In a challenging and evolving hard insurance marketplace, one metric stands out as a true indicator of sustainable growth: sales velocity.
While many consider organic growth the bellwether for agency performance, sales velocity goes deeper, revealing how effectively an agency is bringing in new business regardless of market cycles. For brokerage owners, mastering this metric can open doors to carrier appointments, enhance profitability and make your agency more attractive to potential buyers.
Equally important, regular reviews of sales velocity can uncover trouble spots and reveal whether you’re truly growing organically.
What is sales velocity?
Sales velocity measures how much new business an agency writes in a given year as a percentage of its prior year’s commissions and fees. For example, if your agency generated $3 million in commissions last year and books $300,000 in new business this year, your sales velocity is 10%.
This number excludes premium increases or renewals. It’s a pure measure of new client acquisition and sales effectiveness, making it particularly valuable during a hard market where rate hikes can mask a lack of real growth. High sales velocity shows that your agency is generating meaningful business through strategic selling, not just riding market conditions.
Why sales velocity matters
Carrier appointments — Insurance carriers are more selective than ever, especially in a tight market. They want partners that can write new, profitable business.
A strong sales velocity demonstrates your ability to grow your book through proactive sales, making your agency more appealing when seeking new appointments. More appointments mean more markets to offer clients.
Exit strategy readiness — If you’re grooming your agency for sale, sales velocity is a key performance indicator that buyers and private equity firms will scrutinize. It shows that your agency can grow through internal efforts, not just favorable market conditions.
A high sales velocity can result in favorable valuations and interest from strategic partners or acquirers.
Sales team performance and accountability — Because sales velocity isolates new business activity, it’s a useful tool for identifying underperforming producers.
If your overall organic growth looks good but your sales velocity is lagging, it could signal client churn or overreliance on renewals. Monitoring this metric at the individual producer level can help you coach for improvement or restructure your team.
Benchmarks and targets — According to industry studies such as Reagan Consulting’s Best Practices Study and MarshBerry’s research, a healthy sales velocity falls in the 15% to 20% range.
Top-performing agencies can hit 20% or more, while averages often hover around 12% to 14%, depending on agency size. Tracking your performance against these benchmarks can help you evaluate your competitiveness.
How to improve sales velocity
To consistently grow your agency’s sales velocity, consider the following strategies:
- Specialize and segment: Agencies that focus on specific industries or geographic markets tend to outperform generalists. Establish expertise in a few verticals to become a trusted advisor rather than just a vendor.
- Enhance your book mix: Diversifying into commercial lines or niche markets can increase average account size and complexity, often with higher commission potential.
- Join a network or cluster: If market access is a limitation, consider partnering with an agency network, cluster or aggregator to gain access to exclusive carrier appointments and increase your placement options.
- Set producer-level goals: Make sales velocity a core component of producer performance reviews. Tie compensation and bonus structures to new business generation to reinforce a growth mindset.
The takeaway
Sales velocity is a lens through which you can evaluate the health and growth trajectory of your agency. By focusing on the right prospects, building strong sales habits and holding producers accountable, you can build a resilient business that thrives in any market cycle.
Whether your goal is to secure new carrier relationships or position your agency for a future sale, increasing your sales velocity is one of the most effective strategies you can pursue.
