Insurance Agent Tip #2: Defining Success Through ROI

By The "Insurance Lead Guru" - Last updated: Friday, August 13, 2010 - Save & Share - Leave a Comment

Ok Agents its time to get out your calculators! Too often new insurance agents use “gut feelings” to make business decisions when their own data is all they need to determine what marketing initiatives are making them money.

To know how successful your marketing efforts are, its important to track your return on investment (ROI) – that is, how much you make vs. how much you spend.
To calculate your ROI, add you own data into this formula:

Commissions from policy Sales
————————————————— = ROI
(Cost of leads + # of leads purchased)

Now lets see that same formula
with the following example data:

           $800 in Commissions
          —————————— =$3.35 ROI
              ($7.95 + 30 Leads)

Another way to look at the above return-on-investment example: if you have a $3.35 ROI – then for every $1 in marketing dollars, you receive $3.35 in commissions. That is like earning a 235% return on your money!
There is no “right” ROI number – try a variety of tactics to get an idea of what a good ROI is for you. However, if you have a ROI that is less than$1, then you are losing money and should re-evaluate your marketing strategy.
Agents often incorrectly focus purely on closing ratio and contact ratio. While these metrics do demonstrate the relative quality of leads, it does not take into consideration the cost of obtaining those leads in the first place. A higher closing ratio definitly helps and saves you time.
That being said, agents are also making a mistake if they only consider price when choosing an online lead company. Price is only part of the equation when determining whether or not leads are profitable. After all, its no good to get a lot of cheap leads if not enough are converting into sales. Price and quality And Return (commissions) work together to determine the best value.
Dont get discouraged because your initial life insurance leads didnt convert – look at the big picture! Before calculating your ROI you need to have statistically significant data. We recommend at least 30 Insurance Lesds to really get an accurate representation of how a comany’s leads will work for you. Too often agents give up too soon because they dont have enough data to realize their long term ROI.

Visit our website TopPickLeads.com to find out what companies offer the best Internet Insurance Leads

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