Understanding and tracking commission revenue per employee can be a valuable key performance indicator (KPI) and benchmark. For an agency owner, maximizing revenue per employee is also critical in driving healthy operating margins. For producers and accounts managers/CSRs, it can be useful in evaluating individual performance and value to the agency.
According to best practice studies conducted by the Big I, typical smaller agencies generate $131,081 average annual commission revenue per employee, while top-performing smaller agencies generate $187,976 average annual commission revenue per employee. Variation in numbers may be explained by differences in job descriptions, regional economic factors, and automation used.
For agency owners considering staffing decisions, how should these numbers be used? A few things to consider:
Knowing an agency’s average annual commission revenue per employee versus comparable benchmarks can help agency owners understand when additional staff will be needed and what type of production goals would be necessary to “close the gap” should their agency run below industry averages.
Determining Individual Work Loads and Job Duties
Agency owners can measure their current agency revenue per employee KPI against benchmarks, set goals, and break down appropriate workload guidelines for staff (for CSRs/Account Managers, this can be broken down into an appropriate number of clients, policies, or premium to manage; for Producers this can be a threshold written premium goal to reach and then broken down on a month-by-month basis to track long-term performance).
Use of Carrier Service Centers
Some agencies have a hard time finding a way to scale staffing efforts and meeting the revenue benchmarks previously shared. Carrier service centers offer an alternative to help agency owners handle the increased processing/servicing workload of a growing book, without having to prematurely take on additional staff.
Promoting Carrier Self-Service Capabilities
Even agencies that forgo using carrier service centers, many will direct their clients to access insurance information using self-service tools either through a secured carrier website or mobile app. Offloading some of those processing tasks can free up staff to handle larger workloads.
Use of Automation
Top-performing agencies in terms of higher average annual revenue per employee typically invest more in automation. This can include utilizing more cutting-edge automation systems, communication tools, sales automation, client relationship management software, consumer websites (especially if they have client self-service functionality), and agency mobile apps. Agency staff empowered with more automation tools can typically produce and/or manage higher commission revenues.
Understanding average annual commission revenue per employee as a Key Performance Indicator can be useful for agency owners in determining key strategic business decisions to be made in the future.