GAs Shift From Surviving To Thriving

According to Mark Krejci, president of the Association of Independent General Agents (AiGA) the U.S. GA corps has moved from simply surviving a deep recession to thriving in better times. While not the golden days of years past, business for most general agents is reported as brisk. The turnaround, says Krejci, can be contributed to similar operational realignments impacting both general agents and the dealer community, which despite their different points of origin, generated the same positive results.

Refocus on Net versus Gross Income

If GAs and car dealers shared a common heritage it was an infatuation with sales volume – cars, VSCs, etc. – as the elixir for ever-burgeoning operating expenses. When volume in any form officially disappeared in December of 2007, prudent operators in both camps moved quickly to cull nonessential expenses.

What has emerged three years later are business enterprises operating at heretofore unachieved levels of operational efficiency. The surprise has been that customer needs can be more than adequately met, internal systems continue to function, and that even the most conservative sales projections can be achieved on less of everything. The even greater surprise is that with each incremental increase in sales volume, cash drops to the bottom line. It’s left most dealers and GAs musing, “Wow, if I had operated with today’s overhead five years ago, who knows how rich I’d be?”

A Sharper Focus on What Sells Makes Money

If there’s a misconception about the good times, it’s that whatever happens to be selling is yielding the optimum monetary return. Granted robust volume normally equates to positive cash flows. While curing a lot of ills, it doesn’t necessarily equate to net profit. Most dealers, and to a much broader extent, the general agents, took a hard look at their product mix to evaluate the cost of supporting a particular product relative to its net income return to the agency. As a result, inefficient products were quickly replaced with those capable of maintaining a proper balance between sales volume and the daily costs associated with supporting the program.

Capitalizing on Current Marketing Opportunities – the GA’s Domain

The core vehicle-acquisition, funding, and owner-indemnification processes, while tempered by cyclic economic undulations, are essentially the same in 2011 as they’ve been for the years since WWII. However, each unique set of market conditions yields new opportunities. On the retail side of the automobile industry, the independent general agent has maintained his or her position as the most adept at capitalizing on shifts in consumer preferences and the optimum product mix offered by the dealer community. Unfortunately, the recession prompted discriminatory practices initiated by select captive and institutional lenders in an attempt to offset the recession-driven drop in their affinity VSC and GAP programs.

The interest shown in the upcoming Agent Summit 2011 is evidence of the general agent’s commitment to remain on the cutting edge of products, marketing techniques, regulations, and industry affairs. When it comes to capitalizing on aftermarket income when the chips are down, dealers are apt to pick up the phone and call their independent general agent.

AiGA is working to level the aftermarket playing field on behalf of the GA community. Stop by our table for more information.

For more information about the AiGA ad hoc agent coalition, contact Mark Krejci at mkrejci@cn-group.com

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Association of Independent General Agents
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