3 Numbers You Aren’t Tracking (and Should)

By John Pojeta | February 19, 2019

When I first began my career as an advisor, a mentor gave me two lessons that I still use today:

  • If you can’t measure it, don’t do it.
  • The bottom line counts provided you know how to count.

You have heard this advice or some version of it before. In practice, though, tracking your numbers and understanding the nuances of your bottom line can fall by the wayside. The fuzzier our data measurement and tracking become, the more we stunt our growth potential. When you don’t know what’s working and aren’t measuring its true impact, you can’t make smarter, more profitable decisions in the future.

If you are aggressively pursuing growth, you should track the true return on investment (ROI) for your marketing and your true bottom line.

You may think you are tracking those numbers now, but you are likely overlooking key insights.

If you can’t measure it, don’t do it.

Measuring Your Prospecting Efforts
The game all businesses play is finding a way to put in X amount of money to then get more back out. This is the most basic form of the idea of return on investment, yet we often encounter advisors who aren’t assessing the ROI of their prospecting correctly or thoroughly. The apparent simplicity of calculating ROI obscures opportunities to better understand what you can do to make your business grow. Money-in and money-out are the ultimate end-games, but there are more questions to answer along the way, especially if you are looking at marketing:

  1. When will you reasonably break-even on a new marketing tactic (and can you tolerate writing checks until then)?
  2. At what return will you feel good about a marketing investment? When will you feel great?
  3. Given your break-even point and your goals, how do you plan to address your potential discomfort between now and the return?

To use a common prospecting tool as an example, say you spend four hours this month attending networking events, how many prospects will you engage, how many of those prospects will become clients, and what is the total lifetime value of those clients?

Let’s take this big question apart into its variables:

  • Your investment (time and/or money) – You need this to determine your ROI, but we often find that advisors don’t know what they are worth per hour or how to measure the value of spending an hour doing one task versus another.
  • The specific activity you are measuring – Being clear now makes reviewing your prospecting later much easier.
  • The number of leads you generated – This helps you calculate your conversion rate, but for this calculation to be meaningful you need a stricter process for defining a lead. If you wanted, you could gather a nearly infinite number of names and phone numbers, but that doesn’t mean they are real opportunities. Develop a process to qualify leads and track them.
  • The conversion rate and total number of those leads – How many clients you got for your investment or what percentage of leads became clients.
  • The true value of the clients you converted – You may find that some sources of clients are actually less profitable than others or that certain types of clients are more likely to provide referrals or increase wallet share. Many advisors don’t measure these metrics, yet they have massive potential for driving revenue.

You should be able to do this math for all of your prospecting efforts. You may find that a piece of your prospecting that perhaps feels good to do, such as an annual direct mail newsletter about your staff to the zip codes you target, is actually not impacting the business. That enables you to reallocate those resources to an aspect of your prospecting that is performing far better, such as your appointment setting program or your client appreciation events.

(Related: 5 Ways to Fix the Blind Spot in Your Business)

The Bottom Line You Don’t Know About
How you measure your bottom line is more than your total net revenue. Net revenue absolutely counts and is important, but by itself does not tell the entire story about the growth or trajectory of your business. The hidden challenge of an upmarket is that you can generate more revenue without ever expanding your customer base in a meaningful way.

For example, a health & welfare advisor could see a 15% increase in revenue for their business, but that increase might actually be a result of her clients growing—such as a business that expands from 21 employees to 45 employees to meet market demand. In this case, the advisor adds new lives to the plan but did not add a new client. If the market hits a downturn and that same client lays off employees, that perceived growth will evaporate.

When you look at your bottom line, you need to see the whole story, and that means counting profit alongside the number of clients.

By tracking these numbers consistently—especially if it’s done in conjunction with the first piece of advice—you should be able to see how many new high-value clients you are adding. Your goal is not to get 100 mediocre clients to pad your client count but rather to add ideal and bread & butter clients alongside the profit growth of your current client base.

Under those circumstances, the business will not only grow exponentially, but you also better insulate yourself from the painful consequences of a recession.

Get Started
If you don’t have this tracking in place currently, the upfront work of going back through your activity and calculating your numbers might seem daunting, but don’t let that deter you from the growth opportunities on the other side of that effort. You will gain new understanding of your business and therefore be better equipped to reach new goals.

Thank you, Insurance News Net Magazine for publishing this article in October 2018.

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About the Author

John Pojeta

John Pojeta - Vice President of Business Development

John researches new types of business and manages and initiates strategic, corporate-level relationships to expand exposure for The PT Services Group. John came to The PT Services Group in 2011. Before that, he owned and operated an Ameriprise Financial Services franchise for 16 years.

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