How Hiring Mistakes Drain Your Agency's Profits with iDudes Mailbag

Now I can't find my notes. I mean, what kind of mailbag is it if there's no notes? Well, check your mailbag, bro. Let me look here.

I literally have no idea what we're going to talk about. Craig wants to talk about something, and it's going to be an argument. Yeah. Yeah.

That's why. It's up on my camera. Oh, my gosh. How silly.

That is so silly. Okay. So, you know, I've said this for a long time, and we tend to disagree on it. You think that it's far less, and I actually think it's far more.

Do you know what I'm talking about? Ooh, hook. I don't even know what we're talking about. You don't even know.

Are you interested? I am interested. No sack, no lack. Sometimes a gag.

The insurance dude's mailbag. Okay. Well, that's a mailbag. There you go.

That's a mailbag. That's it. Hang it up. So I believe, and because I've read it in so many places, I've seen it in so many places, I used to not believe it because it seemed crazy.

Maybe. But the cost of losing a hire is fantastically higher than what you think. Yeah. And so, you know, the thing you see around the interwebs for salesperson somewhere like 80 grand, I'll concede that that seems ridiculous, right?

But I think more along the lines of 40, 50K, if you hire somebody and they don't work out and you had that seat vacant because you have that rotating door, right? When you're doing the scramble. And I know that you've said multiple times, Mr. Jason, that you think, oh, it's like 10K, 15K.

Okay. I would say maybe that's on the lower end. But I think that what we've talked about before was like 160K or 300K. It was like these numbers that were- silly.

That's what I'm going to get into silly town. So it makes me think back to, I love to bring it up Wolfgang Van Helsing, who I hired. He came in. This is before I really, well, I didn't do any assessment.

There was no assessment at that point. And he had energy. He told me he was the best salesman in the world. Best name and best salesman.

Right. I mean, I thought, okay, this is a no-brainer. He had a great handshake, couldn't stop telling stories. I'm like, this guy, he's going to knock you out of the park, right?

He's a dream. I basically hired him on the spot, which we know is probably not the best thing that you could do, right? I think it makes it seem like, well, that was sure easy. I'm the best.

And then they come in and it didn't work out, right? But I like it. Yeah. I mean, it was fun to have a guy with that name.

And if he's listening. He was a really good guy. It just wasn't a good fit. I don't think that people add up all of the things, right?

Okay. So let's take that producer seat. You have a seat with a computer and a phone and all these things and all these costs add up, right? Every single month before somebody sells something, that seat costs money or there's a fixed cost to it.

So what do you have? You have, well, you have your base salary, right? So let's say, you know, Subware, some people are on the lower end, whatever. We're around 4K.

Okay, 4K. Yeah. Okay. You have to have, if you want them to be successful, you need somebody making dials on the leads, right?

So let's say that's $1,500. We have leads. How many leads does somebody need? Go on the low end because most people don't buy them.

That's what I think, right? Let's say 20, 20 leads a day. Is that fair? 15?

Let's go 10. Okay, I'll go 10. Sold. So that's 50 bucks a day, right?

1,000 bucks a month. okay ish right and there's there's all these different factors we're gonna ballpark it here what else is there phone technology tech let's call that a couple hundred bucks okay what else so i mean all these things the lights the rent you know if you if you part if you partially need to think that stuff out now you also have your time right there's got to be somebody's got to train up okay does that cost anything yeah like so what would we say a half of another person Maybe, right?

For how long? Or the cost of not, or it's a different kind of cost of not. It's the cost of the things that you're not able to do because you're doing that. Right.

Fair, right? Whether you don't do anything. Let's call it 1K a month. You could be camping.

You could be doing something fun instead of doing that, right? Okay. Let's go 1K a month. Yeah.

So you're doing a lot of things. It's like having a car in the driveway that you're making a payment on and it doesn't run. Yeah. So your thoughts so far?

That's cool. We're at, we'll call it S7. We'll call it 8K a month. So what else do we have here?

Now think about this. The part that really gets you, okay? This is the part that you don't really ever, you don't really feel. The real value isn't necessarily in that first sale they make, right?

The real value is in what happens over time as their sales compound and the lifetime value, right? So when they sell a policy or they sell, let's say they sell 20K a month, right? They sell. So you got whatever it works out to.

So maybe you got 4K, right? For your first month. And then it's going to renew four times. So over the course of the lifetime of that thing, it's probably, it works out to about 10K, right?

Of lifetime value. A little bit less. 9K. Depending on.

Yeah. I mean, depending on your co-op and all that stuff. But I mean, a quick, easy number is just say a little less than half of your lifetime value or of your premium that you sold. You could say lifetime value if you want to do a quick math.

I'd say maybe a little less here in California if you're with a captive. Sure. Yeah, probably eight. Right.

Maybe a little less. But it's like a it's like a fruit tree, right? Like the thing is going to produce these these fruit, but you got to water it. You have to put fertilizer.

You got to put it in the sun. You got to do all these things for it to bear fruit or you grow it and you don't do the right things. Now the fruit now the tree there but it not giving you any fruit And then you got to get rid of the tree because it sucks and it happens again right So there this cascading effect that occurs over time right Because you have that situation which I know in being there before that it just it's a lack of a process, right? If you don't have that process where you're constantly recruiting, then this is going to happen.

Yes. Because somebody is going to be gone. Somebody, one of them, maybe all of them, right? Are going to be gone.

And if there aren't new little baby trees out back, now you're in trouble because you got to go buy a big tree. And that big tree comes with its own set of problems because you rushed. Okay. Okay.

So if we have a lifetime value of 8K on that, I didn't want to go on numbers, but I think it is good to get in there, right? If you have that, let's say it's 8K a month. They stick around for, I mean, how long would you say back in the day when you kept somebody too long? How long would you keep them for before you finally said, nah, screw it.

This guy's pissing me off. You know, when you stop coming into work because you're looking. It's been as long as six months. I mean, you know, which is terrible.

I would say as short as three months. Still three months, right? Right, right. Is that the production or three months from the time they got in the door?

Three months from the time, you know, they might not be the right person. Right. So there's some other months behind that where they weren't producing anything too. maybe a couple months, three months, whatever, right?

Yeah. So now let's say that's six to nine months, always an interesting set of numbers. So you have six to nine months at 8K a month if they were writing 20, which now, I mean, that used to be the standard, right? Oh man, if they could just write 20, well shit.

Now if they're not writing 30 or 40, it's a problem, right? So, and then 30 or 40, let's say that's 13,000 to 18,000 of lifetime value per month. That's, you know, ongoing stack. So there, do that math.

We'll do the best case. Six months for a 20K producer, we'll go cheapo. One that's not even doing that awesome. If that's eight, that's 48 grand right there.

Just in production, in commissions, right? That you're not getting if it had been done right and you had the right person there, right? So that cost of having the wrong guy or gal in the seat taking that spot. Still not convinced, are you?

Yeah, no, I mean, yeah, I mean, it's definitely expensive. Well, so that's, but that's the loss of the, that's your loss of commissions. And then what's the salary on six months? 4K times six, 24K.

Yeah. Now that's hard costs that actually came out of your pocket. Not just being, you know, not something that you didn't make. But I mean, those things that you don't see really do cost because, because we've both been in both places, right?

And we've been in the place where we had a fully, where we have a fully crushing it team. He's saying crushing it. We have a team that's, that's really knocking the cover off the ball. Right.

And everything flows. And then the renewals are hitting and there's money everywhere. It's like, ah, who cares? How many monsters should we buy this month?

Get 10 cases. Who cares? Right. Like, it doesn't matter.

It's like, there's just money everywhere. And then when there isn't money everywhere and you start going, oh, I gotta, I gotta tighten up. I gotta tighten. And then all of a sudden, it's this downward spiral.

Yeah. Right? Okay, so let's say we keep someone six months. They suck from the beginning.

They suck till the end. You got rid of them in six months. We're saying that all those costs, even if it's just 10 leads a day, all those costs add up to be $8,000. So six times eight is $48,000.

So that's $48,000 lost right there. And that includes the opportunity costs. That's the salary? No, it's what we originally did.

Okay. 8k a month right and 1k not the revenue huh but not including the revenue but not including the revenue yes right so that's another 50 or whatever 50 ish on the low end if it's a 20k producer like if you if you had if you had somebody like if the guy that left because because the right things weren't being done for that person they bounced they left but they were writing 20k a month right so we're saying that this guy that spent 48 000 barely wrote anything let's say he wrote Yeah.

You know, they're going to write 10K a month unless they're completely moronic. Right. So that so that's in that time frame of 60K. That means you lost out on at least 60K in revenue.

60K. Right. So what did you say your lifetime value is? Did you say 60K a premium?

60K in premium. Yeah. Just call it 26,000 of lifetime value from that. 26,000.

So we'll add the 26K to the 48K. So that's 74K by having the wrong hire. Okay. Now let me take it up a notch.

Ooh. Now, what if you had the right people? Now think back to a team that you had that was really doing awesome, how easy it was to hit bonus. Yes.

Now take a team where things just weren't going right. It's these years where it's like, no, now this guy left. And now this, it's like, all it takes is a couple things to go the wrong way. And all of a sudden you're like, holy shit, I'm really going to have to push it to get bonus.

Oh no. Yeah. I'm not going to bonus. Now, what does that cost you?

I mean, for me, if we don't, like, if we don't max bonus, that's over 300K that we lose. Right. So tack 300K on top, right? Or take somebody.

Let's call it a hundred K. Yeah. Let's call it a hundred K. I mean, even call it 50K.

Yeah, that's a lot. It's a lot. And it adds up. And it's all down to that one, right?

That's one seat. Yep. Remember when everybody left, when the guy stole my whole team? Yep.

10 people. That is pretty amazing, though. I mean, luckily, the comp was a little different then, and we made it back up. But that was a dicey time in history Yeah it just like it this domino effect right The wood falls and it cascades into all the rest of them and everything starts to go sideways And then in your head instead of going, all right, well, that's the way it is.

I need to really batten down the hatches here and focus on a solid recruiting strategy and hiring and pipeline and managing that like I do with the leads. Instead of doing that, it turns into scarcity because now you're freaking out, Right. Right. And I mean, we've done this long enough and there's been so many cycles.

And even just recently with the whole phone thing, the whole phone system fiasco that I've had, like I've gone to these places where I go, you know, I'm free. We only sold 3K today, you know, and freaking out. And then I go, wait a minute. I've done this before.

Calm down. You know, there's always that it's OK to to have it, but you got to recognize it when it happens, you know? Yeah. And I think so just for context for everybody else, we've had this conversation during marketing.

And when you market something, you don't teach people stuff. So it's like, I think this conversation is one of those things that like will make people realize the actual cost of hiring the wrong person. But you have to have this conversation to realize the actual cost of it. So if you're marketing something, it's got to be third grade level.

you know if somebody has to accept it upon first read not ponder and then realize well yeah but that's that's true yeah so like but like it is true and you know like especially the bigger you get the bigger the impact so these numbers would be much bigger kind of like your bonus of 300k versus 100k in some agencies 500k so it's a big it's a really big difference right And sure, you're not going to make the right call every single time. But if you if you put the decision down to one call and it's that one call that's going to affect everything because there isn't something in place to consistently take the risk out of that.

out of that, right? Like it's not, if you have the Wolfgang situation, but there's 10 other lined up and I could, who cares, right? Get rid of this one, bring in the next one and just keep doing it. Like an NFL team, right?

You're not going to see it or any professional sports organization. You're not going to see them say, Hey, our team is solid. We're not going to recruit this year, right? Like that's insane.

I mean, somebody gets hurt, something, who knows, right? I mean, you could have your best producer that always does everything perfect, not a normal best producer. But let's just say it's your best producer. They do everything.

They come in on time. They're great. They do all these things. They could win the lottery.

They're not coming in tomorrow, right? That's it. And so you never know what's going to happen. Yeah.

But be prepared. So most agents don't, we've always said, always be hiring. They're not in that mindset at all. So like you, here's a couple things.

Like they're not even looking. If they were about to look, they don't have the assets lined up. What kind of assets? What about even just a job ad?

Like, you know what I mean? What are the benefits of your agency? What are the struggles that most people have getting into other agencies and like having that on your job posting? Because like you want to differentiate yourself.

So like having things ready to be able to hire is a good way to do it. Most agents also want just somebody else to do it. So then they'll hire these companies that'll hire an agent and you're not even hands-on on it. Or you do your own one-on-one interviews and you waste all your time to try to find a needle in a haystack.

Right. And you're trying to find the perfect closer. And guess what? They don't exist.

Like there's always something, right? And that guy that's like, or girl that's amazing, it's going to be one in a hundred. So unless you're running 100 one-on-one interviews, you know, chances are you're going to hire just someone who you're emotionally connected with. So it might not be the right person.

I mean, are you really calling all the references? Are you really doing all those things? And how good are you at recruiting? I know me like, I mean, I like everybody.

So like that's why even in my- I'm the worst. Yeah, I'm the worst. And that's why in my hiring process, I have to have a spot where I try to unsell them. I sell them and then I try to unsell them.

Well, and I know how hard it is too, right? Because you hate to have somebody not like you. And that's basically what you're doing when you say, you know, you're great. I don't know if it's a great fit.

You know, I don't know if you have what it takes or whatever the line is to try to push them away. That's tough, right? That's tough to say. Yeah.

But it is. I mean, it's very powerful. So I think the best way to deal with this problem, because it's such a big problem, is first, you have to cast the net, right? So like you and I love Indeed ads.

Spend money on it. It's really not. It's so crazy people will spend, you know, if they're desperate, $5,000 on a hire. But they won't run $200, $400 a month ads to get a flooding of people coming in.

You know, like preventative maintenance versus emergency maintenance. Yeah. But like also like, I mean, yeah. If you set it up, like I think what you're saying, if you set it up where you have like, OK, maybe it's 300 bucks a month or 200 bucks a month to have a deed going.

And, you know, you have an assessment, it's 100 bucks a month and you have, you know, a couple other things that costs far less than DEF CON 5. Holy crap, I need somebody this second. I'm gonna pay five grand for it. Right, well, and I, what I'm saying is like, those other people that are, that you're hiring that are costing five grand, usually, I mean, that not your process so it usually not the best hire You know what I mean So it like you can I think there a certain amount of hands on you do need for your own culture and everything with your own agency So it like how do you do that You can't go into a blind like we've done.

So you got to have, like you said, an assessment, right? Something that is quantifiable that you're comparing everybody to. You should be doing it. So like doing your own ND dads is awesome because you're getting a flooding of people.

I know you and I do the group interviews, like group interviews, assess them. them and then one-on-one interviews. So it's like this filtering process, right? And you go down to the cream of the crop.

Not only do you feel good about them because you talk to them, group interviews also, you can pin people against each other. You can see the way they work around other people because that's the most important thing. You can see if they're putting on their BS attitude, right? And then assess them so you can get some quantifiable, like where are the proficiencies and deficiencies, right?

At least that's quantifiable. And then you can bring them in for a one-on-one interview. This is a way you can go through 100 people and it doesn't cost you that much time. And it doesn't cost you that much money to do it either.

But I think part of it is like, dude, you got to have a good assessment. It's remarkable how similar it is to the entire Telefuddle lead process, right? It's all the same. It's the same.

Like, look at that. You buy 100 leads, you're going to sell one or two of them, maybe three, right? and look at you, you get a hundred resumes, you have one or two, maybe three hires out of there, probably closer to one. So I remember, you know, putting an ad, looking at the 30 or 40, you know, first 30 or 40 resumes and then calling five of them.

And one of them shows up for an interview and guess who got the job? Like that's forcing it, right? You can't force it. If you force it, you're getting bad numbers and you may get lucky every now and then, but my experience has been that that doesn't work.

And so if I was going to give out tidbits of what works, it's just consistency. It's the same stuff as with everything else. Consistency, process, and sticking with it. Even though it doesn't look like it's working at first.

Because the alternative is, holy crap, It's an emergency. I'll pay five grand. And guess what? They're doing the same thing.

Like they're not doing it very, and they're not even doing it customized to your situation. And if they are, dude, there's no way they're doing it that good. Right. There's a lot of crappy hiring going on.

You know what I mean? To be honest. I mean, this is one of the most important things in your business, right? We talk about the telefunnel, right?

The sales funnel. And essentially that's just the sales funnel. The sales funnel is the biggest driver. It's the lifeblood of the body of your business.

But dude, the second most important process in your agency is how people come in and out because that is going to happen. And how long they stay or how little they stay makes a drastic difference. I'll never forget, dude, I told you about that dude that was right down the street from my office and he was selling good, right? Like a couple hundred thousand a month or whatever.

and they were using him as an example of like this awesome agent you know they's they's they them's um they were using them him as an example and so i i asked him about his hiring and he's all yeah i'm always hiring man i gotta hire like eight new people a month and i'm like what he's all yeah he's like they they just they're rotating in and out of the agency so quickly i'm like oh my gosh and their numbers that they were selling per agent were so low. And I'm like, this can't, this is not a profitable business.

Oh. Like he was on a new contract, so he was getting all that enhanced commission and dude was breaking even. It's a different situation. Yeah, it's terrible.

It was terrible. The business model sucked. Yeah. But that's why it's important.

So like you have that, you know, customer journey, customers coming in, like how much do they cost on the front end? coming in? How do you make that a consistent model on the front end? How do you make the onboarding into keeping them and then also adding on more policies that includes your LTV lifetime value?

So it's not just what you're getting from the person on the initial sale. It's also what you're getting on the other policies and how long they stay like that drastically changes the economics of your business. Right. And it's the exact same thing when it comes to hiring, how long they stay and how much they produce is a completely like you can have two businesses producing the same numbers but that those numbers of how often they're hiring and how long the people are staying is will completely change the economics of what you actually take home yeah and that's the other thing it's like there's so many agents you know we always look at the vanity numbers like how much they're selling and all this stuff well dude how much are they keeping yeah you know what i mean?

Like, that's the most important thing to me. Like, are you like, or if they're not keeping, are they growing at a rate at like, at some point they, they gotta be keeping, right? Like what's the plan? Because I see so many agents that just dump money in and their processes look, their processes really stink and they're not keeping any money.

So it's like, what are they doing? Good. And I mean, for a lot of people, it feels like they're not keeping any money right now. That's what I hear out on the street.

Then why do it? But I got my ears to the street, Mr. Jason. I guess so.

All right. Well, I think that was good. It was a good mailbag. I didn't argue as much as I thought we would.

You really helped me understand that we're looking at more like the number was in those were incredibly low numbers of the costs, but you're looking at 48, I don't know, 74 K for a bad hire that was in there. And that's on the low, low, low, low end. And that's not saying, but that's like not even. That's without the bonus.

Yeah. So like give it a percentage of that bonus too, you're looking at probably a hundred K. So that's 74 K without the bonus. Crazy.

Yeah. And that's a mailbag. That is a mailbag.