Direct Mail and the Rate of Return

[kwamster]

I have just started as an independent FE agent, and so far, so good. My only concern is (and I realize this is a worn out topic) the rate of return on my direct mail. I went with a highly recommended company and opted for their most successful mailer. I was told it generated almost 1% better return than their less expensive mailer. I staggered two, 1,000 piece drops in different locations and received 15 total replies. If my math is correct that is .75% rate of return, which is even less than what the company told me I could expect from the cheaper piece. Those leads have costs me $60 a piece, which seems unsustainable. I want to continue doing direct mail, but would like to get my costs down to maybe $30 a lead. Has anyone ever heard of a company that charges by the lead, or provides some type of guaranteed response? Your ideas would be appreciated.

There's no such thing as a guaranteed response rate when dealing with Direct Mail lead companies; you will generally average anywhere from 1-2 percent depending on the list, mailer, month and other demographics.

In regards to companies that charge by the lead, there are a few. You may want to consider getting contracted with Lincoln Heritage insurance company, as they charge a set rate per lead (I believe it's around $20 for mailer leads and $30 for TV leads).

Also, they don't charge you upfront for those leads, but I believe the expectation is that you will place some if not all of the business that you write (from their leads of course) with them - I'm not sure on that one, so may want to check that out first.

In my opinion you should just continue doing your own mailings, as this allows you to have more control over the company or companies you use, list, message, mailer (color, size, graphics etc.), timing, and demographics.

The secret, however, is to consistently send out these mailers every week or month, test and track your results and then re-investing your profits and "scale up" or "ramp up" on the volume of the mailings once you find campaign that is yielding you the best results.

 

[jdeasy]

There's no such thing as a guaranteed response rate when dealing with Direct Mail lead companies; you will generally average anywhere from 7-20 percent depending on the list, mailer, month and other demographics.

In regards to companies that charge by the lead, there are a few. You may want to consider getting contracted with Lincoln Heritage insurance company, as they charge a set rate per lead (I believe it's around $20 for mailer leads and $30 for TV leads).

Also, they don't charge you upfront for those leads, but I believe the expectation is that you will place some if not all of the business that you write (from their leads of course) with them - I'm not sure on that one, so may want to check that out first.

In my opinion you should just continue doing your own mailings, as this allows you to have more control over the company or companies you use, list, message, mailer (color, size, graphics etc.), timing, and demographics.

The secret, however, is to consistently send out these mailers every week or month, test and track your results and then re-investing your profits and "scale up" or "ramp up" on the volume of the mailings once you find campaign that is yielding you the best results.

No one is geting 7 to 20% returns. Nor should any person with knowledge get involved with LH's lead program.

 

[kwamster]

Brad is a good dude, you should definitely talk to him about it.


I'm not aware of any mail houses that will guarantee a response rate or charge per lead. If there were, they would definitely charge more than $30/card.

On the plus side, $60 leads aren't necessarily unsustainable. If you can sell at least 2/10 at an average premium of $600 then you're doubling your money. At 20 leads/week and closing 4/20 you're at about $2,400 in commissions and it cost you $1,200. If you can even bump that up to 3/10 you're generating $3,600 in commissions on your $1,200 investment. Keep it in that range every week and that seems very sustainable.

Good point...but I think that you should also stress the importance of mailing out to the proper demographics: 1) Age 50-80 2) Depending on the location, a starting annual income of between $15,000-$20,000 if 65 or older and $25,000-$30,000 if between the ages of 50-64.

Also, I might add, only dealing with people that are really interested in "solving a problem" that they may have.

If these important factors aren't addressed in one's endeavors, a bunch of charge-backs will ensue and have to be added to that equation.

This is one of the biggest problems that final expense agents face (dealing with the wrong people) and one that I feel is oftentimes not properly addressed.

 

[Josh]

Good point...but I think that you should also stress the importance of mailing out to the proper demographics (Age 50-80 and depending on the location, a starting annual income of between $15,000-$20,000 if 65 or older and $25,000-$30,000 if between the ages of 50-64) and only dealing with people that are really interested in "solving a problem" that they may have or else you will have to add a bunch of charge-backs to your equation.

I disagree with what you think are the better demographics. The folks that I know that are doing best with their own direct mail campaigns aren't doing the 50-60 crowd. The other thing is that the income filter by design is flawed regardless of where you're getting it. Agents (or any marketer for that matter) have better success going by home value/geography than the income filter. There are other ways of tweaking a list to make it more accurate too, but you're 100% right about needing to dial in the proper demographics.

Building a proper mailing (or calling) list is a little more involved than most folks want to give it credit for.

 

[Justin Bilyj]

One thing that might explain my return rate is my filters are 60-70, 15-45k.

 

[gordon112]

One thing that might explain my return rate is my filters are 60-70, 15-45k.

50-79 would bring a boat load of more names.

 

[senior-advisor-indiana]

I disagree with what you think are the better demographics. The folks that I know that are doing best with their own direct mail campaigns aren't doing the 50-60 crowd. The other thing is that the income filter by design is flawed regardless of where you're getting it. Agents (or any marketer for that matter) have better success going by home value/geography than the income filter. There are other ways of tweaking a list to make it more accurate too, but you're 100% right about needing to dial in the proper demographics.

Building a proper mailing (or calling) list is a little more involved than most folks want to give it credit for.

I disagree. Income filters have worked well for me. Every time that I have mailed or called without an income filter I would get too many people on Medicaid.

 

[Josh]

I disagree. Income filters have worked well for me. Every time that I have mailed or called without an income filter I would get too many people on Medicaid.

Have you tried other filters to indicate income?

 

[jdeasy]

In an ideal world I would like to have the higher income folks but you took away my cleints that are $15000/yr income it would eliminate moe than half of my clients.

We mail the 50-85 ages and no income filter on the low end. We do try to not mail to the over $50,000 income range. They must filter them pretty good and also the higher income folks don't return the card either. I will only get a handful of high income to wealthy reply cards a year out of over 700 leads received.

 

[davisgroup]

50-79 would bring a boat load of more names.

Not necessarily. My age range on the last two mailings were 55 to 80 yrs old, and I estimate 90% of my returns fell within the 60 to 70 age range. I have received no returns outside of 58 to 73. I plan to tightened up the range next time and expect a better return.