to replace 15% of his or her auto book just to stay even that year. Try assigning an annual dollar figure to that service and decide if it makes sense for your business to have half of your revenue generated from one line of insurance.

Just remember that for most agencies, a more balanced book of business is more profitable.


The largest single expenditure for most agencies is payroll. Most agencies hire when the workload is more than they can handle. Although there may be some small, incremental profit from doing so, there usually isn’t a large jump in revenue from the new hire.

Instead, take a step back and examine your agency. Take a critical look at each employee and examine whether they contribute to your bottom line. Each of your employees, even the ones doing administrative work, need to start producing revenue for your business.

Keep in mind that your business is no longer how many policies you can sell, but it is based on providing your customers with peace of mind. The best way to find out what each of your customer needs is for everyone in the office to come together to find out.

Start by shifting your focus to every household in your agency. The customer needs to think of your agency as a singular team that can provide them with safety and security.

When you start hiring, ensure that your new hire knows that driving revenue is the key to a successful business and that sales is an expectation- even for administrative jobs.

By identifying the cost and profit centers in your agency, you will be able to start building a more successful agency.

To learn more about profit centers and how to be proactive about hiring, read my book, Profit From Change. If you would like to learn how to evaluate your business and create a vision for the future, the Unleash The Power Of Your Agency training can teach you how to achieve success you never thought was possible.

Is your agency experiencing a roadblock? Learn how to overcome it! 

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