Cost of Customer Acquisition

[Cjp231]

I just talked with a rep at a company that calls auto leads for you and then does a live transfer to you when/if they get the client on the line.
They are calling on internet auto leads that you have purchased from a separate company.

The Rep. informed me that if they follow up on 100 leads generally they are able to transfer 20% to you. The other 80% either indicate they don't want a quote or were not reachable. Now this is a professional "quote follow-up firm" and they only get 20% (they are only paid for the clients they transfer to you).

So they break down would go something like this:

Buy 100 internet auto leads for $9 apiece = $900.00
Pay them $19 for each Live Transfer time 20 = $380.00
Total cost for 20 quotes = $1280.00
If you write 1 of 5 quotes total cost per customer acquisition = $320.00

Now that is amazing to me. I guess I never really broke down the numbers like that before. Even if you removed what the live transfer company charges it would still cost $250.00 per new customer. That gives me a new appreciation for those "walk-ins".

Do these numbers seem realistic to you? Do you have better success than this model?

 

[CharityQuotes]

The numbers you are quoting dont seem that good. First off 20% is horrible... I range around 60% of actually being able to quote the leads that I purchase.... from there I am closing around 15%... so in that previous example of your own I would be quoting about 60 customers and closing about 9. In the end... It has always worked out to be around 15% of quotes and 10% of all leads I purchase that I close...

This is a significantly less cost per customer than your model shows...

I don't do anything special. I am not quite sure why the company is giving such horrible %... It makes me think I should get into that business...

Now to keep it fair, I do a lot more than just call the leads... Email marketing is KEY in the way I work and I would say about 40% of my sales are because of it. If your not doing email marketing then start yesterday...

 

[Josh]

I could call cold for you, do live tranfers, and still be under that by a considerable amount.
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So yes, those numbers do seem high.

 

[Quote]

The numbers seem high. I am currently trying to figure out a way to get my cost per acquisition under $100 at this time. I honestly don't think it is possible, but at least making an attempt.

 

[Josh]

The numbers seem high. I am currently trying to figure out a way to get my cost per acquisition under $100 at this time. I honestly don't think it is possible, but at least making an attempt.

It might be easier than you think. Send me your number if you'd like and I can call you Monday about how I might be able to help.

 

[Frank Stastny]

Learn to prospect and get your cost down to a few dollars. It isn't difficult, if they can do it, you as an agent can learn to do it a whole lot better. You are the expert in what you are selling.

Eighty percent of selling insurance is prospecting, twenty percent is the fun, easy part, selling it. Anyone can sell insurance when put in front of a qualified prospect.

I have never met an agent who is so busy writing apps every day, all day that he/she doesn't have time to prospect.

 

[Quote]

The issue is doing it on a large scale when you aren't actually doing the selling. My cost per acquisition includes the costs I pay my sales people.

 

[shaedzs]

I just talked with a rep at a company that calls auto leads for you and then does a live transfer to you when/if they get the client on the line.
They are calling on internet auto leads that you have purchased from a separate company.

The Rep. informed me that if they follow up on 100 leads generally they are able to transfer 20% to you. The other 80% either indicate they don't want a quote or were not reachable. Now this is a professional "quote follow-up firm" and they only get 20% (they are only paid for the clients they transfer to you).

So they break down would go something like this:

Buy 100 internet auto leads for $9 apiece = $900.00
Pay them $19 for each Live Transfer time 20 = $380.00
Total cost for 20 quotes = $1280.00
If you write 1 of 5 quotes total cost per customer acquisition = $320.00

Now that is amazing to me. I guess I never really broke down the numbers like that before. Even if you removed what the live transfer company charges it would still cost $250.00 per new customer. That gives me a new appreciation for those "walk-ins".

Do these numbers seem realistic to you? Do you have better success than this model?

This seems very high. When client acquisition costs begin to exceed $100 in the P&C field, you may want to explore other alternatives for your marketing strategy.