Return on investment

[agent4sail]

Shortly after joining the forum, when I asked for answers to several questions, I was referred to
'seek and ye shall find'. I have done so, searched and made many notes. Thanks for the education.

There is one item I must have missed, and was hoping someone might shed some light on my dilemma;

In order to obtain a six figure income ($100K+)
selling health insurance, assuming a 20% contract, I would need to sell $500,000 annualized premium; and would need to sell 139 policies @ $3600 ann premium.

Here is the rub, if using lead companies at $8/average per lead, a close ratio of 1:20= $160 lead cost per sale, or $22,240 for annual shared lead costs; works out to be > 22% of my projected income. This and the 35%set aside for taxes and wow! How do new agents have $160 per sale, or, for that matter, any disposable $$$$$'s to spend generating business, with hopes of commissions to come.

Or- the agent who buys exclusive leads at $18 each, and the live transfers at $25/each. Does the close ratio improve substantially enough to make up the difference in cost?

How can I improve my ROI using the available lead sources? Is there a point where my return is higher because of the type of lead I can afford?

I'm trying to spend my limited lead money wisely and will appreciate any thoughts you have.

 

[Crabcake Johnny]

I'm more concerned with my net profit per sale.

Regardless of the lead source, if you're properly trained, motivated and have your head in the game any method pulls results.

A lot of this is going to be wash, rinse, repeat as necessary until you find a method that best suits your style.

Take shared leads. Regardless of the source (and long and they're not one of the major violators re-selling to 8+ agents) you should close 1 out of 15 with an average price per lead of $8 and average commission of $650.

That's a $530 net and if you want six figures net that's 4 apps per week or $480 per week in lead expenses.

Yes, you will also figure in about $300-$500 per month of additional business expenses.

 

[Delta76]

As far as shared leads, I can't help you there. However, as far as getting a decent return of investment, have you thought about telemarketing? This is how the math works out for me, these aren't made up numbers:

I use a predictive dialer costing $300 per month (although you could easily find one for $200 per month). This just lets me contact more people per hour than hand dialing, it's actually double. Nothing wrong with hand dialing to start if cash flow is limited, you just have to spend twice as much time to achieve the same results if you're calling for individual health.

Using a predictive dialer, I have to make 250 dials to make write an application. I can make 75 calls per hour easily with the predictive dialer, so that's 3 1/3 hours of calling to write an application. So, in order to write three apps, that would be 10 hours of telemarketing per week or two hours per day. Using your numbers of $3600 annual premium average and 20%, that equals $2160 in revenue. However, not all your apps will be issued, let's say 75% pass underwriting, that would be $1620 per week.

You are calling on business owners, which means your persistency will likely be higher and you will write larger premiums compared to shard leads. The average age of people I write apps on is 48, I only write business owners unless it's a referral situation. Plus, there are more cross selling opportunities. The downside, the process can take longer than shared leads as they didn't call you for health insurance, you called them (I would speculate as I have never bought shared leads). Also, my average premium isn't $3600, depending on your state, you may have to readjust those numbers.

So if you can effectively fill a pipeline on two hours a week of telmarketing, why don't more people do it? It's not fun to do and it takes discipline. Also, it takes a few weeks of consistent telemarketing to build a pipeline and most people give up too early. Imagine telemarketing two hours a day and then working some shared leads on top of it while getting referrals from P&C agents and financial advisors. There is a lot of opportunity out there with a good ROI, it just takes a willingness to get your hands dirty and get after it.

 

[bluemarlin08]

Buying leads can be a great way to start, but long term you are going to want to find additional ways to generate your own, better qualified leads. It takes more time, but try to concentrate working leads in a 60 mile radius of where you live. Inform them in the beginning that one of the ways you are compensated , in addition to the fees the company pays you, is referrals to others that might need your services. Then help them think of names you can contact. The more you generate referrals the higher your ROI. Always be looking for ways to get names, who do they hunt, fish or golf with, who is their best friend, brothers, sisters etc. After awhile it will become second nature.

 

[moonlightandmargaritas]

I'm more concerned with my net profit per sale.

Take shared leads. Regardless of the source (and long and they're not one of the major violators re-selling to 8+ agents) you should close 1 out of 15 with an average price per lead of $8 and average commission of $650.

That's a $530 net and if you want six figures net that's 4 apps per week or $480 per week in lead expenses.

Yes, you will also figure in about $300-$500 per month of additional business expenses.

Yup, right on the money. Couldn't have said it better my own self.

I think it's important to look at any marketing expenses not as a cost, but as an investment.

You gotta spend a little to make a lot...

PS-What the hell kind of brutal font is that? Where's al3 when we truly need him?

 

[Crabcake Johnny]

Now let's talk about reality:

You have $400 a week? "No"
You willing to cold call? "No"
Then here: Find Jobs. Build a Better Career. Find Your Calling. | Monster.com

 

[JRoot]

You need to factor in your "gimme's". Your referrals and people who come to you unsolicited once you get going will bring in more than you think.

 

[moonlightandmargaritas]

You need to factor in your "gimme's". Your referrals and people who come to you unsolicited once you get going will bring in more than you think.

Very true, but it takes a little time to get there, no?

I did three apps this morning. One a current client with a better offer, one referred by a client who's a neighbor, and one lead from my monthly newsletter.

What is it they say?

"Sell a bunch by lunch...be a winner by dinner."

 

[moonlightandmargaritas]

You are calling on business owners, which means your persistency will likely be higher and you will write larger premiums compared to shard leads. The average age of people I write apps on is 48, I only write business owners unless it's a referral situation. Plus, there are more cross selling opportunities. The downside, the process can take longer than shared leads as they didn't call you for health insurance, you called them (I would speculate as I have never bought shared leads). Also, my average premium isn't $3600, depending on your state, you may have to readjust those numbers.

Excellent advice Matt. Starting out it would probably be optimum to do both if you can?

I've built my book on business owner telemarketed leads. If you build a "relationship", they'll stay with you forever, and refer like crazy if you "set the table".

E-mail from one of my clients today (roofing company owner): "Thanks for looking out for us."

Hard to get in behind that.

Like my Dad used to say: "Service, service, service."

PS-Congrats to Morneau. You've got to admit though Hamilton "stole the show"! If he was still with the Rays....

 

[Guest]

This and the 35%set aside for taxes...

Thanks for your post! This is the only time I've ever seen taxes taken into consideration as an "expense" against ROI (but maybe I've missed a post or two). Perhaps you could just "put off" the taxes part for a few years?

BTW, are taxes considered an "expense" or an "investment"?