Episode 329: The Ceiling Isn't Motivation, It's Math

Welcome back to the Scale Your Insurance Agency Podcast, the show built for independent agency owners who are done being the bottleneck in their own business. I'm Daniel Metcalf, and every week I'm joined by my co-host Mike Stromso, one of the most respected operators in the independent agency world. Between the two of us, we bring you the real levers that move a $3 to $20 million agency from successful but maxed out to systemized, scalable, and running without you holding it all together. Here's what we focus on. Mike brings the people side, leadership, team development, niche sales mastery, and a three-piece system that helps agencies build a business worth owning. I bring the machine side, AI, automation, and workflow design that frees your team from the operational drag, eating your margin and your time. Together, we're building a framework that can grow an independent agency 4X to 9X without burning out your people or your checkbook. If you're an agency owner who's tired of growing by hiring, who knows you have a capacity sitting on the table but can't figure out how to unlock it, this is the show for you and your weekly edge.

Welcome to the next episode of the Scale Your Insurance Agency podcast. I'm here with my co-host, Daniel Metcalf. Daniel, how are we doing today?

Oh, it's a beautiful day in insurance.

Beautiful day in insurance. Isn't every day a beautiful day in insurance?

That's what I hope to hear, anyways.

That's what we're trying to help agents nationwide accomplish. And so let's start off with this because uh lots of exciting things happening again this week, but something exciting that happened in an agency yesterday was a conversation with one of the agency leaders that we work with. And her take yesterday was it was not a beautiful day in insurance. She was having, frankly, a bad day. And we all have them. Look, I have bad days, they come and they go, but this too shall pass, right? So here's the quick tip for you to start, and then we're gonna get into while the ceiling isn't motivation, it's math, and that's our topic today. But let me give you the tip. I was listening to Les Brown. You may or may not be aware of Les Brown, the motivational speaker. In fact, I am listening to this every single morning right now, and you may be thinking, why? Mike's accomplished a few things in his life. Yes, he has, with a team, a great team, and I'm grateful for that, and a great spouse and all of that. But those days will come, and fear and doubt, and everything else will creep into the equation. And so I want you to think about this and maybe apply it to your own situation. This is my new framework when the bad days happen, and they're I know they're gonna keep coming, and I can't see them coming. They're character building days, is what Les says. It's a character building day. So think about it like that. We just build character on those days. We don't become less on those days, we become more. And let's jump into it, Daniel, to help independent insurance agencies become more. The ceiling isn't motivation. Yeah, motivation's great, inspiration's great. You may have been inspired by what I just said. I hope it helps you. But at the end of the day, like we talk about so much, Daniel, the numbers don't lie. Correct. The ceiling isn't motivation, it's math, the numbers. And we have found in our work with independent insurance agencies that most successful agency owners don't plateau. Do you feel like maybe right now you're plateauing a little bit? It's okay. I remember it happens. Peaks and valleys, right? They don't plateau because they lack ambition. You do have ambition and you want it more than anybody else. That's why you started your business. They plateau because the business model, the business model that got them to 1 million, 2 million, 3 million, maybe you're below that. Whatever your level is, was not designed to take you to the next million, whether that be 3 million, 4 million, 5 million, or beyond, or whatever the next million up is. And I've got a perfect situation for us to dive into in just a minute, Daniel. An agency owner yesterday, I was in a very deep coaching situation with that agency owner at the turning point, at a million turning point, the two million turning point ready to go to three. And was in a lot of ways the orchestra conductor. Perfect setup. I said, this next million is gonna be, it's your crux right now. We've got to identify how we're going to get that next million done because once we get to three, your agency is gonna look very different. And if you're at three when you get to four, your agency is gonna look very different. And five and beyond. Okay. The constraints between those million jumps are mathematical, not motivational. Kick us off, Daniel, in that thought process. Add in what you're going through your mind because I know how your mind is very deep thinking and very strategy-minded. I mean, what do agencies need to think about as you guys create dashboards and everything else and handle the numbers?

Uh, what they need to be thinking about is as we build out the dashboards for looking at what their numbers are, is that you can once you get your numbers aligned and you give yourself the benchmarks, you can see by looking at the math why you're plateauing. Whether it's on and most of it isn't because of a lack of opportunity, it's because of the chaos around those opportunities, right? It's the the lack of being able to get to all the opportunities. So whether that's self-made chaos, like hey, um we're getting 600 opportunities a month and we're only getting back to 250 of them with follow-up, consistency, whatever. Whether that's um whether we're starting to see from a retention standpoint, right? Like, hey, our retention numbers are going down because we're not getting out in front of, you know, we're not we're not organized and getting out in front of the fact that we've got 200 of them all renewing in the next quarter, and we're just starting to work on them two weeks before their their um renewal date, right? And oh, it turns out that we only had four weeks because to find out that there's a uh a remarket that has to happen because the carriers no longer keep them. Like all those different pieces of chaos is what's there, and the current operating system does not help in in making sure to manage all those different areas, and that's where those numbers really start to um that mass starts to show up on what's keeping us at that 3 million, right? Maybe it's we don't have enough uh maybe the opportunity is out there, there's a total addressable market of another, you know, couple hundred businesses in adjacent town or a couple hundred businesses in our niche or whatever it is, but we don't have the marketing staff or budget or process or system in order to start generating those leads in in that total addressable market. That's that's what we're looking what we're talking about when it's a math problem, is and using what we're currently doing and the numbers we currently have with those trends to look at what a predictable future could look like based on if we make those adjustments.

Yeah, and that's the beauty of modern automation technology powered by AI, is the the ability to get really, really uh clear on all of the math equations, so to speak, very quickly, right, Daniel?

Yes. It does a fantastic job of doing the data collection analysis and um displaying the results of that data in an easy digestible way.

Yeah. And I've seen independent insurance agencies, um, just saw one in the last week, who actually have people on their team who are data analysts. And so they are the human aspect inside of an agency who is managing all the data to make sure that it's accurate based on their goals and what they plan to achieve. And I will suggest that agency probably already has probably likely has a solid business plan in place that they're following. Would you agree, Daniel?

Yes, they would, yes.

Yeah. And we say that, everybody, because we've identified that there's a lot of businesses and independent insurance agency businesses that don't have a solid, growth-oriented, scale-oriented business plan in place that will take them from one, you know, one to two to three to five to ten million revenue. It's limited. And we can't ever limit our vision. So let's talk about a couple things that we've identified that are in the way. Okay. Because agencies, look, we've built our businesses. Daniel's built his businesses, we built our businesses at our agency, and most agents do the same thing. We build it on hustle, on grit, on being involved in everything. We're the lead relationship person. And we can personally touch most of you know the clients and the other relationships in the agency. But somewhere around that next million, the math starts to change. And I have found that it's you know, one million, yes, but two million, it really starts to change. And three million, it starts to look very, very different. And the agency starts growing heavier. And so be aware of that. And so if you have that upcoming, now is the time for what we like to call a redesign. Okay. But there is one person in the agency, Daniel, and maybe you have a partnership situation, so there would be two of them or maybe even three. Owner bottleneck. So what happens, Daniel, when all the decisions route back to that one person?

Well, that one person then is responsible for making everything flow through the business. So what we see is that it's if owner is the bottleneck for all either decisions or workflows or customer journeys, you name it, um, service requests, then you can only grow to the level of whatever that owner can do.

Yeah. And for your automation technology powered by the AI equation, when those decisions stop there and stop there only, it becomes a stopping point for the entire agency operating system. Is that what you've seen?

Right, absolutely. Where that then the operating system is the owner itself.

Uh-huh. And so based on our definition of an entrepreneur, and the goal of an entrepreneur should be to build a business that operates without them.

Right.

So if you've properly built an agency operating system, the owner is not involved in all of the decisions, you know, based on what we teach and we try to help independent insurance agencies embrace and grow upon, is that everybody owns a particular portion of the business plan to grow it. Correct. And we're working actively right now with independent insurance agencies who, you know, are at that crux. And like I said, I was I was talking with one yesterday. So happy. They're at that two to three mark.

Okay.

And I see this in three to four and four to five as well, and even six to seven. So it's like I learned from the $1.4 billion revenue entrepreneur who is our client, it's the balance within a team. The balance within a team. So we want to make sure that you are the orchestra conductor of the organization. You're not the first violinist playing just one musical instrument. You are just simply making sure the orchestra plays beautiful music. So eliminate the bottleneck. Anything else to add on that one, Daniel?

No, I think that covers it.

So let's talk about tribal knowledge. And that's the next equation on where the ceiling is a motivation, it's the math and the numbers. But, you know, one of the greatest values in the independent insurance agency business on tribal knowledge is that there's a lot of very smart people. And I want to I want to hear what you have to say on this. So let me set it up for you, Daniel. So the average agency owner age in America is roughly 56, 57 years old, and we've done the research and done the math. In addition to that, there's a lot of very skilled, talented, high-performing agency account managers and CSRs who have been in the industry for 20, 30 years, some more than that. And their tribal knowledge or historical knowledge is deep. And it's very hard to replace. I mean, when they decide to move on, or God forbid, to have a health situation come up and they can't work anymore. It's it's not virtually impossible, but it's very, very difficult to fill that chair. Right. So what do you recommend, Daniel, to help circumvent that gap, if you will, concerning the tribal knowledge? How can automation and technology fill that gap via processes, maybe things living in heads? It's not in their heads, it's in what? Systems, right? What's your thoughts?

Well, the first, if there's a significant amount of tribal knowledge in one or two individuals, maybe some key person insurance would probably be a good first step.

Yeah, for sure, for sure.

I digress. From a from a um a workflow technology standpoint, is that's where you really have to start mapping over and start it, start working, having your leadership, work with each of those that have the tribal knowledge and make sure that all these processes are written down. We know where all it where they all are, um, segment your audience and make sure that you're segment your customer base, go to your top, your 80-20 rule, right? Your 20% of your 80% of your revenue and just look in the CRM or the AMS or whatever you use. And is all the information about them in there? Is everything up to date? Is everything accurate? Um, can you take one of the standing operating procedures and walk it all the way through? Just worked with an agency the other day where it's like, okay, take your take the training, standing operating procedure. You just got a new lead. Uh, show me how the whole new lead process comes from from uh that you receive from a Google review. And it you'll know a lot real fast if you sit down with them and watch them go through it and you ask questions like, well, how do you know how to do that? Like they'll just do something and say, Well, how'd you know how to do that? Well, I just that's just the way we always done it. Or, oh, I know this because I I you know I built this, or I, oh, I have this document over here. Oh, are you the only one that how come this isn't on your desktop? Well, I'm the only this is the document that I use, no one else uses it, right? Things like that. You're you're gonna start to identify where that tribal knowledge starts to live and who has all the tribal knowledge. And then you have to make a concerted effort to put a project in place to getting all that tribal knowledge into the right plot uh place or system that can be easily accessible and make sure that everybody is being followed by all.

Wow. A lot to unpack. I hope you were listening closely to that wisdom that Daniel just dropped. But followed by all, not just sitting on one person's desk. And it's our humble opinion because we've witnessed it happen. I mean, we have an agency which is also at that crux from you know the next million step from two to three million, from three million to four million and up. That there was one of their very experienced commercialized CSR, which is even more complex. And they have a heavy book of farm in combination with that. So it becomes even more complex as far as makeup of the book. And this person was having trouble with the change. And they're implementing this automation and technology in the agency to document the processes. But over time, once she started to understand and could see the picture through the leadership of the agency, kudos to them, she began to shift and said, Wow, this is really easier. It makes my life better, it makes my day better. It helps me better serve more customers. So it's all of that, right, Daniel, cultural mind shift. But I have to piggyback this on because, ladies and gentlemen, we're gonna keep reminding you about this until we can't speak anymore. You cannot build a complete agency operating system using automation technology powered by AI on top of processes, systems, and workflows that do not exist. That are followed by all and agreed up, agreed upon by all, correct, Daniel? Correct. I intentionally let that one sit. That could not be more important to the future of your agency to get to that next million. Critically, critically important. And from my own historical failure, I will tell you this. When we did that the very first time, the thing that I did not do, I did not assign one person to own the updates. So have somebody on your team to own the updates because, like we talked about in, I think it was the last episode, things are changing every five minutes right now, if not faster.

Absolutely.

So just be aware of what the landscape looks like. So also, Daniel, why the next million, the three million, the four million, the five million becomes the next ceiling. In consistent follow-up. And this is right in your wheelhouse, sir. Um, you know, those opportunities abound. The opportunity volume outpaces the team's ability to respond consistently. Why is that?

Well, most people, when they finally make the decision that they want, that they need something, that they buy something, they expect immediate reactions, right? They expect immediate service, support, whatever it might look like, sale. And so if they've taken the time to raise their hand to say, hey, I'm interested in buying something from you, right? Or renewing something from you, they're going to expect that you're going to respond in a timely manner. That timely manner is now, I mean, the last time I looked at was five minutes. It's probably even faster than that at this time, right? Respond within five minutes that that as they've given you their bit their opportunity to win their business or to maintain their business, they want consistent follow-up where they don't have to reach back out to you to say, hey, where are we with this? Where are we with this? Um, and if you don't respond with that five minutes, they'll find somebody else that will. Um, so that's what we mean by that inconsistent follow-up, right? If you're waiting to the last minute to do renewals, somebody in your competition, one of your competitors have probably already reached out to them up to that point, saying that they can do it better, cheaper, faster, whatever it might look like. So having that communication, that consistent follow-up and being able to measure the fact that you know where everyone is inside that, right? By pulling up a dashboard and being able to see, hey, this is where every each one, this one came in on, you know, came in, it was responded to within five minutes. Here's the follow up steps, here's where it's sitting at right now, here's who's working on it. Being able to see that allows you that comfortability to make sure that, and then being able to calculate hey, of the 600 that came in this month, 80% of them got a response within the first five minutes. Should be, if it's automated, should be 100% get at least some type. Response like, hey, we received it, right? Maybe they get an automatic email or a phone call or something saying, hey, if there's other information you'd like to share, I'm here to listen. Whatever that is, it should be a higher percentage than 50% or lower. Um, because there's automations out there that as a consumers are used to getting, right? Those automatic um reach outs to let you know, right? There's nothing worse. You know, we're talking about this is this is outside of insurance, but we were just talking about it, where there's nothing worse than when you reach out to somebody to say, hey, I'm interested in your services, and then you never hear back from them. You don't get a call back, you don't get an email back, there's no place to leave a voicemail, there's no, right? There's no form to fill out, or you fill out, you spend the oodle amount of time to fill out the form, and then it says we'll get right back to you, and then what does get right back to you mean? And nobody responds. So not to drag it out too much farther, but that inconsistent follow-up is where you're gonna start to see the difference between those that are that are can scale and not scale, is as you take on, you know, as you spend the money to bring on new leads, or you bring on a new COI, or you bring on a new association, or something that's gonna bring you a significant amount of leads, can you actually respond quick enough and do all the follow-up necessary in order to make it work?

Every time I listen to you, Daniel, I've got ideas flowing through my mind, and and I'm gonna I'm gonna just grab one of them that uh came to my mind as you were dropping those nuggets. What if we started teaching the consumers that we are serving to embrace technology via you know the automated phone systems that are powered by AI? I mean, car is one of them out there, right? There's car, there's gale, and then other ones out there. Doesn't it have the ability to make outbound calls as well?

Gale has the abil has the ability to make outbound calls. There are there are lots of different flavors now of voice AI that can make outbound calls.

Yeah. So anyway, here's my idea, right? So anytime somebody you know sends an email, uh, especially if it's a new lead or something like that, you know, obviously have to think about this and plan for that. But how about, you know, uh an outbound call by one of those AI agents will call them, right? Say, hey Daniel, it's Mike over at Stromso Insurance Agency. I just want I'm the AI agent for the agency, and we just wanted to say thank you for the opportunity to serve you. We've received your request, and one of our teammates is gonna get back to you as quickly as possible.

So now you're we're you're gonna get in the debate. Would you so if you're willing to do it as an AI agent, what kept you from doing it manually? Why wouldn't that automatically happen with a human being doing it?

Because they're they've got so much on their desk to deal with, they certainly don't have time to make that call.

Let's pretend they had nothing on their desk. Would it be part of a regular workflow? Would that be a part of your regular workflow, which is say, hey, when a lead comes in, what do we do next? Then what do we do next? What do we do next? If someone said, Well, I have to sleep at 2 a.m. in the morning, what if someone works a night shift and a lead comes in at 2 a.m. in the morning? Right? Well, would they want a phone call? I don't know if they want a phone call, right? Like, and but or maybe we can send them uh, you know, maybe if they check the box and said, Can we text you? They get a text message saying that we received it. Like any, you can think all those things through, right? Yeah. My point is that if you don't lay out all those steps, how would you know where to put AI automation in there?

Boom. That's the point right there, ladies and gentlemen. If you don't create the processes, the systems, and the workflows to lay out those steps, the roadmap, whatever word you want to use, it doesn't matter.

Right. It's no different when someone just asked me, should I start using paid Google Ads? I don't know. How do you where do you get most of your leads today? Have you identified, have you done the analysis to say, this is how many, you know, this is our ideal customer profile? They're doing, um, did you go look to see how many searches are done per month, per month, per year, whatever the timeline is in that particular keywords around that your ideal customer profile? How many, how much is the cost per click? How many clicks do you need in order to get them to fill out a form? How many form like have you planned all that out? Once you do that, then you decide if paid ads, do you have the budget? You know, how many, like if you know what's the average sale? If you can plan all that out, then you know where to go to paid ads. That's what we're talking about, even on the inconsistent follow-up. Like, yeah, we do paid ads, we don't get anything out of it. Well, I don't know. Did you plan to use paid ads? Did you know what your numbers needed to be? Did you have the automation to actually follow up with them consistently? That's what we're trying to get at, is what what starts Roblox is what we call random accenting. You know, what's uh just doing marketing for marketing's sake, you're not gonna be able to scale because you you're gonna be spending money that isn't gonna get you the return. You have to be able to spend predictable money.

I know. I lived that life until that two by four moment hit me upside of the head. And the first thing we did, we went through a formal branding process and changed everything. Great stuff, Daniel. Uh that's why the ceiling isn't motivation, it's the math. And what Daniel was just talking about is the math. Well, I don't know. If we can't do the math, then we can't answer the question. And Daniel, for every independent insurance agency out there, the wealth, hopefully predictable wealth, as we were recently discussing, of their agency business is their book of business. But many agencies have leaks going on, and a lot of those leaks are within their retention back to the math, the numbers. And so, what's most agency business owners do? We need to write more business, we need to write more business, we need to write more business. Oh, forget about the ideal client profile. We just need to write more business, and then they keep compounding and compounding, adding more chaos. And producers and the production team chases more business while renewals quietly erode the database. So, what do agency leaders and owners need to be thinking about with regard to automation technology powered by AI with regard to the renewal process?

Um well, first of all, your data has to be clean so that you know what your business, what your book of business looks like, when are the when are the expert, you know, when are the renewal dates, what are the tasks that we have that are necessary at what time point? Is it 120 days out? Is it 60 days, 90 days, whatever your whatever your unique value proposition looks like, your unique process, and you say, hey, um automatically tell me and create task list for me of when it when it when the renewal data is 120 days out, create this task list of everything that we do for a renewal, get it assigned to somebody, and make sure that that gets run and gets done.

Seems pretty simple. Why don't more agencies do it?

Because it takes time to list out all the work, all the what are the necessary steps that we do in order to do that and then set up the automation, right? Um, in some instances, again, it goes back to the math part of it, is we don't take our downtime if there is downtime, right? Or somebody to do the analysis of what's our A client, B client, C client, D client, and what is our renewal process for the A, B, C, and D clients? What do they look like? And then what's our renewal process for it? They should all be different, or at least some flavor of it, depending on how you want to do it. If you want to treat everybody equal, that's fine, treat everybody equal, but at least know that you're doing that and that there's a workflow that everybody gets the same renewal program, right? Um, so by having somebody who's responsible for the renewals, and that's what I mean. Again, Mike, you know better than me being you know, on the sales and leadership standpoint of it. I still believe that there should be new business producers, and that's their whole focus is bringing on new business, and then there should be a focus of people whose whole job it is is to do the renewals. Because I think there's so much work that has to be done in both ends of it that that's where I would spend my time or my my energy, but you might know better than I do as far as can a new business producer also manage a book of business at the same time.

Well, back to the numbers, Daniel. Depends on the agency.

And where they want to go.

And where they want to go. So, like our shift in our agency, yes. We had account managers, CSRs who were also writing new business in the existing book of business until we grew to the point where it was definitely time. And I remember that moment, and I remember the year was 2015, I'll never forget it, where we created a separate sales and service team because our team's capacity was maxed out. So depends on where you want to go. But you know, the theme of the day as we wrap this up, Daniel, processes and systems and workflows documented. Agree, Daniel?

Yes, I agree.

Because if you were listening closely, everything that we just talked about, that's the foundational base, right? But let me recap for you. For everybody, the ceiling isn't motivation, it's math. And the four quadrants that you need to be paying attention to, the numbers, the math, the owner bottleneck, the tribal knowledge, the inconsistent follow-up, and the retention links. And so if you missed any part of that in this podcast, please go back and rinse and repeat it. Because here's the bottom line, ladies and gentlemen. Great stuff, by the way, Daniel. Thank you. A three million, we'll take a three million dollar agency as an example. A three million dollar agency cannot sustainably grow past five million if every growth lever still depends on the owner's attention. And that was quadrant number one, the owner bottleneck. The next stage requires a different machine, a redesigned machine, right, Daniel?

Yep, correct.

Yep. Constant update and redesign. And I'll drop the reminder. Three years in a row, we redesign the agency. Somebody said to me recently, they say that they heard me say that. They said, Did you say three times in a year? I said, no, three years in a row. They said, I know I heard that. I was just like became completely overwhelmed. Here's the deal: when you're working with the right team, that redesign becomes a lot easier because somebody else is handling the whole all the heavy lifting. So, Daniel, thank you for all you're doing for the industry. Great, great stuff. Look forward to the future. Anything else to add as we wrap this up?

I just think that what I'd like to add is all of this, the feedback we've been getting is like everything seems daunting because it just, you know, we're talking about so many different subjects. And what what I was reflecting on as we were having this podcast is it's just starting somewhere, right? It's just it's it's just the start. Start by picking one workflow, the most important workflow of the organization, or just pick, we're gonna do some analysis of our numbers, or pick something that's gonna be the most impactful for you, and just slowly start to do it. And you're gonna see that momentum start to get created, right? You're gonna start to feel that. But but in the back of your mind, have to understand everything needs to run around the numbers, not necessarily on getting on the motivation, right? So start looking at your numbers one at a time and then start working through the workflows that's gonna be necessary in order to get those numbers to where you want them to go.

Couldn't have said it better myself. Great job. Great job. All right, everybody. Thank you. Thank you for joining the Scale Your Insurance Agency podcast. Until the next episode, know your numbers and continue to build your system. But most importantly, like Daniel just said, take the first step. You got this. We believe in you. We'll see you on the next episode.

That's a wrap on this week's episode of Scale Your Insurance Agency. Quick reminder: everything we talk about on this show is built to do one thing: turn your time into profit, more revenue, more margin, more freedom without adding headcount to make it happen. If something landed for you today, please share it with another agency owner who needs to hear it. This community only grows when good operators help each other level up. Please subscribe, download, and share our podcast and all your other favorite podcast engines. And if you're ready to stop figuring this out alone, Mike and I are both in the field working with agencies right now. Please reach out. Find us on LinkedIn or on our websites, and we'll tell you exactly where your biggest opportunity is to scale. Until next week, build the system, protect your time, and scale the right way. See you next week.