We recently completed a full workforce cost and marketing ROI analysis for one of our CFO advisory clients: a multi-location captive agency with over 40 employees across three offices. I’m sharing a version of it here with the identifying details removed, because the numbers are useful context for any agency owner operating at this scale.

This isn’t a cautionary story. The agency is doing well. But a few things showed up in the data that are worth talking about openly.

Setup

The data we worked with

The agency runs on a PEO, which gave us clean all-in payroll numbers: gross wages, employer taxes, benefits, and PEO fees all in one place. We paired that with the cash-basis P&L for the same period to build a real picture of what workforce cost and marketing spend are actually returning.

The dataset: four months of activity, roughly $2.2M in reported revenue, 46 people on payroll, and $281K in marketing spend.

One note on the revenue number: the agency receives an annual carrier performance bonus that hit in a single month and materially inflated that month’s total. We ran everything two ways — as-reported and on a normalized recurring basis — because the bonus changes the picture significantly and shouldn’t anchor forward planning. That’s a common issue for captive agencies, and one we factor in as a matter of course.

Labor

People cost is carrying half the business

Labor consumed 48.1% of reported revenue and 62.5% of total operating expense. Strip out the bonus and normalize to recurring revenue, and the labor load climbs to 55.5%.

Roughly half of every dollar this agency takes in goes back out the door in people cost before anything else gets paid. Here are the four numbers that frame the workforce picture:

Those are the top-line numbers. The more interesting question is what’s underneath them.

When we broke payroll down by function, eight people in leadership and administration were consuming 44% of total payroll — more than the entire 26-person sales team. That’s not automatically wrong; leadership investment can reflect real strategic intent. But it’s the kind of thing you want to know and be deliberate about, not stumble across three years in.

Turnover

Turnover cost $276,932 in four months

Of the 46 people paid during the period, 19 were already terminated by the time we ran the analysis — 41% of headcount.

That’s not mismanagement. It’s just what turnover costs when you’re not tracking it as a line item. We haven’t modeled replacement and ramp cost on top of that number yet, but we will. Even before that layer, the figure changes how you think about retention.

Marketing

Marketing has an attribution gap

The agency was spending $281,291 on marketing, 12.8% of revenue, and the surface-level return looks fine at $7.81 in total revenue per marketing dollar.

The problem is that’s the wrong metric for a growth-stage agency. The right number is new business revenue. Against $281K of spend, the agency generated $186,013 in first-year new premium — $0.67 back on every marketing dollar in year one.

Insurance is a renewal business, so the full picture is better than year-one premium suggests. But measuring first-year new business only also surfaced something specific: March was the peak spend month at $90,757 and produced the lowest new revenue of any month in the period. April was the lowest spend month and produced the highest new revenue. Spend and bound policies don’t move in lockstep — which means anyone trying to evaluate marketing performance month-to-month without source-level attribution is mostly guessing.

On vendor mix: 68.4% of marketing spend was going to purchased internet leads. A single vendor represented 35.8% of the total budget, and the top five vendors together made up 74.7% of spend across 25 total vendors. That’s real pricing leverage sitting unused — and a dependency worth managing before someone raises rates.

The Full Picture

Where the dollar actually goes

The slide the owner responded to most was the simplest one: a breakdown of where every $1.00 of recurring revenue actually goes.

A few things worth noting. The interest and financing line at 11.6¢ is a fixed cost that doesn’t shrink just because revenue grows. And the operating profit at 11.3¢ is a functional margin, but it’s thin enough that a bad quarter requires active management, not a wait-and-see approach.

“I’ve been running this business for twelve years and this is the first time I’ve seen it laid out this way.”

That’s what we’re trying to do for every client at the CFO tier.

Why We Do This

Why we do this work

Most agency owners have an accountant. We think that’s a starting point, not a finish line. An analysis like this doesn’t tell you what decisions to make — it shows you where the real levers are, so you can make those decisions with clear numbers in front of you rather than a rough sense of what’s going on.

This is part of our CFO advisory service for captive agencies. If you’re running a multi-location operation and want to see what this looks like for your book, we’re happy to walk through it.

All client data has been anonymized. Club Capital is an accounting, tax, and CFO advisory firm serving captive insurance agencies nationwide.