Prospecting is the toughest, most time-consuming part of getting a new insurance career up and running. Buying leads can be a great way to fill your pipeline more quickly, but watch out – there are a few pitfalls you want to be sure to avoid along the way.
1. Don’t chase the “perfect lead”
The concept of “return on investment,” or ROI, is very important to us as insurance agents. If I spend $100 on leads and make $600 in commissions, I’ve got a 6:1 ROI – and I’m pretty happy with that. If I spend $500 on leads and make $600 in commissions, then I’m not nearly as happy – my ROI is significantly worse.
Early in your career, buying super-expensive leads like exclusive real-time life insurance leads or pre-set telemarketed appointments can be a quick way to tank your ROI. While your closing ratio may be marginally higher with these types of leads, the significantly higher cost means you’ll be returning less on every dollar you invest – that’s not great for business. Aged leads and direct mail campaigns may not be as flashy, but the lower cost-per-lead tips your ROI in the right direction.
Besides, an “exclusive” lead isn’t ever really exclusive. Sure, one lead vendor may only sell that person’s information once. But if that person went to another website looking for a quote – and they probably did – there’s no telling how many times their information has been resold.
2. Take adequate sample sizes
Prospecting for insurance sales works on the law of large numbers. Sometimes you’ll buy a batch of leads and only close one or two – sometimes you’ll close many more. Over time, these peaks and valleys average out – but you’ve got to give them time to do so. Don’t make any assumptions about a lead source until you’ve given it a fair shake.
I remember the first batch of leads I ever purchased. Forty leads, and I didn’t close any of the first thirty-nine. Number forty was a big sale, though, and I reinvested some of that commission into another order. I ended up closing numbers 41, 42, 43 and 44. My ROI by then looked pretty good, and I was glad I hadn’t ditched that lead source just because of an early cold run.
With the number of options available to you, there’s no reason not to spread your business around to multiple lead vendors. Sometimes the “hot hand” cools off, and you’ll want to shift your marketing dollars from one vendor to another. Tracking your ROI on a consistent basis makes it possible to determine when a move like this may be necessary, and trying multiple lead sources means you’ll never lack for options if you need to swap things around.
In addition to trying multiple vendors, try multiple types of leads as well. You may be great on the phone, but even better with direct mail. If you don’t try it you’ll never know. Don’t be afraid to invest in your business and explore multiple marketing avenues!