A Plan for Excellence
With regular annual growth of 15%, two-time IBAO Award of Excellence winner Kevin Donovan and Donovan Insurance Brokers Inc. have shown what implementing a solid business plan can do for a brokerage
The radio, television and now Internet ads represent just a small portion of Donovan Insurance Brokers’ promotional efforts. The company—which has won the Insurance Brokers Association of Ontario’s (IBAO) Award of Excellence in the Brokerage of the Year category for the last two years, and is a finalist again this year (see coverage here)—has also invested significantly in mobile applications. The multimedia approach and the messages, designed to educate and inform clients—are an essential part of a broad and complex marketing strategy that has helped the company to grow 15% per year over the past three years, more than double the brokerage’s own growth projections.
“Donovan Insurance, and Kevin as their leader, have been very innovative in terms of how they market themselves,” says Paul Cugliari, vice-president and general manager of local radio station 105.3 Kool FM and a client of Donovan insurance. Waterloo Region, located 100km west of Toronto, he notes, is the 11th largest advertising market in Canada.
“Donovan and his team were gracious enough to allow us 12 years ago to sit with them in a brainstorming session to really try to figure out the essence of how Donovan Insurance, going forward, would be positioned in the marketplace,” says Cugliari.
The 12-year mark is significant. It was a little over a dozen years ago that Kevin Donovan was diagnosed with a brain tumour. Three years into formalizing the company’s perpetuation plan, the father of four found himself suddenly facing his own mortality—questioning the future, not only for him and his family, but for his business and employees as well. Not for the first time, the issue of succession planning was put on the table.
“We had bits and pieces of the succession plan, but we had never formalized it,” says Donovan. “When I went for my surgery in November 2002, I gave up everything here as if I wasn’t coming back,” says Donovan. “To prepare for me not returning, I had to make sure my managers could run the business without me—I left them a lot of direction and I let go.”
The 60-page succession plan that Donovan and his managers started in 2002 and continued to develop over the next two years addresses everything from vacation planning—who’s in charge when Donovan’s not there—to short-term and long-term disability planning.
“We also included how the business could be sold—including a list of potential buyers—if I died and had to realize the value for my family,” says Donovan.
For his managers to run the business in his absence meant they had to abandon any client-facing duties.
“They manage the sales people, the service people, but for the most part they are client free,” says Donovan about his managers. “Their role is to support the people serving customers. My role is to support them.”
When I went for my surgery in November 2002, I gave up everything here as if I wasn’t coming back. I had to make sure my managers could run the business without me. I left them a lot of direction and I let go.”
The four managers—all women—had started meeting weekly a few years prior to Donovan’s diagnosis, something they have continued as part of their formal business planning. “We adjust everything weekly, from our personnel to the financial side of the business, to the planning side, to the marketing side,” says Donovan. “Managers provide me information with what’s going on in their areas, they write a plan and they present it to the team quarterly.”
Donovan Insurance produced manuals for everything, from those describing broker responsibilities under various scenarios and detailing everyone’s role and job description. The managers all have task lists, and there are company-wide contact lists that cover every aspect of risk management.
It may sound like a daunting process, but the succession planning was a natural next step in the company’s formalized business and growth plan. Donovan’s father, John, founded Donovan Insurance in 1969 and the brokerage expanded rapidly in the first 20 years. In 1999, a little over ten years after Donovan first acquired the company, the brokerage was experiencing a surge in growth and Donovan thought it was time to look for some external direction.
Donovan turned to the Best Practices Program that was offered by the Insurance Brokers Association of Canada (IBAC) at the time. Over a period of eight months, Donovan and his management team took moduled courses that walked them through formalized business planning, preparing marketing plans, preparing operational plans, HR, and financial management models.
“It was the roadmap—or the GPS—we needed to go forward,” says Donovan. “We sort of knew what we needed to do, but until we took the course it was as good as keeping that GPS in the box. The course helped us to take it out of the box and really get to where we wanted to go. A lot of brokers took the modules at that time—it was really popular—but we may have been unique in that we took everything back and started to implement it.”
The Best Practices Program also gave Donovan the opportunity to examine case studies of the top growth-oriented and profit-oriented brokerages of various sizes in the US.
“It didn’t take me long looking at the financial statements to realize that the biggest thing a broker spends money on is their people,” said Donovan. “I knew if we wanted to continue to grow, we had to continue to invest in our people—hire the right people, provide them with the tools they need to do their jobs and the support and mentoring they deserve.”
Donovan Insurance has a staff of 29, but its growth plan, in a competitive market, is extremely ambitious. Currently in the third year of a five year plan, Donovan Insurance has exceeded target growth expectations consistently.
“Our expected growth has been around 6-7%,” says Donovan. “This year the growth rate was 15%. Our target was much lower in anticipation of the auto reductions coming in Ontario sooner rather than later.”
The growth plan includes, for one, adding a net of two producers per year in order to sustain healthy growth for the brokerage.
“The marketing innovation in terms of how they approach their clients through lead generation, their referral networks within group programs, recruitment of producers—there’s some very strong drivers for success” says Tom Reikman, senior vice-president, Ontario Region at Aviva. “Kevin has been able to attract and retain some really strong brokers and other staff.”
Donovan says the secret to his company’s success is knowing the precise capabilities of his staff.
“If I was looking at 10% growth for next year, we will drill that down to what each producer is capable of—usually pro-rated so we’re realistic, but we often can exceed our results because we’re realistic about growth and about the timing.”
“Part of the competing part comes down to our producers. They all have their own networks of people that they work with, and they’re making inroads into those groups of clients and contacts they have all the time,” says Donovan. “Part of the formal process we’ve implemented with our sales people is to get them to be more forward-looking toward where their next sales call is coming from.”
Donovan has also formalized the activities of the sales people. It may sound like micro-management, but he says it all comes down to having good systems in place to allow their sales people to do what they do best: sell.
“They have an activity planner that they use each week with blocked times to meet with people in their centres of influence. If they want us to, we can take their lists and put them into their electronic calendars.”
Earlier this year, Donovan brought in a coach for a two-day session on the importance of the personal brand. “The message was really that you should be able to tell a good story about yourself that doesn’t brag, but still gets the point across that you’re part of the community. It was all about learning to talk about themselves in the right way,” he says.
At the end of the training, each staff had to rewrite their own profiles for the website and marketing materials; another way of formalizing what they’d learned.
“Donovan is a very forward-thinking organization with a very cohesive team” says Reikman at Aviva. “That’s extremely important in that the staff all understand and buy in to the master strategy of the brokerage and how that’s helping differentiate the brokerage in the marketplace.”
Donovan is not shy in saying that acquisitions represent a future growth opportunity for his firm, while acknowledging that they require careful oversight, including training and integration for the new staff.
Donovan Insurance has already tested these waters, having acquired two local brokerages in the past few years. In May 2011, the firm purchased a five-person company called Tweed Insurance. Tweed’s lease expired within five weeks of the acquisition.
“We had to reorganize very quickly to bring their staff in and integrate them without any business interruption,” says Donovan. “They’d been running on paper files, but we were already paper free.”
Sixteen months later, on September 3 this year, the staff from Tweed completed the paperless transition. The lengthy time for change was purposeful.
“We wanted to take our time, make sure there was no disruption to the customer,” explains Donovan. “People need time to adapt. Companies sometimes forget that. But they’ve very much embraced it and grabbed hold of what they’re doing, even the former owner, who’s 84 years old now.”
Donovan is confident his company could grow 40-50% in the next five years if the company continues to follow its current five-year plan. The internal push, admits Donovan, is to increase the percentage of commercial business.
“In the past few years, as we’ve grown, personal lines has gone from 80% down to 70%,” says Donovan. “Our objective is to get that close to 60. It’s pretty bold in this marketplace. We’ve got a lot of competitors and they’re all working very hard.”
Regardless of targets, however, Donovan’s friends and colleagues say he and his company are destined for success.
“This market is so fragmented; [Donovan Insurance’s] ability to grow every year, maintain their presence, cross-selling to maximize the number of accounts they have with clients, all these things have been critical to their success,” says Reikman.
Reikman notes that the commitment of Donovan and his staff to charity events in the Waterloo Region go a long way to cementing the brokerages local reputation and the “small enough to know you” part of their advertising tagline. Donovan has given more than 20 years of service to Scouts Canada and acted as chairperson for a number of high profile events. His firm sponsors more than 30 golf tournaments per year. In 2012, Donovan Insurance and their staff helped raise more than $200,000 for local charities.
“Donovan’s brand recognition is so strong in this community—and in a competitive consumer-driven market,” says Reikman. “They’ve continued to grow because of Kevin’s drive to never be satisfied with the status quo.”
Copyright 2013 Rogers Publishing Ltd. This article first appeared in the October 2013 edition of Canadian Insurance Top Broker magazine