3) Larger, better accounts: The odds are that by selecting your customers, you will end up with larger accounts. More revenue but fewer customers–what's not to like about that? The agency also can provide better service to those clients than it could with a larger number of accounts, thereby increasing retention and referrals. The referrals probably will be high-quality, because they are likely to be to prospects similar to the customers the agency already has selected.

4) Lower processing costs: Having fewer, but better, customers means the agency can get by with a smaller staff. It also means the agency does not need to represent as many carriers. Producers likely will be more focused because they will not have as much opportunity to chase far-flung accounts. More focus results in better company relationships and probably better loss ratios. CSRs can be more efficient because they do not have to know the rules and coverages for as many carriers. Other advantages can include lower benefits, telephone and postage expense; lower rent; possibly lower E&O premiums; and in all likelihood, fewer management headaches.

5) An improved work environment: Imagine for a moment a few additional ways that choosing customers can change an agency. A proactive approach to customer selection sets the tone for a proactive stance toward other agency functions. I have found that proactive agencies are happier places in which to work, and they attract and keep more self-starters as employees. Also, when an agency does not have to deal with customers better served elsewhere, employees are likely to feel less stressed and more positive. Mix a proactive environment with happier employees and the result is a harmonious, highly profitable workplace.

How does an agency start selecting its own customers? By taking the following steps.

1) Determine the type of customers the agency serves best. Define them in regard to their economic status, size, lines of required coverage, complexity and types of markets required (e.g., standard or E&S). Ask whether you are looking for clients who are price-driven, coverage-driven or relationship-driven. In regard to commercial-lines clients, are you looking for small business, big business or family business? Do you want to focus on a specific target market or industry?

2) After defining your preferred customers, survey the ones you've already chosen to learn how you can better serve them. Build your marketing plan around those customers and their needs. Develop your service capabilities and procedures accordingly.

3) Next, plan a phase-out of current customers that do not fit your model, beginning with those that fit it least.

4) Set up a management structure that assures that your employees–especially the producers–follow the agency's procedures regarding new-business production. Otherwise, you might end up with a new book of the same old ill-fitting customers.

5) Continuously monitor your model and make changes where necessary.

Making this kind of change is much harder than writing about it. The hardest part is making the commitment and getting started. Once you get rolling, though, carrying out the plan is comparatively easy. I made this change with my own business several years ago, so I know it is difficult. I also know that when I violate my own rules and don't choose my customers, I pay a price. But, as long as I follow the rules, the benefits are automatic. Give the system a try!