Daniel Metcalf 0:01

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.

Mike Stromsoe 1:10

Hey everybody, welcome back to the Scale Your Insurance Agency podcast. I'm Mike Stromso, one of your hosts and my co-hosts, Daniel Metcalf. Daniel, how are you doing?

Daniel Metcalf 1:18

I'm doing fantastic, Mike. Yourself?

Mike Stromsoe 1:21

Doing well. What a wild, wild week again in the independent insurance agency space.

Daniel Metcalf 1:30

It's what keeps us going. We don't even need coffee anymore, right? This is just what keeps us going.

Mike Stromsoe 1:35

No. I mean, you know, the updates come, you know, minute by minute, and sometimes faster than that with everything going on. But, you know, there's something that's going on out there uh in the industry, and we're finding that as we talk to more and more agents and serve more and more agents in what we do with agency operating systems, that there's a huge contingent that are resisting the future. Right, Daniel?

Daniel Metcalf 2:07

Resisting is a very nice word to put it.

Mike Stromsoe 2:12

So what's your word? We don't hold anything back here.

Daniel Metcalf 2:16

Oh, my word right now is like fighting it. Uh they're they're battling over wanting to make some adjustments based on what what we're dealing with in the market.

Mike Stromsoe 2:28

Yeah, and we were just deep in a conversation uh and helping one of our clients, and that's exactly what's going on. They are fighting upstream like a salmon, right? You know the old story. Uh, salmon, when they swim upstream, um they're fighting the current, right? And that's what's happening in the agency business nowadays. So in this, all of these events going on, we want to make sure that we are in the lead of the industry and letting you know the latest of what the future will hold for you. And what we're gonna talk about may not be the most pleasant news, but we're not here to bring pleasant news. We're here to bring reality. And the reality of the future fight that we will all be in will be to learn how to design, how learn how to design our agency business so that we can maximize its ability to scale and flourish and be valuable into the future. And so the conversation that Daniel and I were having a couple of days ago on this exact subject who's gonna do the work? And we'll take a certain the service team as an example, who's focused on retention and keeping clients. Daniel said, Well, Mike, the question is this who's gonna do the work, right, Daniel? Right. Tell us more about what you you know, your your thoughts and and your heart behind that.

Daniel Metcalf 4:09

Yeah, so the idea is that some of these opportunities are available to us to scale. We might have to look at alternative ways of being able to service our clients. Um and some of them seem scary because they're they're new to us, right? They're new to this, you know, to our industry. However, they're getting they're successfully being used in others, right? And one could argue that even within our own industry, we've been using technology as the who on some of the servicing, whether it's mobile apps that we've given them to service their own accounts, whether it's other types of um applications that that people can go to to service their accounts. This could be a difference between it's not necessarily who to start with, it's what is our process for servicing accounts for each one of the different ways that a service request comes in, what is our process to be able to do that? And then based on the type of client that it is, it might not be the human that is going to service that account all the way through. It might be a combination of technology and a human, or it might be technology all by itself. So the who becomes, right, could also be a what and a who and a what, or just a who. And so that's where we're starting to look at on, you know, as agencies are scaling, as they're looking at how can we, you know, how can we grow our revenues profitably, which are the most profitable clients, which ones bring in the most revenue and the profit, and start segmenting out those clients, it can then start to depend on technology as a way to be able to help us scale and service our clients.

Mike Stromsoe 5:50

I think it's vitally, vital and important. And what I was thinking about as I was listening to you, Daniel, is these self-service kiosks and fast food restaurants. And there's the largest restaurant company on the planet, McDonald's, who has taken this, taken this wholeheartedly into the majority of the restaurants. When you walk in, there's all these self-ordering kiosks, and they're using technology for the orders. And I know people in my family, and I won't mention who, that don't want to deal with that. They want to deal with a human being. So that's the resistance, right? And so as you were passionately talking about this, Daniel, about pushing the service down to the lowest level in the agency business, and that's our message today, right, Daniel? Yep. Who is servicing your clients? We must get ready to have the lowest level or certain clients. Let's just take monoline as an example. Okay, we must get ready to have our monoline clients serviced by non-human people in our agency. And I intentionally let that sit for just a minute because a lot of people, if you were driving, you might have steered towards the side of the road when I said that. Yes, I said that. Is that my favorite thing to say? No. But it's reality in today's market. And and Daniel, we're fighting, we're we're getting people fighting us all the time, right? Right. And everything we're trying to help them with. Not just this subject, but a lot of things that we're saying, you should do, you need to do this. This is the way to your 4X to 9x agency growth. And they're fighting us, right, Daniel? Right. So, yes, that's leadership. Yes, that's decision making. Yes, it's an inner conversation with oh, this is the way we've always done it. We're not willing to change. That's a whole nother topic and a whole nother conversation that you have in the mirror with yourself, and that's important too. But we want to give you this all today. So, what is the first step that you should take to be able to think about operating like this? Well, it's something that a number of our agents that we work with, when we suggested this to them, they took our advice and they did it. And it's simply called client segmentation or tiering. Okay, so it really requires stepping back, looking at your entire book of business, and this is something that I hear Daniel talk about all the time data analysis. Right?

Daniel Metcalf 8:53

Yes.

Mike Stromsoe 8:55

Analyze your data and I identify who are your best, who are your top 20% of clients. If you want to use the AD20 rule, it's a great place to start. Yep. Okay. Make sure that all the characteristics that you want for your clients uh are lined up in that report uh should be by uh premium size, revenue size, number of policies to start. And a simple way that I recommend agencies do it, if you if you don't, if you're not sure, just do it by policy count to start. Anybody that's a monoline client, they are the bottom 20, right? And if they've got two or more policies, they're in that middle 60. And then the the top ones with three or more, they're generally up in that upper upper echelon. So you have triple A, three or more policies, double A, middle 60%, and then bottom 20% or the monolines are the single A's, right? Okay. So start there, just to begin with. And Dano, so if they're gonna think about, and let's predict the agency of the future here a little bit, based on the incredible knowledge and depth of knowledge you have. Those bottom 20% of clients, the monoline clients, who we've asked umpteen times to move their home, we've recommended that they add an umbrella. We see they have boats and other toys. We recommend they move those all over to eliminate the gaps, but they won't do it. Okay. So they're now going to be serviced by non-human agents in the agency, which is technology. What does that look like? If you say blank check. If I can do a blank check, Daniel, here you go, invest, build it.

Daniel Metcalf 10:43

Yeah, I mean that you know, start with uh artificial intelligence, you know, read it, reviewing email boxes, right? Service email boxes, taking the inbound phone calls, like receptionist phone calls, being able to then read and write, you know, read what's going on inside the AMS system as far as what you know, who is this client, what is what is their segmentation with us. It could then redirect them to say, hey, you you need this, you know, this particular item done for you. We have an app for that. Please sign into your app and you can actually request to do that through the application, you know, through the web app or the mobile app, right? Or hey, this is the you know, um leave this information with us. Um I have a couple more pieces of information that I need. Um I'll make sure to get that ordered for you, and we'll we'll let you know, right? And the AI just goes and orders it from wherever it needs to get ordered for, or or it um you know, forwards them onto a carrier phone number or support phone number, something, whatever that might look like. But whatever your workflow would be for them, right? Having a human doing all that, we would map it where artificial intelligence would just map them all the way through it. A lot of agencies that I've talked to already have some type of self-servicing application um that comes from their carrier, comes to their organization that just doesn't get used, right? Because they just introduce it one time to you know everybody instead of you know kind of uh filtering it all through that type of segmentation.

Mike Stromsoe 12:10

So you brought up a very interesting point and it perked a thought in my mind. You brought up the word carrier. And just for everybody out there, the carriers have been working on this for a period of time because they have the money to do so. And so, you know, there's a there's a contingent of the carriers out there who are working on direct-to-consumer models without you. However, be aware that still a large majority of the consumers they want that independent insurance agent relationship, they want to be served by the local independent insurance agent who's part of the community, who lives and works in the community, and they're not interested in that. All the carriers think that they are, but not yet. So that's why we're having this conversation today. Because we want you to be aware of what the future holds, and we want you to get set up to be able to overcome that. So, Daniel, back to all of those things being housed in my agency to be able to serve these people. You mentioned all the tools, but what ties it all together? Is it an agentic bot? I mean, what is what does that look like?

Daniel Metcalf 13:34

Yeah, it's an agentic workflow as we'll tie it all together, right? So there are tools out there that already have workflows attached, whether that's already inside their, you know, we'd have to look at their different tech sec, right? So maybe there's a gentic tools already in their CRM or their AMS system that would allow some of these to happen. Maybe there's it's a third-party tool that we have to attach in order to run those different types of scenarios. Um and I know we all want to have a technology that binds it all together, but without a workflow, without a standing operating procedure, without knowing what those steps are, it's it's tough to say what those is going to tie it all together. But let's just pretend for a second that we have the workflows. Then yes, you could look at multiple options, whether that's uh, you know, some people are looking at other third parties like Cloud or OpenAI or things within HubSpot, right? So people are taking it upon themselves to be able to build out their agentic workflows. There are third-party tools that already exist out there that have already started to build out these uh agentic workflows for servicing your clients. Um, and some on the producer side too. All of these are are available to you. We just need to find out what's your system, which ones are gonna glue it all together, and where and and how are we gonna make sure that the segmented audience is taken care of.

Mike Stromsoe 14:47

I'm really starting to understand why there's a fight going on. And I'm gonna be completely vulnerable and real here. Because even though I've been working on a computer since the 1980s when they first came out and landed on my desk, I'm more of an executor mentality. I mean, I was locked and loaded to attract and convert, attract and convert, attract and convert, attract and convert, and I just simply ran the program to attract and convert. Okay. So what I'm hearing Daniel say, damn it, Daniel. Every situation is unique, right? And how the automation technology powered by AI is applied to a certain agency situation will be unique. Just like every independent insurance agency is unique. Is that accurate?

Daniel Metcalf 15:50

Yeah, it's accurate to a point of like, look, if you've been in business for 20 years and you say, hey, I want to start adding artificial intelligence automation to all my, you know, to my agency, your standing operating procedures might not have been designed to do that, right? Obviously, because it's been 20 years, right? But if you're gonna start this from scratch and you're like, hey, this is how I want to operate, and this is how we're gonna run these scenarios, and it's always AI first or AI forward, as we like to say, right? It's okay, how would AI solve this over how to how you know how we do it manually? That's the difference, right? And that's that's where the the the fight's coming in in some of my in some instances is they're they're fighting the technology because they don't want to have don't want to have to deal with the technology and don't have to you know change. Some of it is that we've been doing things this way for so long. We didn't we didn't anticipate artificial intelligence and automation being here. So the idea of moving, right, that change is becoming difficult because we just want to turn it on and have it work.

SPEAKER_02 16:52

Uh-huh. Right? Gratification.

Daniel Metcalf 16:55

Right. The third fight is like, hey, is my uh is my customer gonna accept this? Is my customer still gonna see value in me if I do this? If I, you know, what's the what's the perceived value to the customers on doing this? Right? Could they cause negative connotation? Um all of the all three scenarios are valid. And they're all real. But if we don't start changing our perception that those that start using artificial intelligence are the ones that are gonna win, they're the ones that are gonna continue on, they're the ones that continue to grow versus the ones that don't even try. Because you could still have three agencies in the same, let's call it in the same community, one who's fully using AI, one that's kind of using AI, and one that's not, I'm still saying the two that are just at least kind of and are are gonna are gonna win the rest of the customers of the one that doesn't.

SPEAKER_02 17:48

That's correct.

Daniel Metcalf 17:49

Okay. If we want to get even beyond that, if you say, hey, there's a carrier who's gonna try to replicate what you're doing using artificial intelligence with your relationships, I'm still today saying those agencies that are doing the combination of the people and the AI are the ones that are still gonna keep the competition out. And they could start eating other people agencies lunches that aren't using artificial intelligence and grow that way. It's just making that commitment to do it.

Mike Stromsoe 18:23

Yeah, and speaking of commitment, I I think it's a commitment by agency ownership and leadership back to not only who is servicing your client, but who you want to serve. Right. Because last check, Daniel, we're not getting any younger. Right?

Daniel Metcalf 18:44

Well, I haven't found that, yeah, have not found that fountain of youth yet either, no.

Mike Stromsoe 18:49

Yeah, so I mean, so society as a whole, I mean, the up-and-coming generations, you know, I've got the visual right here of the seven generations, and uh, I love this visual. Sorry, I moved that around. I mean, everything from the greatest and silent generation to the boomers to the Gen X to the millennials to the Gen Z, and the latest generation, Gen Alpha, if you're not aware of it, look it up. Okay, they are all in Gen Alpha, Gen Z, Millennials, Gen X, and some boomers, but they're all ingrained in technology. Many of them brought up on technology, and it's what they're used to using, and so one of the greatest tips that I got in my insurance career, it was actually a personal situation that I blended into my insurance career, and it was a simple thought meet them where they are, meet them where they are. And if you don't learn to start meeting them where they are, Daniel, would you suggest in the future more and more agencies are going to start losing?

Daniel Metcalf 20:12

Yeah, I I I fully believe that we need to start meeting people where they are, what they expect, right? Their expectation, their perception is their reality, and that's you know, when you have you know, when you have customers, that's the expectation you have to follow meet to their expectations. Does that mean that we have to throw away every single thing that we've done up to this point and just walk away from it? No. We have but we have to start getting to the reality that this is where these are the expectations are changing. These tools are changing people's expectations, both positively and negatively, and we have to figure out who we want to serve and how we want to serve them.

SPEAKER_02 20:49

Yep.

Daniel Metcalf 20:50

And do we want to start investing in artificial intelligence in order to be a small and medium-sized business of the future?

Mike Stromsoe 20:59

Well, again, we're gonna take the lead on this because Daniel just said, do we want to invest? I'm gonna shift that slightly and say you need to invest. Right? Would you agree, Daniel?

Daniel Metcalf 21:12

Yes. I at the very bare minimum, even if you just start, I mean, we we went through this where I think uh 80% of the last audience that we talked to, Mike, they all already had used Chat GPT or have a or or a uh or Claude on the pro account or plus account, whatever that $20 paid account is. So many people are already using that. Now it's not investing in the $20 a month, it's investing in the time, the energy, the resources, the change management, the looking at all of our workflows, the AI forward mindset. Like that is the investment that we're asking to make, right? Um, starting to prepare yourself in your budgets to what are we going to spend on artificial intelligence and automation next year? Um, you know, how are we gonna start to attribute the success of those different tools?

Mike Stromsoe 22:00

Yeah. So again, just to make sure that you have an action plan from this podcast, which is always our goal, right? Go back and if you haven't done it, segment your clients or tier your clients, it's called in some parts of the country. And if you have, when is the last time you revisited it? And if you haven't, revisit it to make sure that it's accurate based on the criteria that you want and use the 20, 80-20 rule as a thought process because there's a good chance that the top 20% of your clients are generating up to 80% of your revenue. Okay. And so you'll find that when you run your list. The middle 60% is your bread and butter, right? They're keeping the bills paid and they're giving you operating revenue, et cetera, et cetera. And then there's that bottom 20%, right? And so I loved what Daniel just said. AI forward thinking. And I heard you say this recently, Daniel. If you're doing things manually, you need to stop. What are we gonna how are we gonna set this up? How are we gonna set this workflow up? As an example. That's a bad example. If we're gonna do this in the agency, how are we gonna get it done? Everybody leans, especially if you've been around for a while, to a manual process. Stop that thinking. Start thinking that how can we automate this first? And then if you cannot automate it somehow, then you think manual. Correct, Daniel?

Daniel Metcalf 23:35

Yeah, especially there's you know, you don't want to automate anything that is going to affect the relationships of your top-tier clients, right? Uh how you're gonna distribute, uh making insurance decisions, um, you know, licensed insurance decisions, things like that. So there are there are exceptions. All we're saying is that for non, you know, some of those non-licensed service requests, you know, changing my VIN number, you know, I add a new vehicle, you know, I'm the first thing top of my head for a monoline auto-only customer, I mean, that can just be done through artificial intelligence automation. Especially, especially if you segment to say, hey, we've already asked about your home. We've asked about what we've asked, we've asked, we've asked, we've asked. You can still ask using technology, still ask. But especially if they haven't wanted to progress within your agency either.

Mike Stromsoe 24:29

Daniel, I haven't told you this. I was working with an agency last week to this point, ladies and gentlemen. And I remember asking them a question after they shared this information with me, and I closed my jaw because my I'm sure my mouth is hanging wide open. They did the math. This agency, pretty niche and commercial, wanting to completely get rid of personal lines, wanting to completely move in the direction of commercial niche commercial, did the work. Their top 83% of their revenue, 83% of their revenue is generated by their top 23% of their clients. Here's a bigger kicker. 91% of their revenue, 91% is generated by their top 50% of their customers. Now, keep in mind this is a an independent insurance agency that is over a million dollars in revenue, but not up to the 3 million yet, but they're getting there very, very quickly, right? But they've they've already set the thought process, right? And so I said to them, I said, all right, great. We're gonna keep those top 50% of clients that generate 91% of your revenue. What are we gonna do with the bottom 9%?

SPEAKER_02 26:11

That's exactly what I heard, Daniel. Yeah, silence.

Mike Stromsoe 26:14

Silence.

SPEAKER_02 26:15

Yeah.

Mike Stromsoe 26:16

So it's real out there, ladies and gentlemen. And so this is the stuff that we need to figure out together. Because it's what the future holds. And and the suggestion was all right, let's figure out how we can automate it first, that nine percent, right? And if we can't do it somehow, then we'll figure out who's gonna do it. Because it should not be your licensed highest best compensated people, they should be handling those top ninety-one percent of clients.

Daniel Metcalf 26:58

Well, yeah, and that nine percent then must not be profitable if we're using I misspoke.

Mike Stromsoe 27:03

Top 50% of clients that generate 91% of the revenue. Go ahead.

Daniel Metcalf 27:06

Yep. So if if top 50% or 50% of the clients make up 91%, so you're saying the other 50% make up 9%.

Mike Stromsoe 27:18

9%, yes.

Daniel Metcalf 27:19

Right. So that would also tell you then then it wouldn't be profitable because of the amount of people it would have to take in order to manage that that 50%.

Mike Stromsoe 27:28

Yep.

SPEAKER_02 27:29

So you'd have to look at it from a standpoint of can we use technology inexpensively enough to service that 50% in order to make it profitable or a combination of someone and technology to make it profitable. And then what if it isn't? Then that's that's where the the next conversation is to have, correct?

Daniel Metcalf 27:57

Yeah, and the same as looking at, you know, one eventually gets to the 95.5. That's the Dan Martell rule, right? If you want to go look it up 95.5, that you're gonna figure out that five percent of your clients make up 95% of your revenue. Your profitable revenue.

SPEAKER_02 28:16

Correct.

Daniel Metcalf 28:17

And then what are you going to do in order to increase you either have to increase your you know, and insurance is tough because you can't increase your rates. Right? You don't really control the rates and right. So in that model Well, I understand. Okay. In general.

Mike Stromsoe 28:34

Yes, I get it.

Daniel Metcalf 28:35

Yeah. Whereas some in other industries, the first thing that says, well, then you gotta raise your rates, right? You gotta raise your prices. Yeah. In ours, it's you have to go after a bigger pool or a more or add more to the wall to the wall chair. Yeah. So that at least gives you that focus. At least gives you that that that true north of like, hey, here's our 95.5. This isn't good enough. That you know, this 5% is not good enough to where we want to be. So what do we have to do differently in order to make our five, our our 95-5 where we want it to be?

SPEAKER_02 29:07

That gives you the focus. I love that.

Mike Stromsoe 29:12

That's a great great way to wrap this up, Daniel. It's been an exciting conversation. I mean, um and and to point everybody. So think about this for your future. Like Daniel so eloquently says, who will be serving your clients in the future? It's a real thought because perception is reality. And, you know, if we want to flourish and scale and grow into the future profitably, with the proper margins in place based on what they are receiving for that service, we've got to design the agency properly. Because it's already been done and being done by larger insurance organizations out there. And we don't want you left behind. Who's servicing your clients or your customers? Any last thoughts to add, Dana?

Daniel Metcalf 30:18

I'm just super excited. The fact that these conversations are starting to be had, that there's the tough ones, the easy ones, right? Um that at least we're having the conversation and starting to get ahead of it. Where a lot of times it was just a lot of theory. Now we're actually seeing action, and that that that bodes well for our industry.

Mike Stromsoe 30:37

Yeah, for sure. And there will always be those top 20% who are going to be at the lead and they're taking action on this, massive action, and they have been taking massive action for the last couple of years. Well, kudos to them. But please, don't be one of the ones who doesn't. Don't put your head in the sand. Don't sit there with your hands sitting on your hands or anything like that. Be the one who takes the lead and does what needs to be done. Because we want you to flourish. We want you to scale into the future. That's why this is the Scale Your Insurance Agency Podcast. So thank you on behalf of Daniel Metcalf. Daniel, great job. Thank you, sir. Thank you too, Mike. Our producer, Andrea Wyatt, I am Mike Strom. So thank you for joining us on this episode of the Scale Your Insurance Agency Podcast. And if you heard something here that perked an interest in you and you want to have a deeper conversation about that, we'd love to connect with you on an Onyx scaling session. There is a link to join us to set that appointment in the show notes. Take action right now. Click that link. Let's make sure that we get in touch so that we can have a deep have a deeper conversation and talk about the future of who is servicing your clients. Only action will get you to where you want to go. Have a great week ahead, everybody. We'll see you on the next episode. Take care, Danny. Yep, you too, Mike.

Daniel Metcalf 32:03

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.