“Our producer is retiring. We have to talk about how we allocateher book.”

That statement is an all-too-familiar one for leadership at manybrokerages around the country today. As the industry faces consolidation and turnover on amassive scale, attrition is happening more frequently and agenciesare being forced to make some difficult decisions. The challenge isparticularly acute for brokerages with a large percentage of smallcompany books of business.

It’s no secret that the economics of small business benefitsputs financial pressures on a brokerage. Many brokerages service amix of business that looks something like this: 30 percentsmall business, 50 percent mid-market, and 20 percent largebusiness. But the mid-to-large size clients often drive themajority of a firm’s revenue and cash profits. At best, the smallerclients return a slim, single digit margin, and end up pulling downthe firm’s bottom line.

This is because as a commission-based business, it’s nearlyimpossible to return a solid profit on clients with less than 50lives. They generally require the same service intensity of a100-life group, but with only one-fifth the revenue. Someindividual employee benefits clients might be profitable, butoverall, small group business with expanded HR service needs and atechnology experience expectation effectively blows the profit andloss formula.

Despite this, many brokerages continue to service small businessclients, as they are often a producer’s income hedge and perceivedlottery ticket in the hopes they’ll grow into larger, moreprofitable clients one day. But what happens when the producerservicing those small business clients leave an agency? Is itbusiness (and margins) as usual, or is it an opportunity totransfer the portfolio and reallocate client services to focus onmore revenue-generating work?

Some forward leaning agencies are learning that they can delivera higher standard of client service and contribute to the bottomline by monetizing their small book of business. They aremonetizing small business clients using a short-term outsourcedpartner that will pay cash for the book and provide a return of thebusiness to the broker at a predetermined threshold, effectivelyfreeing up time and resources to newer, mid-sized or largerclients. This approach provides a roadmap for managing brokerattrition and delivering better service to your clients for thelong-term.

Below are three approaches brokerages can take to moreeffectively determine how to manage their small business book ofbusiness — either as part of a proactive exercise or because brokerdepartures force a decision.

1. Assess the performance ofyour overall portfolio. Understand tenure over time and evaluatehow many and which companies are more likely to grow and becomelarger, more profitable pieces of business. How many of youraccounts have been a 10-15 employee firm for the last fiveyears? Are your smaller clients likely to follow that path,or is there a strategic relationship for keeping them as firmaccounts?

2. Assess your small businessclients’ appetite for change. Many small businesses today arecomfortable with modern tech and app-based tools, so a transitionto an online platform with client dedicated relationship managersvia phone could be a natural fit for them.

3. If you can transition thebulk of your small business clients to a technology based solution,then you must next chart the best course to market. This requiresan evaluation of the cost versus benefits of building a technologyin-house or utilizing available SaaS technology platforms. Acustom-built solution is great for accommodating the unique natureof your business and staff. But it can also be expensive — both todevelop and sustain — and take longer to roll out. There are enoughoutsourced platforms on the market today that you will likely findone that suits your firm’s needs, whether outsourcing servicing,market quoting or selling the book. If you are able to sell yoursmall business book, be sure to consider sale to a firm thatprovides a path back to you in case that book grows to the nextGoogle.

At the end of day, it’s possible to turn broker attrition intoan agency opportunity. By playing your cards right, you can usethat moment in time to transform the underperforming majority ofyour client mix into a more sustainable and growth orientedportfolio that will improve overall margins.

Kevin Dunn is CEO of Decisely, reimaginingthe way brokers and small businesses work together.