Whether or not the pursuit of new revenue is killing your potential for profitable growth is, in some form or another, a question that business leaders are (or should be) asking on an ongoing basis.
It's no secret that new revenue doesn't necessarily translate into profits or profitable growth. But often times the reasons for this and the response to addressing this challenge are overlooked.
|The acquisition strategy
In the insurance industry, using an acquisition strategy to drive the growth of business and produce new revenue is common practice. Whether that strategy includes acquiring new salespeople, books of business, other agencies or all of the above, many insurance organizations look externally to increase revenue. But how profitable is that revenue?
In addition to the actual cost of acquisition — no matter what is being acquired — there are hidden and often unidentified costs that end up eating into profitability. For example, when an agency acquires another, most likely they will have different systems and processes. This creates a serious drain on resources and a lot of waste.
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