2001 Best Practices Study

A NALYSIS OF A GENCIES WITH R EVENUES B ETWEEN $2,500,000 AND $5,000,000

B EST B USINESS P RACTICES A NALYSIS

C USTOMER S ERVICE AND S ATISFACTION The practices of the leading agencies clearly indicate that customer service and satisfaction is critical to the long-term success of the agency. The retention of existing business, the referrals from clients, and the cross-sell potential all serve to enhance both the top line and the bottom line of the agency. A critical business practice is the development of the abilities of the employees. A tenured and professional servicing staff leverages the time of the producers for new business and also allows the producers to be involved with client issues. It also creates a better opportunity for career advancement. As employees are given increasingly challenging duties and responsibilities, it creates new opportunities for enhancing income and job satisfaction. Many of the leading firms in this revenue category find that a “value added” approach to selling ensures enhanced client service. Anticipating the needs of the client and being proactive in marketing, claims services and loss control are all being used by the leading agencies. Hiring, developing and rewarding employees has been cited as a frustration for many agencies for many years. Many of the best agencies become targets for competitors in recruiting key employees. Without creating a career path for employees, many agencies find it very difficult to retain existing employees. Many of the best agencies are spending as much as 5% of their total expenses in the development of employees’ abilities. Training, development and education beyond the continuing education level is critical to keeping employees. Incentive compensation is an increasingly important element of the business practices of the leading firms. Incentive compensation involves staff at all levels with one firm stating that every position has a measurable goal or goals that influence ultimate compensation, from the mail room to the President. There was one consistent theme for all of the best firms: good employees want the opportunity to influence their compensation. Incentive compensation that ranges between 5% and 15% of base salaries for service employees, and incentive compensation that can be significantly higher than that for account executives/producers, is a normal business practice of the leading agencies. H IRING , D EVELOPING , AND R EWARDING E MPLOYEES

“It is very frustrating to be one of three agencies offering a similar pricing on a piece of business with no reason for the prospect to go with us. Our difference is the quality of our people, and our ability to deliver on what we promise.” “Customer Service is not simply doing what the customer asks you do. It is anticipating what the customer’s needs are in advance of their understanding of their needs. It is being far more proactive.”

“It has become clearer that certain employees will be successful in our agency and other employees will not. My job is to recognize the difference.” “The best indication of future performance is past performance. We spend a lot of time trying to understand the likes and dislikes of potential employees, and then making sure the job we have for them fits them.”

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