Paying For Leads ONLY After a Sale

[payperconversion]

What would you pay for a standard, preferred auto lead ONLY if

a) it converted into a client

AND

b) only after it converted into a client?

I know the market rates for Internet leads in general as well as exclusive Internet leads as well as so-called hot lead transfer, but what if there were a service that allowed you to pay for a lead only AFTER it converted into a client?

What would you pay for such a lead for preferred auto vs. standard homeowners vs. plain vanilla commercial P&C?

Thanks!

 

[STIBROKER]

but what if there were a service that allowed you to pay for a lead only AFTER it converted into a client?

What would you pay for such a lead for preferred auto vs. standard homeowners vs. plain vanilla commercial P&C?

Thanks!

well you know that could hurt a company if you give good leads to a sucky agent that could not close a door.......

 

[tlmarketing]

I don't think there's a way for a lead company to offer that to you unless they were completely aware of your sales ability and had confidence in your sales ability...

if you close 10% of the leads you currently work, the lead vendor is going to want 10x more to provide you with guarantees based on sales.

 

[payperconversion]

Thanks for the replies.

Here is the concept:

Agents access system and check out leads that continually flow into the system based on state(s) and line(s) of authority matches.

A lead can be taken up by a max of 3 agents simultaneously for a week - but agents do not pay to check out the lead.

Leads flow back into the system automatically after the week finishes unless the agent marks the checked out lead as sold.

Agents receive an invoice monthly for leads they have marked as sold.

System audits leads to make sure agents properly report sold leads.

Agents pay nothing to access leads and pay only if they convert.

Better converting agents get priority with new leads.

Similar to the CPA model in other lines of financial services.

The simple idea is to solve two problems in Internet lead gen: the first being that many, many agents are spending way too much money on re-sold leads of varying quality where only one agent wins - there is a lot of waste in the system and the value accrues to the lead seller which is not fair.

The second is that the best performing agents should get the best pick of the leads.

Overall, it is a self correcting and efficient system, completely aligned with everyone, removing a lot of risk - of course, the system itself would bear a lot of risk, but as the systems ultimately self corrects, it should be worth the risk, in theory.

Could it work?

 

[CHUMPS FROM OXFORD]

"3 agents simultaneously for a week"

Not enough time. Many policies are sold months after the original contact.

This will never work unless you change that week to six months.

 

[STIBROKER]

Leads flow back into the system automatically after the week finishes unless the agent marks the checked out lead as sold.

and there in lays the flaw....I sell the lead and said look .....you are going to get hammered over and over because you put your chili out on the net....and it may never stop....tell people to stop calling.....and never report as sold....so...were is your link for life leads........

 

[Crabcake Johnny]

Vimo tried this exact system - you may want to contact them about the results. It lasted a few weeks before it was yanked.

 

[joshb]

They have a system similar to this in Florida through the state, the leads NEVER get marked as sold even though they suspend your account when you don't, it still never happens, they just get marked as offer refused, even though they are sold.

 

[payperconversion]

Thanks everyone, great feedback, fair points.

We have done a lot of work in the credit card and for profit education sectors where pay for performance lead generation works extremely well if it is well managed, and seems to be much more fair to lead purchasers.

Of course there are challenges such as the sales cycle and managing lead exposure and managing lead audits. On the latter, I actually think we could manage it better than the current lead model where leads are sold god knows how many times as we would only allow a max number of checkouts and not everyone would see the entire lead detail.

For the former, this is indeed a good point, but if we are sticking to plain vanilla preferred risks, primarily personal lines, I would expect the sales cycle to average no more than two weeks - is this fair?

If this could be pulled off, what would agents in say CA, NY, FL, or TX typically be willing to pay for a preferred auto lead after the deal closes?

I am *assuming* an avg premium of about $900 gross per year, conservatively 10% to the agency, so $90 per year, and then 50% to the agent, so $45 maybe an avg lifetime value of 5 years or so with a declining renewal commission, so call it $250 of income over time not getting fancy with discounting cash flows.

If this is the case, and you are now paying $10 or so per standard non-exclusive Internet lead resold god knows how many times and likely acquired through an iframed win-an-ipad page, I would guess you would be willing to pay at least 10% of lifetime value up front, maybe $25 or so only after the deal closes? Maybe even more?

Please feel free to correct my poor math skills as required.

Thanks!

 

[djs]

At even $35 a lead, under what you are describing, I'm in, all day long. Make it 2 weeks though, or at least let me keep selling the lead.

Dan