Goosehead Insurance and the Thrill of the Chase
If your last meeting with an insurance agent wasn’t an adrenaline inducing event, maybe you’re not working with the right brand. Mark Jones, co-founder and CEO of Goosehead Insurance, is a former Bain Consulting guy who is fond of predatory metaphors in describing the philosophy behind his franchised insurance brand that’s feasting on the lackluster service provided by many rivals in the industry.
Years ago, when Jones and his wife were looking for a decent insurance agent for their real estate investment portfolio, the two realized they were better off starting their own agency rather than settling for what was already out there on the prairie. Jones admits that getting into insurance isn’t the usual path for ex-Bain people, many of whom leave to run huge multinational companies.
“I saw an opportunity, and saw it because there were so many points in the industry,” he said. “I thought for sure there’s many better ways to do this than the way it’s being done now, so we literally started with a blank sheet of paper—and even to this day I’ve never been inside an insurance agency.”
Starting from the beginning back in 2003 when he founded Goosehead, Jones said the goal was making insurance a more lucrative and exciting career path to attract aggressive young kids out of college. Saying that most parents might grouse at paying for a college degree only to see their offspring start selling insurance, Jones stressed that it’s a different mindset when the goal is reinventing a massive industry within the wider U.S. economy.
Part of that reinvention meant separating the sales and service functions, given that the best salespeople live on the adrenaline rush from acquiring new business, rather than servicing existing clients.
“The best salespeople are highly motivated by the hunt, the chase, the kill, but once that kill is over they lose interest,” he said. “We need to have separate service functions, and it needs to be staffed by people who are wired differently than these carnivores.”
Goosehead’s recent performance suggests the approach is working. Its revenues are massive up over the previous year, and the number of operating franchises in the system grew by 55 percent, which is remarkable in an industry that typically grows in line with the GDP.
Seeking to emulate the best in the business, Jones said he targeted USAA’s sky-high net promoter scores, which at 87 is higher than many other companies regardless of industry.
“In business school they always taught us that quality is free,” he added of the company’s mindset. “Our corporate salespeople are 3.6 times more productive than industry best practice, but what we’re truly extraordinarily good at is the back-office.”
Compared with non-franchised insurance providers, Jones said one of the key hurdles is explaining the benefits of handing client servicing off to separate people than those who are bringing in new business. Oftentimes during discovery day, he said prospective franchisees are easily converted when they witness how the process works and can be a big upgrade over traditional agencies.
“If you’re an insurance agent you get to do exactly what you love, and generally that’s why you got into the business, because you like to work with people and you like to sell—we take care of all the rest,” he added.
Primarily in personal lines, Goosehead’s biggest categories are homeowners, auto, boat and umbrella insurance. It doesn’t currently participate in the commercial side of the industry. Its personal lines include more than 80 carriers on the platform.
After raising approximately $100 million as part of an IPO last April, Goosehead is now investing heavily in growth, which means countless new agents and markets squarely in its sights. At present Goosehead has more than 400 offices in the country with more than $400 million written premiums to date.
With that fat war chest and the sales-motivated drive of highly motivated carnivores in its stable, it’s a safe bet insurance will be one of the next franchise segments that’s growing quickly, but still crouching under the radar.