By most accounts 2009 agency growth and new business production gets mixed reviews. Early on, most of my clients were guardedly optimistic about 2009 while over all industry thinking leaned towards pessimism. Most of my clients were coming off a decent 2008 characterized by significant growth, high retention and decent margins. All were concerned about shrinking premiums but most had confidence in their producers and our process to generate enough activity and new business to keep pace with shrinkage. In the last 2 quarters Ive seen optimism turn to concern and even fear as the market shows no bottom and the recession places financial strain on clients with reductions in exposure negatively impacting premium. Several sectors, particularly, the construction trades have slowed considerably resulting in shrinking renewal and bond revenue.

Prediction: 2010 will be a highly profitable break out year for some, and extremely challenging shakeout year for the rest. I know, Im hedging both outcomes, but both are predictable and you dont need a crystal ball to divine these outcomes. If you have any gray hair, youve seen this before.

In the past, those who prospered in difficult times had strong cash positions and willing to invest and take advantage of bargains. The three areas we should be investing in as the market continues to decline are:

Talent
Technology
Undervalued portfolios

To prosper in a recession, agency owners must trim fat and reinvest strategically in their companies.

Hire talent cast off from failing agencies and companies. In 2009, the insurance industry will lay off an additional 2-3% of its talent pool and freeze hiring on new talent entering into the marketplace. Smart agency owners and managers will take advantage of this glut by gobbling up good talent at bargain prices. Begin looking in earnest and budget to add producers and CSRs in 2009. Hire A players and pay them wellyou wont be disappointed. After the new year and in years to come there will be a surplus of A players at bargain rates. Smart owners will be there to scoop them up when they become available.

Invest in technology that creates distance from the competition through differentiation to give you a competitive edge. This may be more impactful in a recession than in a booming economy. One reason is the law of supply and demand. The loss of a large client is more devastating in a recession, because there are less of them, and they are more difficult to replace. Invest in technology that larger prospects will see as valuable, and want as they try leverage vendors to cut costs and become more efficient. Your ability to attract and take business from the competition in a challenging market can create a tipping point, which puts significant strain on the competition and creates opportunity for you in the area of distress acquisitions.

Below is a list of The best of the best in technology that I have come into contact with in 2008 and will continue to support and invest in for my clients in 2009.

Zywave
Mywave
Go to Meeting
Sales Nexus
Polycom Video Conferencing

All create significant improvements in differentiation, client service, communication, and sophistication and sales management.

Zywave and Mywave with their broker brief case tools and their client portal help agencies create sophisticated and significant advantages on which to sell and retain customers. Most clients use less than 10 % of its capabilities and while it is relatively expensive, if you can afford it, get it before the competition does. This product alone, if used properly can expand capabilities and create service platform and level of sophistication previously reserved for the top 100 with strong IT and significant budgets.
Go to meeting is an in expensive method of creating and delivering online presentations from your desktop computer. Go to meeting allows you to project your desktop onto their computer for viewing. Anything on your desktop can be shared with up to 18 computers simultaneously. It includes a conference call center, is simple to use and costs less than $100 per month. This is an excellent, inexpensive method to deliver professional presentations, webinars, meetings and training programs inexpensively.
Sale Nexus is one of best sales tracking tool I have found to manage pipelines, prospects and producers online. Nexus uses a simple template where producers input vital information about individual prospects. Once entered it is logged into his/her pipeline. Nexus then tracks the prospect through the stages in sales cycle and creates a variety of valuable reports by producer, by department and by agency.
It keeps track of individual and agency sales goals, it generates hit ratios and quantifies adjusted pipeline revenues required to attain goals. Sales Nexus can be accessed online to review or update by producers, managers or anyone who has access. I use them to help run sales meetings and to motivate producers who are behind. These reports are in real time and let me know exactly where each producer needs to be at any time to be on track.

Polycom Video Conferencing: The best system I have found for high quality videoconferencing. Ideal for running meetings where an agency has a large footprint with many locations, this system allows for 2 way audio video conferencing for up to 6 locations with expansion capabilities for many more. With zoom and pan features and conversational stereo, the quality is as good as TV. Additional components allow you to tape meetings and training sessions for review and re-enforcement. Applications are limitless. Polycom will be a major investment for my firm as I continue to improve and expand my service platform and grow my practice.

Acquisitions: I am not an acquisition consultant, but it doesnt take experience to understand how the forces of competition, shrinking premiums, tight margins, aging producers and no perpetuation plan might create a compelling reason for owners to decide to sell for a reasonable profitNOW. Well -established agencies with good reputations are feeling the pinch and are getting attacked from all sides by larger competitors. Even Marsh has jumped into the fray with a division aimed at middle market sector business. For agencies that depend on a few major markets, a combination of recession, competition and a hard market could spell disaster. Agencies seeking to grow through acquisition should follow up on old conversations and put their feelers out.

Up or down, the market creates opportunities on both sides of the curve. The difference is that when times are good, typically everyone benefits. But when times are bad, only a few savvy business owners prevail. Those who have the prescience and the resources to invest intelligently will take advantage of bargains while the competition sits it out on the sidelines. Warren Buffett is fond of saying; This is how fortunes are made

iQ Consulting Inc.
P.O. Box 47567 Plymouth MN 55447
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612-414-5618
www.iqsalescoach.com