--:-- Ryan Hanley: In a crude laboratory in the basement of his home. Hello everyone and welcome back to the show. Today we have Justin Sloan on the podcast. Justin is the principal agent and owner at BSP Insurance in Connecticut.
--:-- Ryan Hanley: If you are part of the IOA group, then I'm sure you're very familiar with Justin and the work that he does and his level of professionalism. I first met Justin in person out in San Diego at last year's Innovate event. We just became fast friends, having similar viewpoints on the business.
--:-- Ryan Hanley: Justin has a deep history in insurance, and he's told that on a lot of other shows. So we don't necessarily get into his backstory as much. I just wanted to wrap the business with him. What was going on? What tools is he using? What is he seeing coming down the pipe? How is he handling running that business? It's a tremendous conversation. We have a ton of fun. I think you're going to love this one.
--:-- Ryan Hanley: Before we get there, I want to give a big shout out to today's sponsor, Agency VA. If you're looking to scale your business, if you're looking for horsepower, Agency VA is the tool to help you get that done. The professionals at Agency VA are well-trained, well-managed. They show up. They're consistent.
--:-- Ryan Hanley: My VA that I have, I get four hours a day of work from him. His name's Nat. He works extremely hard. Anytime I build out a loom for him, I show him how I want a process done, he goes through it a few times and then he picks it up pretty quick. He asks me if he has questions, handles a lot of different things for the agency now and has become an indispensable part of helping me get my business to the next level.
--:-- Ryan Hanley: So if you're looking for horsepower, if you're looking for human capital that is relatively inexpensive versus having to hire these people off the streets here in America, if you're looking for people who are conscientious, that enjoy doing repeated action tasks, who are good at that task-oriented work, AgencyVA is the place. Go to agencyva.com.
--:-- Ryan Hanley: I also want to give a quick shout out to my guy, Chris Langell at Advisor Evolved. Chris is taking the Advisor Evolved brand as well as the local traffic marketing brand to a whole other level this year. The work that dude does, he's one of the most unheralded people in our industry. The websites he's put together, the digital properties, the digital traffic that he's helped create for agents across this country is absolutely unbelievable.
--:-- Ryan Hanley: If you need a website, if you need digital traffic, specifically local digital traffic, go to Advisor Evolved, go to Local Traffic Marketing. Chris and Nate Bunty, the work that he's doing there as well. Go to advisorevolved.com, localtrafficmarketing.com. They will get you hooked up. No questions asked. They're the best in the business. There's no other options. If you're using another website provider, understand that you are making a tactical decision to have a lesser website.
--:-- Ryan Hanley: All right, let's get on to Justin Sloan. There he is.
--:-- Justin Sloan: Yeah, what's up man? What's up buddy? Just living the dream here. Living the dream. Trying to at least.
--:-- Ryan Hanley: Look at you, all your plaques in the background. I got Hanover Guard, New York Central Mutual is the other one. What are they good at?
--:-- Justin Sloan: They're domestic here in New York and they mostly do home, auto, umbrella, renters. They have a commercial product which they're starting to roll out. It's just BOPs, it's still a little light, but in general it's coming along for main street stuff. You put them in New York Central, you'll have them there forever.
--:-- Ryan Hanley: Are they true mutual? Like the dividend check and all that?
--:-- Justin Sloan: They don't pay a dividend. They don't do a dividend check, but they function like a true mutual in every other way. Their rates are so stable, it's insane. Their rates just never change. They're a good company to have in your arsenal.
--:-- Ryan Hanley: Just being in New York, I mean, they're the sixth largest writer of auto insurance in the state of New York.
--:-- Justin Sloan: Yeah. They're not like a little baby company. They only write in New York, but in New York, they're a pretty major player.
--:-- Ryan Hanley: New York's an odd state in that way. We have a lot of mutuals and domestics. A lot of the big guys just don't really play here, or play in such a small way. I hear these stories about Texas where people are like, "I'll just BOR it." Their BOR game is so tight. I'm like, I'd have to have 570 appointments to play the BOR game here. It just doesn't work the same way. What happens when they have Mid-State Mutual? I'm going to go get a Mid-State Mutual appointment just to write that account? I can't do that. It's just a different ball game.
--:-- Justin Sloan: So what's going on with you, dude?
--:-- Ryan Hanley: Nothing man, just living the dream. We're actually finally implementing the EOS system in our organization.
--:-- Justin Sloan: I'm mildly familiar. What is EOS? I've heard Paradiso talk about it a lot.
--:-- Ryan Hanley: It's the Entrepreneurial Operating System. All relatively large organizations that you probably have some sort of product in your house — Apple, McDonald's — they all operate on this platform. It's a way of structuring your organization so that you, Ryan Hanley, and me, Justin Sloan, as owners, aren't so involved in wearing 12 different hats.
--:-- Ryan Hanley: In the EOS model, you have a visionary at the top, which is usually a CEO or someone of high level. And then you have an integrator. Those are two separate positions. A visionary tries to look forward for the organization. The integrator is somebody that has a final say over all decisions within the organization. Then you have your typical hierarchy.
--:-- Ryan Hanley: My role in BSP right now under this model is I run sales and marketing. Then there's another bucket of client experience. Technology is its own little thing. Chris is going to run that piece. We have an HR type bucket. You see this in all organizations, but behind the scenes, there's a lot more that goes into it. It helps you hit benchmarks and make sure things get done.
--:-- Ryan Hanley: The biggest problem in any organization is, "Hey Ryan, we should redo our website. It's kind of outdated." You kick that can down the road, you try out a couple of different vendors, and nothing gets done. This means you have quarterly rocks where you have to hit certain things, get it done. The micromanage piece is the scorecard, the KPIs.
--:-- Ryan Hanley: I'm trying to take a 400-page book and tell you in like... no, it's fine. I definitely recommend reading it. *Traction* is the name of the book. He also wrote *Good to Great*, which is a little bit drier, but it's a pretty cool book. There's a whole series of books that goes with it.
--:-- Ryan Hanley: It's weekly meetings, Level 10 meetings, 90 minutes. You can't miss it — the meetings still go on with or without you. You have quarterly rocks, which are usually four things that each person at the head of each department is responsible for. At the end of the year, you have larger goals. For me, it's focused on sales — premium, commissions, bringing on new producers. My rocks for this quarter, for example, would be two new producers. I got one here already. I'm courting a guy right now.
--:-- Ryan Hanley: It's pretty cool. It definitely is a game changer. People that implement it and actually execute on it, the year-over-year growth is just exponentially greater compared to what they were doing previous to it. Chris has implemented it in his organization. I don't know if they started it like a year ago, but I think they started it halfway into the year. BSP is doing it effective now. It's a little premature to talk about it now, but if you see us growing 30 new employees over the next year, you can tell it's working.
--:-- Justin Sloan: That's awesome, man. I think there's a part of me that says the system is less important than having the system. There's so many systems and there's probably a good argument for all of them. I've heard nothing but the best of the best use EOS, and there's a reason for it. That system works. If you follow it, you grow. I've heard that from people in our industry, people in other industries. I've heard it across the board. I have no doubt that you're doing the right thing.
--:-- Justin Sloan: A big part of me says if you don't have a system and you don't have goals, where the heck are you going? That was probably 2020 for me at Rogue. It was like, "Oh my God, just flailing." If I had to put a word on 2020, why would you describe Rogue Risk 2020? I'd just put "flailing" underneath.
--:-- Justin Sloan: I've been following you before we started. I think I physically met you out in San Diego last year in January, right around this time last year. Obviously the pandemic wasn't a thing back then. We didn't know 30 days, maybe 60 days later it was. But you were gung-ho about commercial and this and that. It was interesting watching you and your organization and how you pivoted and adapted, because that's what you have to do.
--:-- Justin Sloan: A lot of industries — rest in peace to the restaurant industry right now, I feel bad for them. But at the end of the day, you evolved. You went after homeowners and personal lines and building up that book. I think it's a blessing in disguise for you and your organization. We always joke, me and other business owners, about David Carruthers. He's a great example. When I met him out in Vegas, he had no personal lines. He was middle market commercial. To this day, he kind of loves-hates that he has that book of business, but it's a good foundation. It's stable. It's always going to be there.
--:-- Justin Sloan: I know for him, maybe his agency isn't set up to support that bandwidth and that volume of problems. But I think all organizations need to not be a one-trick pony anymore. Going after middle market commercial in the middle of a pandemic where nobody wants to meet you face to face, you can't market to them easily unless you're doing it digitally, cold calling, snail mail. The biggest relationships you're going to get are face-to-face. Zoom's great and everything, but there's nothing like going to a happy hour and a networking event and staying there until 9 or 10 o'clock at night because you just got the CEO of a 500-employee organization in love with you, wanting to hear more about Rogue Risk 365. That's your dream.
--:-- Ryan Hanley: I think you're 100% right. What is it? The most overused Mike Tyson quote: "Everyone's got a plan until they get punched in the mouth." I think grit, perseverance, dedication are undeniably important. At the same time, you have to know when dogged determination is actually pointing you in the wrong direction.
--:-- Ryan Hanley: One of the things that has helped me be successful in my career is that I could give two shits about saying, "Hey, I was wrong about this," or "This isn't working," and adjusting course. I just don't care. I've had people say, "Geez Ryan, you were on Infusionsoft, then you went to Agency Zoom, and now you're on Better Agency. Why don't you just pick a CRM?" I'm like, "Because I'm trying to figure out what works for me."
--:-- Ryan Hanley: Infusionsoft and Agency Zoom are perfectly fine tools. I chose Better Agency because it works for me in this time and what I'm trying to do. I don't care about being wrong or being considered someone who switches services. It doesn't matter. What we ultimately have to get to is: what do you want your business to be? How do you make money? That's really why we're doing this to begin with. You have to know when to adjust course. It's not easy, but you have to.
--:-- Justin Sloan: As you're aware, in the Protege group, you're one of the coaches. I'm pivoting. Everybody knows me through IOA and through the industry. I'm vocal about it with my real estate investor niche. We're actually partnering up with a local RIA here in Connecticut to build out an insurance agency inside the RIA. The one in Long Island is going wildly successful, so they're mirroring that.
--:-- Justin Sloan: What we're really focusing on this year is what opportunities can we go after that are currently in our wheelhouse that we're not actively exploiting. For example, our sister company, Bon Giovanni Insurance and Financial, does group benefits. Their groups are big — 100-plus lives inside these groups, large organizations that we're just not going after. It's not that we don't have the resources, it's that we never actively pursued them from the property and casualty piece.
--:-- Justin Sloan: Most of these clients have middle market type agencies — the USIs, the Brown and Browns, the big players. Why can't we go after that? Do we have a value proposition that mirrors what they're offering? The answer is no at this point in time. So that's why I took that leap. You want to license Rogue Risk 365? We can make that deal happen right here over the phone for one low price of $499.
--:-- Justin Sloan: That's kind of why I jumped this year. I saw what David was doing and I took that leap. My background, as you might be aware, is small commercial. That's what I did. I was a wholesaler at an ENS shop here in Connecticut. My average premium that I was underwriting was $3,500 to $4,000. It wasn't big ticket items. No one really versed you or taught you that when you're playing in the middle market space, you can't just sell the insurance product. You have to sell more than that.
--:-- Justin Sloan: We provide value on the home and auto and the side-by-side analysis and all that stuff, but what real value are you bringing to these people? To your point earlier about going from Infusionsoft to here to here, you're trying to find a solution not necessarily for your agency but for that overall holistic customer experience. We went through that as well. We started off with Excel spreadsheets, then we went over to Capsule 5, and now we're flirting around with a couple different ideas. Neon is an option as well.
--:-- Justin Sloan: At the end of the day, agencies like yours and mine that are very nimble, relatively newer, can do things like that. What people say is neither here nor there. You've got to do what's best for you, your organization, and most importantly, your clients, because that's the customer experience. If it's good and great, you're awesome. If it's subpar, you're going to get passed up to some other Joe Schmo down the street.
--:-- Justin Sloan: I like the fact that you're trying different things because that shows that you care. If you didn't care, you would have stuck with Infusionsoft and adapted to that product. Maybe it's not the best thing for you.
--:-- Ryan Hanley: The truth is, Infusionsoft was a really good tool. It was too big for me at the time. One of the early mistakes that I made was because I was so aware of all the products in the market, I moved faster than an agency of my size should. I also did not expect that I would have two months of pandemic before I'd sell my first policy. It's really difficult looking at an Infusionsoft build out in April of 2020 when nothing is happening and you're paying whatever I was paying for it. You're just like, "Oh my God, what's going on?" Then you're like, "I just want something easy."
--:-- Ryan Hanley: My point in saying all that is we're all going to have different seasons. There's going to be so many different seasons. People think it's just like, "Oh, your buildup season, then you know who you are, then your twilight." It's like, no. You could be a different company every six months because you adjust and change, the economy changes, your clients change, your partners and vendors change.
--:-- Ryan Hanley: Our industry tends to put so much emphasis on perceived consistency. If we're with the same agency management system for 20 years, that shows consistency. If we're with this vendor for this many years, it shows consistency and loyalty. I don't think consistency and loyalty are unimportant, but we just don't want them to be at the detriment to the experience you're providing your customers. If your loyalty to a vendor or to a setup is causing you to not be able to deliver on your customer experience promise, that's more important than what product you're on.
--:-- Justin Sloan: Wholeheartedly. You have to adapt. Right now, there's a lot of movement going on in our industry with the direct writers, the Lemonades and the Hippos. We actually just got appointed with Hippo. I didn't even know they were appointing independent agencies until I saw someone mention it. Lemonade reached out, but we passed on that opportunity.
--:-- Justin Sloan: We just got off a call with a local captive here. My buddy's a newer producer in the agency. I told him, "Listen, I think you could be wildly successful in the agency. What you need to do is call every single State Farm, Farmers, Allstate, all the captives within 20 square miles and say, 'Hey, when you have a prospect and you can't help them out, I'm your guy. If you write their home and you can't help them on the auto, just be that guy.'"
--:-- Justin Sloan: I've seen this on other podcasts. I think it was even on your podcast recently, I forget who was on, but you were talking about State Farm or Farmers and how they're using celebrities to build customer loyalty. That's so backwards. Why not invest that money in the technology to make your platform even stronger and better? Maybe they have certain budgets where they have to spend $10 million on some kind of endorsement. But I think that's a detriment to the consumer, the people that are actually using the product. That's great for brand awareness. You can have the strongest, coolest brand in the world, but if your product sucks — I'm not saying their product sucks, but could it be better?
--:-- Justin Sloan: Investing in that R&D and product development, in a few years you're going to see a few people sitting at the top. There's going to be billions and billions of dollars shifting from one company to the one that actually invested in that technology, that customer experience, that UX. Right now, if I want to get pet insurance, the first thing that comes to mind is Lemonade. I've never even thought about pet insurance before this. I have a dog. The fact that they just launched that product six months ago and the fact that I think of Lemonade for pet insurance is mind-blowing. That's how strong that brand is.
--:-- Justin Sloan: They're not using some famous celebrity to pitch their product. They're using very good targeted advertising based on demographics. I think that's where everything's headed. A lot of the companies that we even represent — Travelers, Progressive — they are investing in this, but I think they could be doing more. They could spend more time on the integration between the data that we have, a lot of the unstructured data like the phone calls that we take in every day, and using that to their advantage, Travelers, the consumer, and us as the independent agent. I know Neon's been doing that and working on that, and some other vendors like Donna.
--:-- Justin Sloan: I think there's going to be a huge change pretty quickly over the next few years. You're going to see some money move around very quickly from some of these old behemoth companies that have been around 100-plus years to some of these startup tech companies, not even insurance companies.
--:-- Ryan Hanley: The opportunity that the average independent agency has is based in large part around the lethargy of the larger players in our industry. The scary thing that I think about when I think about what are the real vulnerabilities of this business that I'm creating — how could I be three years in and just get wiped out? What would make that possible? There are obviously internal things, things with employees. I could do something illegal. Those are all possibilities, hopefully they won't happen.
--:-- Ryan Hanley: From an external standpoint, one of the major things is if any of these larger companies — say anybody in the top 100 — if they ever actually decided to play in the smaller middle market. Middle market to you and me is not necessarily middle market to anyone in the top 100 or even the top 250. We're talking about two different things. If they ever actually wanted to play in that space and invested the time and technology to do it, which wouldn't be tremendously hard since most of the stuff is already plug and play off the shelf or will be within six months, how do you compete?
--:-- Ryan Hanley: I get that you can still write your family and people in your local market. But in terms of really scaling and growing that two to three million revenue agency that your grandfather or your father built, that's going to become incredibly difficult to do if that downward pressure ever comes. How do you defend against that? You have to be that company first. So many agents are unwilling to do those things. Thankfully, we live in America and you get to run your business however you want to run it.
--:-- Ryan Hanley: These type of tools — Donna, Neon, there are others — but I don't see any of them really being in the data, being implementable. The one outside of Neon that I'm the most excited about is Donna, especially after we saw that demo at Paradiso and Tom Larson's thing. That's when I really got hooked. I had seen a demo before, but after seeing it live and getting to talk to those guys, that's when I became very interested in it. That is the kind of insights that allow you to scale your business in a way that only companies with tens of millions in investment capital can do right now. All of a sudden, you and I have that capability at our fingertips.
--:-- Justin Sloan: To your point, two things. Number one, going back to my original point, you can't be a one-trick pony anymore. You have to have multiple product offerings, or at least have the capability to do that. If all of a sudden in the middle market, there's a carrier that has some great AI and data scraping and they're killing it in the middle market on X industry or whatever vertical, if there's somebody in there that has a niche that's doing it and doesn't have access to that, they're screwed.
--:-- Justin Sloan: I always preach niches. I love niches, but you can't just have one. You can't just sell home and auto. You have to divest. You have to diversify your portfolio.
--:-- Justin Sloan: The other point, talking about Donna and stuff like that. I saw the product a while back. It's come a long way from when I first saw it. The biggest problem in a lot of organizations, we were talking about this earlier, is transparency. One of the biggest problems that I experienced in my organization — I'm not in the weeds every day on accounts. I try not to be as much as possible. I let the team do their own thing. But doing an NPS score or just gauging the temperature is tough to do. Donna does solve that problem.
--:-- Justin Sloan: Once that's implemented properly, we're going to see higher renewal retentions. We were talking about growth and agencies. Just being able to see the transparency of what your clients are experiencing and feeling is going to be the wave of the future. Someone buys a policy from me, I save them $500, they're happy go lucky. I get a glowing five-star review. They refer their cousin John over to me. Then a month later, the insurance company screws up the billing and sends an AP endorsement for a couple hundred bucks. Someone at the bottom of my organization that processes payments just moves that paper along. That person can be very upset with my organization 45 days later, and I'll never know it. Next year they're leaving out the back door because no one ever addressed that issue and they just paid the bill.
--:-- Justin Sloan: The Donnas of the world, the Neons of the world — that's where everything's shifting. Being able to expose that is greatly going to help your agency, my agency, all the agents, those technology vendors that are willing to provide that as a resource to us. Right now, I know what's going on in my agency, but I can't tell you with the click of a button without using something like that what's going on.
--:-- Justin Sloan: Agencies that don't adopt that technology — and I was saying it about the companies before, but even at the agency level — those are going to be the types of agencies that get bought out for two times multiples. They're complacent, they're lethargic, they're fat and happy. Then all of a sudden, you got the Ryan Hanleys of the world coming in and cleaning them up. You'll be able to grow that both organically, renewal retention, cross referrals, et cetera. A lot of opportunity out there.
--:-- Ryan Hanley: I think just being local too is another huge vulnerability. I know there are a lot of agents listening to this that probably would highly disagree with me. I think local for them is probably one of their strongest value propositions. I don't mean this as a negative, but I can drop into anyone's backyard tomorrow. I can get in front of them when they're watching TV. I can get in front of them when they're on Facebook or whatever social network, YouTube.
--:-- Ryan Hanley: You can drop in front of them with mail. You can call them on the phone. No one cares. You know what I haven't had at Rogue in my whatever nine months? I haven't had anyone want to meet with me in person. So, I guess that's another place that I see huge vulnerability: being local only. It doesn't mean local can't be part of it, and I certainly think that delivering local service is important. I do think that caring, being compassionate, Zappos-style service is valuable. But being exclusively local is a huge vulnerability.
--:-- Justin Sloan: When we first started up, we piggybacked Paradiso's agency because he has a FedEx program and he's in almost every state. So we were able to be a national player out of the gates. I kind of piggybacked that very early on because when I started going into the real estate investor niche, investors go where the money is. Just because they're located in Connecticut doesn't mean they're only investors there. A lot of them have properties down in Florida, down in the Gulf.
--:-- Justin Sloan: I literally just wrote a deal in Gulf Shores, Alabama. He's a client of mine here in Connecticut. He works at one of the big insurance companies. I wrote his personal lines, did a great job. I reached out to Chris Green, he helped me with the flood insurance. We did it competitively. I wrote the fire with one of my in-house London programs. I beat out a local Alabama independent agent that had a hundred plus five-star reviews. It doesn't matter that I'm located in Connecticut. He even went out of his way to call someone down there. The fact that he still went with me — yes, my price was better and my product was better — but he didn't care where I'm located. Nobody cares anymore.
--:-- Justin Sloan: Logistically speaking, I could jump into California tomorrow and start writing profitable business. Granted, our expertise isn't there for quake and fire lines, but you could pivot and have a specialist. If your top three reasons someone should do business with you are geographic, you need to find another reason. Zoom, video proposals, cell phones, FaceTime — the whole boundary game is old news.
--:-- Justin Sloan: I definitely see growth for our agency on a national level this year. We mainly focus in the Northeast, but we get a lot of opportunities outside that. I have a network of real estate investor insurance specialists like Jeremy Goodrich at Shine, James Jenkins, and others. We pass stuff behind the scenes that nobody sees because we know it's better suited for them. Even though I can do a deal in Texas, it doesn't make sense for me to put resources on that.
--:-- Ryan Hanley: Because of the YouTube stuff I do, I get half a dozen to a dozen leads from states I don't write in every week. I pass those out to people as much as I can because it's the right thing to do. I've thought through Indium, the network I'm part of, I could write a lot of those accounts. They have the ability to write on their paper and I'd just be a sub-producer. But there's part of me that wonders: are you really helping the agency and doing what's right by the person?
--:-- Ryan Hanley: If you build out strategically, there's nothing I can't do for someone in Buffalo, Rochester, or Syracuse. These are towns that traditionally would be completely out of reach. New York City and Long Island are a different kind of space for me. But Vermont — I checked the other day, 31% of the premium in this agency comes from Vermont. That's crazy. I've tapped into accounts with second businesses or second homes there. I'm directly appointed in Vermont with all my carriers. Not one of those people cares that I'm in a completely different state.
--:-- Ryan Hanley: I think we've beat this point up, but it's important. In this exercise of thinking about major vulnerabilities: not knowing what's going on inside your agency — that's where something like a Donna or Neon comes in. Holding on to local as a primary value proposition is another vulnerability. You brought up valuation, and this is the part that makes me nervous for people. I think the peak in agency valuation is here. There's almost no way interest rates don't start going up, and the moment they do, valuations will come down.
--:-- Ryan Hanley: I've already heard from valuation experts that based on your agency's makeup, its technology, the type of data you have, how much information you have, how it's stored, where it's stored — these things were theory that they would impact valuation. I've started to hear rumblings that they actually are going to impact valuation. From your standpoint, as you look at acquisition as a way to grow, talk to me about that. If you walk into an agency with a book you want, but it's inside Applied TAM and you can't get at the information without a $10,000 extraction fee, is that impacting how much you're willing to offer?
--:-- Justin Sloan: Not necessarily. We're going more organic this year on the merger side. A financial advisor a couple towns over has been kicking the can around for three to four years about doing an independent insurance agency. He exhausted every outlet. We went through two or three rounds of interviews and he said we're the right fit. We're not looking too aggressively into agency acquisitions this year. If something falls in my lap or I catch wind from a marketing rep that someone wants out, yes.
--:-- Justin Sloan: At the end of Q4 last year, I created a pipeline of agency acquisition opportunities in my CRM, Pipedrive. This was straight cold outreach — using what you said with Hunter IO, getting email addresses, looking at websites, trying to find the outdated website or the person who looks like they're about to retire. I'd say, "Hey, I worked with you at my old wholesaler, I now own an agency, I'm looking to grow my footprint." I got a lot of "let's talk in a year or two" or "no thank you."
--:-- Justin Sloan: If we were to pursue an agency acquisition this year, nothing surprises me anymore. I expect the data to be relatively dirty. I expect them to be on some archaic agency management system. I expect I'll have to pay a fee to get out of that contract or move the data over. But if you're buying an agency bringing in $1 million or $2 million a year in revenue, what's $10,000 to get out of a contract? Interest rates are low. It's relatively free money.
--:-- Justin Sloan: What we'd be looking for are synergies that help our organization grow. I don't need to buy an agency with a book that's 99% home and auto. That doesn't strategically help us grow. Yes, it increases premium and we get overrides and contingency bonuses. But I'm looking at it more strategically. What verticals do we need to go into? Let's do a SWOT analysis of the marketplace. Where are the weak points? What should we do to pivot so we never get caught three years from now when some company is hot and that's all we do and we can't compete?
--:-- Justin Sloan: I hear about valuation with EBITDA and two times or three times commissions. I think each agency is unique. I disagree with your statement about valuations being at a peak. Right now, with Chris and his agency, all our data is intertwined in the same management system. We're investing heavily in cleaning up that data — not because it was dirty, but to make it more accurate. We're putting in not just the source of the business, but the true source. Like, "Oh, you found us on Google. That's cool. But what did you put in Google?"
--:-- Justin Sloan: Those types of agencies will get paid multiples upon multiples greater than anybody else. I foresee that increasing as agencies implement things like Donna and Neon and other technologies that help transparency. The more transparency of the data, the cleaner the data, the more uniqueness of the data — that's a big thing people don't talk about. For example, Ryan, you might be a diehard Broadway show guy who goes with his wife once a year. You might not tell people that because you're embarrassed. But knowing that is huge. If I found that connection between you and Broadway, and my agency did something with that, you'd have brand loyalty because I know that intimate information about you.
--:-- Justin Sloan: Right now, maybe only one person in my organization knows that. But what if everybody knew it? How awesome would that be? I know there are privacy issues, but the uniqueness of data and transparency going forward will differentiate valuations. Somebody that just has your name, number, policy number, and what cars you drive — that's cool. But what if I had way more unique information about you? What's that worth?
--:-- Ryan Hanley: That's a great point. Thank you for pushing back because it helps me clarify what I was trying to say. I think the days of a ubiquitous valuation are at a peak — where you just say, "I want to sell my agency" and you get five times or 13 times this multiple. I think those days are over. If someone can come in, look at your system, know what's going on, trust the information, and really dive into how you're operating, they're going to pay way more for that than someone who comes in and says, "Here's how much money we made. What does that mean? Where is it? How did you get it?"
--:-- Ryan Hanley: Looking into 2021, you're trying to hire people. Your goal is to hire two people in the first quarter. Producers, right?
--:-- Justin Sloan: Yeah, producers.
--:-- Ryan Hanley: So how do you go about hiring producers? I'm going to get some free consulting out of you now. I'm in the first quarter, my goal is to hire both an account manager and a producer. I am not delivering on the Rogue promise from a service standpoint. It's not my specialty. What does your process look like for finding producers?
--:-- Justin Sloan: Somebody that knows nothing about insurance — that's my dream. It's difficult to bring somebody in that might have certain expectations from a previous employer or previous experiences. I'll train them fresh, get them licensed, green. The reason is I know how to sell insurance. I know how to sell small commercial, home and auto, real estate investor. I know how to build niches, market, do social media. I can take everything in my brain and put it into somebody else's brain that has similar characteristics.
--:-- Justin Sloan: Are you good at what you're going to do? Do you follow up with people? Do you have good empathy? You need to be empathetic. There are certain characteristics you can't train or teach. Passion is a big one too. When we're hiring, those are the words we use: Are you empathetic? Are you passionate? Do you do what you say you're going to do? Those are the core principles of our organization. As long as that person understands that and those are the expectations, we can teach them everything else.
--:-- Justin Sloan: I recently implemented a new scorecard for a producer here, Sal. It says each day, all we need you to do is bring in business. The KPI on that scorecard: on Monday, December 1st, he needs to make 10 phone calls to people. He's new, so he can call mutual friends, family. Then he's got to call or text one or two centers of influence — a mortgage loan officer, a buddy, an Allstate person. Then the next step is social media. He can put a post out or engage.
--:-- Justin Sloan: None of it talks about sales. It doesn't say "I expect you to make one home sale" or "get one business insurance policy." Doing those activities will result in sales. We're not big on numbers per se for sales unless there's profit sharing or overrides. We're more focused on those activities and doing them consistently. Every three extra phone calls you make, you're probably going to get one extra sale.
--:-- Justin Sloan: When you ask what I'm looking for in a producer, I'm looking for somebody that's green, doesn't have an insurance license — we'll get them licensed — or relatively newer in the space. Maybe they worked at a local insurance company in a cold call center or claims division. Our new producer was a secondary ticket broker — StubHub type stuff. Every time I bought sports tickets through him, he texted me after the game asking how it was. You don't get that experience with StubHub. That's him going out of his way to make sure the experience was good.
--:-- Justin Sloan: Everybody's trying to steal that middle market producer at Brown & Brown. Good luck — he's getting paid six figures base plus crazy commissions. You can't afford them and you don't have the resources to support that individual. Don't try for that shiny object problem. Blaze your own trail, create your own way of doing business, and you'll be wildly successful. He's already brought in about two dozen leads in 30 days or less. We're closing them. He's getting his license. We can't compensate him yet because he's not licensed, but once he is, we can. He's learning from the ground up, and we have all these technologies for him to learn and implement.
--:-- Ryan Hanley: How many producers do you think you can bring on in a period of time? I've had people tell me I'm crazy for wanting to bring on three producers in 2021. They say it'll be overwhelming, you have to manage them. I don't understand why someone would think that's crazy.
--:-- Justin Sloan: I could see why someone would say that if they're a smaller shop — the owner, the account manager, the janitor, everything, with maybe one part-time VA. But if you have a structure, back to our original talking point about the EOS system, as long as you have clearly defined duties and roles and the bandwidth to support you, it's doable. You can hire as many producers as you want. The real question is how many of them are going to succeed.
--:-- Ryan Hanley: I figure if I bring three in, maybe two stick. Maybe one sticks.
--:-- Justin Sloan: That shouldn't be the thought process. They should all stick because you should make sure they're a good fit in the beginning. I was on a call last week with a guy who wanted to be a producer. He got his life and health license a year ago, his P&C license six months ago. He owns a company where he rents out big trucks and trailers, he owns a handyman business, and he does something else. Three things. He somehow had time to study for insurance. He's probably not going to work out. Chris and I had a Zoom call and two conversations with him, and every time something felt weird in my gut.
--:-- Justin Sloan: This happens all the time, even with new accounts. Something strikes you off. Usually your gut instinct is right. He's going up to Chris's office for training, but I told Chris something's off. He agreed. I'm not bashing him — he might be the best producer we've ever hired. But sometimes you have to focus your resources. If you bring on three people and only one in your gut feels right, stop wasting time on the other two. Take that time and over-invest in that one. They'll ramp up that much quicker.
--:-- Justin Sloan: Ryan, I know your agency structure. You could bring on three, four, five producers, but there needs to be a uniform process. Pre-recorded videos, inside procedures for claims, autopilot — everything needs to be uniformed. As long as you have that and the bandwidth to backfill service requests, because producers produce. They bring in new business. We all love the shiny new object. That's the problem. Smaller agencies say you can't bring on three producers because everything else will fail. You just need the proper infrastructure.
--:-- Justin Sloan: Now that my role in my organization because of EOS is exclusively focused on sales and marketing, I can spend all day, all week with this individual. He's in my office right now studying for his exam. He asks me questions, brings in deals. I stop what I'm doing because I have the resources, infrastructure, and team behind the scenes to support him. We have the team for quoting and rating. I do the video proposal on his behalf. Once the lead is closed, I send it to the rating team for policy issuance. I could clone him five times over because we have the proper infrastructure. I said this quarter, but my goal for the year is five producers.
--:-- Ryan Hanley: I love that. I want to be respectful of your time. This has been great. You have an interesting perspective on the business and how you've gotten here. If anyone wants to reach out to you, what's the best place?
--:-- Justin Sloan: Our agency is BSP Insurance — bspinsurance.com. There's a link on the homepage where you can book a time to chat with me. My email and phone are there. DM me on Facebook or Instagram at my full name, Justin Mark Sloan. I'm happy to help. I love connecting with people to better the independent agency channel and bring us closer to success. Right now it feels like an uphill battle with these companies that are supposed to be your partners. Sometimes sticking together helps us move the ball forward faster.
--:-- Ryan Hanley: I agree. Appreciate you, man. Be good, and we'll catch you next time.
--:-- Justin Sloan: All right, Ryan. Have a good one.
--:-- [End of conversation]
