AGENCY TECH
OPTIMIZING YOUR ADVANTAGE
WHAT SHOULD YOUR INSURANCE AGENCY ' S TECH SPEND BE ? by Colby Tunick , ReFocus AI and Colby Allen , Agency Brokerage
In today ' s dynamic insurance landscape , technology is no longer a luxury ; it ' s a necessity . However , a crucial question arises for insurance agencies and brokerage principals : how much should you spend on technology ? Finding the right balance between costeffectiveness and innovation can take time and effort . This article delves into the world of tech spending for insurance agencies , exploring industry benchmarks , strategies for measuring ROI , and the evolving role of AI .
THE ELUSIVE RATIO : BENCHMARKS FOR TECH SPENDING
We asked Colby Allen , an insurance industry consultant and financial analysst , to share their insights into agency technology spending . Colby indicated , " Although spending habits are unique to each agency and its processes , many agencies spend between 2.5 % and 3.5 % of their annual revenue each year on tech ." This can vary depending on the agency ' s size .
Larger agencies have a higher headcount , which corresponds to needing more software licenses . According to Colby , a standard benchmark he sees is an " agency spending between $ 25,000 and $ 35,000 per $ 1M in revenue on tech each year ."
MEASURING ROI : BEYOND THE SPREADSHEET
Simply throwing money at technology isn ' t enough . You need a robust ROI ( Return on Investment ) measurement strategy to ensure your tech investments drive growth . Here are some key metrics to consider :
• Increased Efficiency : Can your new CRM system streamline lead nurturing , resulting in faster sales cycles and higher conversion rates ?
• Enhanced Client Service : Did your self-service portal implementation lead to a decrease in call volume , allowing your team to focus on high-value client interactions ?
• Improved Productivity : Have productivity tools like project management software or workflow automation platforms freed up employee time for strategic initiatives ?
To Colby , " Key Performance Indicators ( KPIs ) don ' t just measure dollars but how effectively a process operates . Agencies that stand out establish KPIs they want to improve with a tech solution and measure results over time ." Remember , ROI isn ' t just about financial metrics . Improved employee satisfaction and client retention can also be considered positive returns on your tech investment .
24 KANSAS INSURANCE AGENT & BROKER