Benchmarking for Success
Unlocking Performance Gains
The objective of this whitepaper is to inform and educate broker owners on the role of benchmarking for their business. We will highlight the key areas you need to focus on while outlining the corresponding benchmarks you need to monitor. We will also highlight how you can incorporate this task into your periodic business review process.
What is Benchmarking?
Many of us are familiar with the term benchmarking, but do we truly understand what it means and why it’s so critical for many businesses? In essence, benchmarking is a process of assessing and comparing a company’s operational performance to industry and business norms (i.e., other insurance brokerages). Simply put, benchmarking helps to refine and enhance the review and optimization of business performance. This tactic involves looking at a wide variety of business components, each of which are key elements to their success. By identifying underperforming areas that can be improved, company performance can be enhanced.
Benefits of Benchmarking
The primary benefit of the benchmarking process is its ability to provide brokerages with an objective measure to evaluate overall business performance relative to a highly relevant target. As the highly regarded consulting firm Bain & Company noted, companies can benefit by implementing benchmarking into their regular business review process because of the following factors:
Improved Performance
Identify methods for improving operational efficiency and product (and service) design and delivery
Understand Relative Cost Positions
Reveal a company’s relative cost and revenue positions, identifying opportunities for improvement
Gain Strategic Advantage
Help business focus on the capabilities that are critical to building strategic advantages
Increase Rate of Business Learning
Bring new ideas into the company and facilitate experience sharing [1]
In fact, benchmarking has also become a key tool and resource from a competitive and performance analysis perspective (see the table below). It is widely used across a variety of businesses and industries as a means to optimize results, having been first introduced in 1979 by Xerox as they attempted to compete with Japanese copy firms capable of selling their copiers at much lower prices. [2]
As the Independent Agents & Brokers of America (the “Big I”) stated in their most recent 2024 Best Practices Study, “The beginning of improvement is knowing where you are – benchmark your agency.” [3]
It’s worth noting that in most cases, larger brokerages enjoy a significant competitive advantage in the marketplace, given the tools and resources they wield. This will often translate into better benchmarking outcomes for these larger firms versus smaller companies. Scale and size do matter.
Regardless, benchmarking can benefit businesses of all sizes, which is why it is so important to us. At Collectivfide, we fully embrace building businesses with competitive advantages while fostering strong relationships with our locally-owned insurance brokers.
By working alongside our partners, we support brokers in all facets of your operations, allowing you to focus on what you do best: serving your clients and communities.
10 Key Performance Benchmarks for Brokers
It’s clear that benchmarking offers an objective, quantitative and empirical methodology to analyzing and evaluating your business. Nevertheless, the unique characteristics of your business can result in variations from these industry benchmarks, which often times can be for all the right reasons.
That’s why it’s important you are aware of the unique characteristics of your brokerage and can therefore adjust these respective benchmarks to ensure they fully reflect and are relevant for your unique circumstances. Taking these measures at face value isn’t always your best course of action.
The following are the ten key areas brokers need to consider when looking to benchmark their company relative to others in the industry. [4]
Request Full Whitepaper
Request the full whitepaper and get information, checklists and answers to your questions about:
Key Performance Benchmarks
Ways to Enhance your Operational Performance
Benchmarks and the Brokerage Industry
Implementing Benchmarking in your Brokerage