ROI on AP Vs Lead Cost & Chargebacks!

[TDFnCali]

ROI-

I have just completed a spread sheet showing all my costs for FE & all my income since I started in Feb 2012. What I wanna know is when computing an acceptable ROI (I think at least 3 to 1 is good, hopefully 4:1) do u guys/gals count ALL your cost or just your lead cost? To this point, I have spent apprx $2200 on leads & I have over $13k in AP paid- so not counting what I still have pending. That amount IS counting starting with cheaper old leads so I wont be able to sustain that kinda ROI over time & its also counting fam & friends apps that obviously had no lead cost. But of course I also had E&O, stationary, gas, off supplies, etc costs. Im just trying to get a consensus of how most agents calculate their own ROI & whats an acceptable ROI for most?

Chargebacks-

I dont think Ill get a concrete answer for this, simple cause it most likely doesnt exists, but Ill ask anyway. Have any of u guys ever noticed when your chargebacks typically happen? I mean Im sure they happen anywhere from the 1st month to the 9th...but Im trying to see if the majority of them happen in a certain time frame like between mos 2-3 or anything like that?

Thanks in advance!

 

[rapidrobert]

For me the majority happened between about the 3rd to the 6th month. Those that stuck that long were good usually.

 

[lsalmans]

For me the majority happened between about the 3rd to the 6th month. Those that stuck that long were good usually.

I second this notion. Even your worst clients for their ability to make their payments will often squeak out 2 and maybe 3 payments. Then somethings happens.

 

[Justin Bilyj]

If there is a pattern with chargebacks then maybe you should invest a couple of dollars and send out two cards from SOC that thanks them for their business, and also to check up and see if they have any questions, or to tell them how important it is for them to consider their family's wellbeing and to go to lengths to protect them from the inevitable.
Also, ROI is think 3-1 is a bare minimum for this industry. Now I don't want some knucklehead being mr. devils advocate saying, "well if i had a tiny sales cycle, i would do 2-1 the whole day", well thats nice and all but it ain't happening in this arena.

 

[Newby]

There is a great way to prepare for chargebacks. Put a % of your commission on each sale in a separate account that you consider a chargeback account. I assume you are already doing something similar for taxes.

The largest chargeback exposure comes when the insured dies during the 2nd year and the policy is contested and rescinded. I've only had one of these but it resulted in an unexpected chargeback of over $2,500 in that case. No problem if your chargeback account is funded. Big problem if you aren't prepared.

 

[jdeasy]

The only investment I count is what's in my bank account. I do keep track of all my expenses for my tax lady to use, other than that, who cares?

As for chargebacks, my are limited because I'm paid as earned on all business except for one company that I'm on a 6 month advance with. You still get chargebacks even whe paid as earned, but not big ones unless it was a death claim not paid.

As for the not takens, I can't remember ever having one after the policy was in force for more then 2 months. 90% happen in the first month.

I will get people that miss payments well after that because of NSF or changed bank accounts that I have to do service w ork to get back on track. There may have been someone cancel 9, 10 or 18 months into a policy but I don't remember it.

As for the not taken I get very few of them now. I used to get quite a few when I used the "think about it" close a lot. Now that I very seldom use that close I don't get so many not takens.

 

[RonRoberts]

The only investment I count is what's in my bank account. I do keep track of all my expenses for my tax lady to use, other than that, who cares?

As for chargebacks, my are limited because I'm paid as earned on all business except for one company that I'm on a 6 month advance with. You still get chargebacks even whe paid as earned, but not big ones unless it was a death claim not paid.

As for the not takens, I can't remember ever having one after the policy was in force for more then 2 months. 90% happen in the first month.

I will get people that miss payments well after that because of NSF or changed bank accounts that I have to do service w ork to get back on track. There may have been someone cancel 9, 10 or 18 months into a policy but I don't remember it.

As for the not taken I get very few of them now. I used to get quite a few when I used the "think about it" close a lot. Now that I very seldom use that close I don't get so many not takens.

You are right about the "think about it" close. I will not consider it either. IMO, if they have to think about it then the way I look at it is they are going to cancel on me because they see no value.

 

[djs]

ROI-

I have just completed a spread sheet showing all my costs for FE & all my income since I started in Feb 2012. What I wanna know is when computing an acceptable ROI (I think at least 3 to 1 is good, hopefully 4:1) do u guys/gals count ALL your cost or just your lead cost? .......

There is a lot of ways to look at ROI, but when referring to leads, its usually dollars in from those leads vs dollars out in buying the leads.

If I buy $100 in leads and get $400 in return from those leads, I have a 4:1 ROI which gives me money to pay my overhead and costs of doing business and hopefully enough to pay my own bills.

The number you are looking at is the ROI on your agency. You put in xxx dollars, get xxx dollars back, for your time, you have earned a certain ROI. This is an important number, but not for assessing the value of a lead source.

By tracking the ROI on individual lead sources, you can determine if its worth continuing or not. You want to know if one lead source consistently has a breakeven ROI, another a 2:1 ROI and another 4:1 ROI. If so, you would want to pull some money from the breakeven and reallocate to the 4:1 (sounds easier than it really is).

Keep in mind, its not just $$$$, but its also a more precious commodity, your time. A lot of people love networking because they feel the lead cost is much lower (and it usually is) but frequently their time costs are very, very high with networking over other sources.

Dan

 

[jdeasy]

You are right about the "think about it" close. I will not consider it either. IMO, if they have to think about it then the way I look at it is they are going to cancel on me because they see no value.

I haven't completely thrown it out. I will use it as a last resort still. Used it on a couple last week. They are approved and say they are taking the policies, but I'm never surprised if those go the other way.

 

[TDFnCali]

If there is a pattern with chargebacks then maybe you should invest a couple of dollars and send out two cards from SOC that thanks them for their business, and also to check up and see if they have any questions, or to tell them how important it is for them to consider their family's wellbeing and to go to lengths to protect them from the inevitable.
Also, ROI is think 3-1 is a bare minimum for this industry. Now I don't want some knucklehead being mr. devils advocate saying, "well if i had a tiny sales cycle, i would do 2-1 the whole day", well thats nice and all but it ain't happening in this arena.

I send out a thank you card as soon as its issued & I call at that point too...to congratulate them. I also call after 3mos & send a Bday, Xmas & 1 yr anniv card. When u say 3:1...are u taking into account ALL exp or just lead exp?
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The only investment I count is what's in my bank account. I do keep track of all my expenses for my tax lady to use, other than that, who cares?

As for chargebacks, my are limited because I'm paid as earned on all business except for one company that I'm on a 6 month advance with. You still get chargebacks even whe paid as earned, but not big ones unless it was a death claim not paid.

As for the not takens, I can't remember ever having one after the policy was in force for more then 2 months. 90% happen in the first month.

I will get people that miss payments well after that because of NSF or changed bank accounts that I have to do service w ork to get back on track. There may have been someone cancel 9, 10 or 18 months into a policy but I don't remember it.

As for the not taken I get very few of them now. I used to get quite a few when I used the "think about it" close a lot. Now that I very seldom use that close I don't get so many not takens.

I mustve misunderstood what a "Not taken" was...when U say u dont remember having 1 after the policy has been in place more then 2mos, well if its been in place 2mos & stops, isnt that a chargeback?? A "not taken" I thought was a policy u sold, issued & then the customer never paid 1st payment due to change of mind or whatever.

And as far as the "think about it" close, this was referenced before by me in another post & everybody jumped all over me...inc u JD, I believe, maybe not, dont remember exactly. But when I mentioned it, I was referring to ppl who WANT a policy, u can tell the rapport is good, but they are scared to pull the trigger, or they want to make sure its the best price and/or just want to procrastinate even more then they already have....thats when I use it, to get it in their hands so they wont stall any longer & allows them to make sure they arent getting screwed on price (although I suspect 75% of them never shop the rate). I dont use it on ppl I can tell they dont value it or dont seem more then 1/2 interested or maybe have some & was thinking of getting more (unless they have very lil)...thats a waste of time. Know when to use it & when to just pass...I passed on using it yesterday for a very elderly couple who had some but thought about more. So far none of those Ive used it on have got it & then cancelled before 1st payment.