MRL #100- Why 90% Of Producers Fail (And How To Beat The Odds)

Our industry has had a big problem for a while.

Roughly 90% of new Producers fail in their first 5 years.

Now I can’t site this stat.

It’s what I was told when I first started in the business.

From my firsthand experience and observations from the trenches, it’s proven to be true.

I’ve also talked with hundreds—if not thousands—of other Producers who have echoed the same observation to me.

Regardless, if it’s 57% or 78% or 90% or any other number in between, there is no denying that most new Producers fail.

For me, there’s two big reasons why:

1. It’s never been harder to be a Producer

2. Agencies do a poor job developing new Producers

That’s not a new revelation.

We’ve written about these two issues multiple times before.

What I want to explore in this newsletter is the underlying root cause of both.

Let’s get started.

The Mid-Market Is A Bloody Red Ocean

In their book Blue Ocean Strategy, W. Chan Kim and Renée Mauborgne define a “red ocean” as a saturated market with intense competition, limited growth, and shrinking profitability.

If that doesn’t sum up the mid-market right now, I don’t know what does.

The mid-market is a bloody red ocean being devoured from both ends.

Technology is eating the mid-market from the bottom up.

While national firms are eating it from the top down.

Neither are the bad guy. It is what it is.

From my understanding…

Insurance Was Much Different Back In The Day

30 years ago, the market was predominately made up of smaller privately owned agencies.

Ray and 3 buddies would decide to hang a shingle, and a local agency was born.

They grew their books by networking in the community, spreading their tentacles of influence as far as they could.

A $500,000 book was respectable. A $1,000,000 book was exceptional.

Dozens of local agencies could carve out their own little profit centers in the same market.

When it came time to perpetuate, they would bring in their sons, nephews, or the kids of close friends.

They trained them up on coverage, service, and networking. Passed on their books, and the agency lived on.

But somewhere in the 2010s, things got super competitive.

Private equity began gobbling up agencies.

Agencies quickly proved to be profitable investments, often generating 20%+ EBITDA margins, leading to even more aggressive acquisitions in the middle market.

In the 2020s the race intensified as valuation multiples skyrocketed.

And the consolidation wave continues today.

These unique circumstances created a conundrum for our industry.

An insanely competitive marketplace without a fundamental understanding of outside sales.

For me, this is…

The Root Cause Of Our Current 90% Failure Rate

We are essentially the blind leading the blind.

An industry flushed with ever increasing competition and no grasp on the fundamentals of selling.

Yes, this is painting with a broad brush.

But on the whole, I think it’s both fair and true.

For the last two decades we’ve been trying to train new Producers using an outdated methodology by Producers who never had to eat what they killed.

And if they were one of the rare few who killed what they ate, they didn’t have to prospect nearly to the extent you do today to be successful.

Case in point.

When I first started in 2019, an older Producer offered me the advice:

“Pick up the phone everyday and ask one person to work their upcoming renewal. By the end of the year you’ll have more work than you can handle.”

While that may have worked in 1984, I can guarantee that won’t get it done in 2024.

How To Beat The Odds

To cross this chasm, Producers and Agency Owners must accept this fact:

Selling today isn’t what it was 30 years ago.

Because of increased competition, how Ray and his buddies built their books in the 80’s and 90’s does not work in 2024.

Our industry must evolve.

We’d be smart to look at other bloody red oceans for inspiration.

I suggest B2B software sales.

Like insurance, it’s a technical B2B product that’s viewed as a commodity. The competition is fierce, and every deal must be fought for.

To generate a robust pipeline SDR’s (Sales Dev Reps) must cold prospect decision makers relentlessly.

If a Producer is not being brought in on business deals or being seeded business, this is the only way, in my opinion, to succeed today as an agent too.

Agents must learn to cold prospect. And they must do it well and often.

If Agency Owners accepted this as gospel and adopted the necessary Producer development programs--and Producers accepted this fact and adopted an outside sales mentality—I’m convinced our 90% failure problem would resolve overnight.

It wouldn’t go to zero, of course.

Hell, it might even remain above 50%.

Let’s be honest, this business is tough. I’m not dumb enough to think that everyone can do it.

But 90%?

It wouldn’t last.

The Bottom Line

We are an antiquated industry in flux.

What was done 30 years ago, is no longer viable. We must adopt an outside sales approach as an industry. And we must have people teaching it who actually know it.

That’s my big idea for this week.

Maybe you agree. Maybe you don’t.

Undoubtably, this newsletter will catch flack from some of you. I’m fine with that. I just call it like I see it.

One things for certain, we can’t keep doing what we’re doing.

A 10% success rate is ridiculous. Producers deserve better. Agency Owners deserve better. For both’s sake, I hope we course correct soon.

Thanks for reading.

See you next Sunday.

Kick ass take names,

Maximus F. Revenue IV

(Micah & Trey)

P.S. If you’re not being handed business and looking for a step-by-step system to build a book-o-biz from scratch, then check this out.

This is literally the process Micah has used to build not one, but two $1,000,000+ books from scratch with cold outbound.