Lead Costs Will Lower?

[theinsuranceman]

I think leads will be sold to fewer agents increasing quality a little, and the price goes up a little.

 

[Josh]

Since we're all just guessing about things, I think agents will drop out of the market and fewer will be getting into it which will lower demand, that might lower price. I have to completely agree with John though, the cost associated with generating a lead is free and independent of agent commissions.

 

[VolAgent]

IMO...

Vendors are going to have to rebalance supply versus demand. Prior to HCR and perhaps currently, there was vastly more demand than supply. Vendors could continue to raise rates, resell leads, and offer incentives to request quotes.

Vendors are going to have to either increase demand, or decrease supply going forward. The most expensive lead sources for vendors will quickly disappear. You might even see an increase in price from some vendors as they claim quality has increased, and they are sold to fewer agents. Others will probably find cheaper sources and reduce prices in order to restore demand and margins.

You can expect vendors across the board to dump their most expensives sources. Hopefully that is "register for a free iPad" leads, but it very well could be PPC leads. Finally, you should expect a lag in lower commissions and response from the vendors. Just like everyone else, they will try to pretend it isn't happening at first. Then they have to develop a gameplan and respond.

 

[Ann H]

Basic supply and demand shift from two sides

From the agent side, DEMAND for leads goes down as agents exit the business The type of agent exiting the business is the very type that needs leads - they don't have a solid book of business with renewals and referrals.

From the consumer side SUPPLY of consumers looking for insurance goes up because their agent left the business, or their insurer exited the market, or their premiums spiked...

Although cost of developing a lead is the same, the cost of web leads is nearly zero anyway. They build websites and invest in SEO, keep databases and sell an intangible product. No inventory, no overhead, no product costs.

However, one way this can turn backwards is if lead sources also exit the business, making the SUPPLY of leads go down.

 

[YouGotMyMoney]

From the agent side, DEMAND for leads goes down as agents exit the business The type of agent exiting the business is the very type that needs leads - they don't have a solid book of business with renewals and referrals.

Everyone needs leads.

Just because you've built a book doesn't mean you stop needing leads.

Ind Health is not med supps, the average client is not staying on the books for 5 yrs plus. You need to replace what drops off.

Although cost of developing a lead is the same, the cost of web leads is nearly zero anyway. They build websites and invest in SEO, keep databases and sell an intangible product. No inventory, no overhead, no product costs.

Clearly you have no idea how it really works.

 

[669comche]

There will be some sort of market "correction" in the leads business.

If demand is no longer there, then the lead company's will have to do something. Whats their alternative? Go out of business?

Thats not going to happen.

We are all assuming that lead closing ratios stay the same as well. Maybe that will change.

At this point we are all just pissing in the wind.