Breaking Down the Costs
The concept of purchasing leads might initially seem to be an additional monthly expense. When it comes to generating new leads, traditional methods like referrals, networking, organic traffic and more, have little to no direct costs associated with them. However, it’s important to consider that these methods require a significant investment of time and effort, which is an indirect cost.
On the other hand, lead generation partners provide a straightforward solution—you pay a specified amount for a predetermined number of leads. The cost generally includes the expenses involved in targeting, obtaining, and qualifying leads, before they reach your hands. To paint a more vivid picture, let’s break down the costs even further.
- Cost Comparison: The average leads might cost anywhere between $20 and $150 dollars. This depends on a variety of factors including:
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- The type of insurance lead (health vs. business vs. auto vs. life, etc.)
- Volume (the number of leads purchased at a single time).
- Preferred location of leads.
On the flip side, attending networking events, or hosting seminars might include travel expenses, promotional materials, venue hire, and more. Not to mention the hours out of your busy schedule.
- Efficiency: When it comes to sales, time is money. When purchasing leads from a trusted source, all of your energy can be focused towards closing deals. With more traditional generation methods though, you have to account for the time it takes to set up advertising campaigns, mingle with industry professionals, and more. While both methods are valuable, working with purchased leads allows you to talk to more individuals in a set period, ultimately maximizing your chances of closing sales.
Analyzing the Return on Investment (ROI)
One of the best ways to determine whether or not buying leads is cost-effective, is to evaluate the return on investment (ROI). Now let’s look at some key factors to consider when calculating your ROI:
Conversion Rate: While not every lead will result in a sale, high-quality leads from reputable partners tend to have a higher likelihood of converting. For this example let’s assume that you have a 10% conversion rate.
Average Premium: The average cost of client’s premiums will vary depending on the type of insurance you sell. With that said, let’s assume that your average annual premium is $1000.
Lifetime Value of Customers: Consider the fact that many clients renew their policies on an annual basis, leading to recurring revenue. For example, if the premium is $1000 per year, and the customer stays with you for five years, that’s a $5,000 lifetime value.
When putting all of this information together, we can see the potential ROI:
Say you buy 100 leads for $50 each, totalling $5,000. If you have a sales conversion rate of 10%, that means you’ll convert 10 of those leads into sales. And if every one of those leads represents a $5,000 lifetime value, you’ll see a return of $50,000 over five years’ time. That’s a return of ten times your initial investment!
Looking Beyond the Numbers
In addition to the monetary value that we’ve outlined, there are a number of other strategic benefits that agents who purchase leads gain:
- Easy to Scale: Whenever you find the need to bring in even more leads, you won’t have to worry! Lead generation partners specialize in having as many leads as you need, which makes it a breeze to meet your demands however big or small they might be.
- Discover Untapped Markets: Lead generation companies usually have access to broader and more diverse markets so you can discover new opportunities that you didn’t even know existed!
- Optimize and Test: With a higher volume of leads to work with, you’ll have the ability to test out new sales approaches, and optimize your techniques.
- Less Time Finding, More Time Selling: With a consistent flow of leads at your disposal, you can revert all of your attention to converting prospects into sales, instead of searching for needles in haystacks.
Trust Your Lead Generator
We can’t emphasize enough how important it is to find a lead generation partner who is reputable, and understand your specific market. Luckily, Benepath has both of the boxes checked! For over 20 years Benepath has been serving insurance agents and brokers across the country with our high-intent, exclusive leads. Offering a variety of different lead types including—individual health, group health, Medicare, life and commercial insurance— we’ve got something to fit just about every agent’s needs! On top of that, all of our leads are produced and sent to you in real-time, maximizing your chances of conversion. To learn more or get started, just fill out a quick form or call us at 888-684-3121.
