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How to Have Success When Buying Insurance Leads

Buying Insurance Leads
Mar 8, 2022
minute read
Jacob Tegtman
How to Have Success When Buying Insurance Leads

Purchasing high-quality insurance leads is an appealing concept for insurance agency owners at any stage in business. As long as the leads you buy are real people, actively looking for insurance at the time you reach out to them, purchased leads bring substantial value.

Of course, not all leads convert into new insurance clients, even if the leads are premium. There are also stages of agency growth where leads become more or less important. However, if the numbers make sense at the end of the day, then purchasing leads is a simple decision.

When it comes to buying insurance leads, it’s important to know your options and have a strategy in place to maximize your sales conversion rates. As you’re investing money into lead purchases, it’s also crucial to track your metrics to ensure you’re getting the most value from your leads. Read on for more on buying leads and how to make the most of them.

Does Buying Leads Actually Work?

Purchased insurance leads are a profitable source of new clients for insurance agencies across the country. Each day, thousands of transactions take place from new leads, meaning that leads do “work” as far as creating agency profit goes.

When it comes to the value of an insurance lead, you need to look at the cost and average closing rate of the leads you're purchasing. It's also important to compare your success with purchase leads vs. ones you obtain by other means.

The cost of leads varies by company and the type of lead you’re purchasing, so the range can change dramatically. In terms of success rate, much depends on the effort you put into it, but the average closing rate of insurance leads ranges from 8% to 15%.

Evaluating Lead Cost and Profit

To determine if a lead actually “works” for you, take a look at national averages of premiums sold by insurance type, along with your commission and conversion rates. So long as the profit you make from new policies and renewals is higher than each insurance lead’s true cost, then buying leads makes sense for you. For example:

  • The average homeowner’s insurance premium in the U.S. in 2021 is $1,249 per year.
  • The average car insurance premium in 2021 was $1,321 per year.
  • Life insurance price is certainly not a one-size-fits-all situation as you have to factor in client age, health status, type of insurance, and coverage. But, on average, the premium for a single variable life policy is $40 per month (or $480 per year).

Say you calculate that your average conversion rate for leads is 15%, your commission rate on homeowner's policies is 15%, and you sell a homeowner's policy with a $1,249 premium, then your actual value for each lead ($1,249 x 15% x 15%) is $28.10, regardless of whether you sell insurance to any particular lead. Remember that you also receive a commission for renewals on policies you sell. 

The bottom line is that if your lead costs you $20, and you're gaining an average of $28.10 per lead, you know you'll have a dependable net gain if you buy enough leads.

Types of Paid Leads

There are many types of paid insurance leads, and choosing the right fit for you is often one of the keys to making paid leads worth your while.

Real-time leads

Real-time leads are a premium type of insurance leads. When you work with a company that offers real-time leads, whenever they receive a request for insurance or an insurance quote, they send that lead to you within minutes of the prospect expressing interest.

These leads are great because you’re often able to connect with the lead before they speak with several other insurance agencies. These prospective clients may not need a lot of convincing since they’re already looking to buy. As a result, real-time leads often come with a high sales conversion rate.  

Aged leads

In contrast, aged leads are prospects who have submitted their contact information to a lead aggregator website or quote-generating service some time ago. Often, aged leads can be anywhere from one to three months old. In addition, lead companies that sell aged leads also typically sell them to multiple insurance agencies (more on that below), meaning that the chances of conversion are often extremely low. The only upside to aged leads is that their price is often comparatively low.

Live-transfer leads

Live-transfer leads take the concept of real-time leads to the next level. In this case, instead of just sending you notice of the lead, the lead-generation company will actually transfer a live phone call with a qualified prospect on the line directly to you.

With live-transfer leads, you get a 100% chance to speak with your lead and sell coverage to them. These leads come with a price but are often the best value when it comes to types of insurance leads.

Exclusive Leads vs. Shared Leads

When you're shopping for an insurance leads company, make sure you know if the leads you’re receiving are exclusive or shared:

  • Exclusive leads are sent only to you and no other insurance agencies. These leads may cost a little more, but you have a higher chance of closing a sale with these prospects since you don’t have competition from other agencies.
  • Shared leads are given to multiple insurance agencies at the same time. The main advantage of shared leads is that they’re often less expensive than exclusive leads. If you don’t mind the extra competition when reaching out to prospects, these leads can have a good ROI.

Keys for Lead-Buying Success

The value of buying leads comes down to your success in converting the leads you purchase. To give yourself the biggest advantage, make sure you’re buying leads from a premium company and that the type of leads you purchase matches your budget and expectations. Here are a few additional tips to maximize your sales closing rates.

Utilize an auto-dialer

Using an auto-dialer is especially pertinent to real-time leads. One of the best ways to ensure success when you receive a new real-time lead is to call them right away. After all, real-time leads are looking for insurance right now. So, if you can get in touch with them right when insurance is on their mind, your chances of selling go up — way up, in fact, as between 30% and 50% of sales go to the vendor that responds first.

If you’re competing with other insurance agencies for your lead, then response time matters even more. Make the call first, and while you’re discussing options and payment with your new prospect, everyone else who received that lead will be leaving voicemails.

Make Sure To Cross-Sell

When selling to insurance leads, one of the best ways to get a higher ROI is to sell multiple types of coverage. That way, even though you’re only paying for one type of insurance lead, you’re getting the chance to profit from multiple.

For example, even if you purchase specifically auto leads, life insurance leads, or homeowners insurance leads, ask your prospect about all three. Since you sell protection against financial loss, offering your new lead protection against all risks you insure against is a smart sales strategy.

Keep realistic expectations

If at first you have a rough time getting sales from purchased leads, just remember that sales success takes time and persistence. Buying leads gives potential clients an additional way to find you (as opposed to you always finding them). Still, when you’re reaching out to someone new for the first time, there’s always a slightly lower chance you’ll get the sale than you would on the second or third attempt.

Just remember that if leads didn’t work, people wouldn’t buy them. Every type of sales effort takes time to pay off, so stay consistent with your approach and keep positive. But don’t put pressure on the process to produce too quickly.

Be hardcore with your follow-up

On average, only 2% of sales are made on the first contact. Sales is a long-term game with the most sales going to agencies who follow up with their prospects consistently. To be successful, make improving your follow-up organization a priority and maintain a positive attitude that keeps you motivated to continually follow up, even and especially when you don’t want to.  

Utilize multiple contact strategies

When you get a new lead, as part of your follow-up strategy, reach out to each prospect in every way possible.

  • Try calling them, and leave a message if you need to.
  • If you have their email information, send them a message.
  • Send them direct mail with your insurance offer.
  • If you can find them on LinkedIn, there’s nothing wrong with trying to create a professional connection that way.

Keep your lists of paid insurance leads. When times are slow in your agency, get back in touch with leads that didn’t turn out. You never know when some random phone call, email, or outreach will find them ready to purchase insurance again.

Work with a great insurance leads provider

No matter how good you are at closing leads, your chances of sales success with bought leads is largely determined by the company with which you work. After all, if the leads you’re receiving aren’t quality ones or you’re getting prospects that have already purchased from someone else, great sales skills don’t help.

Give yourself the greatest advantage possible by working with Nectar.

No matter what stage you’re at in your agency’s growth, you need the best possible leads delivered directly to you so that you can maximize your ROI and create a profitable business.

Nectar offers premium real-time. We source our leads from the best marketing platforms across the web, using advanced technology and data science. When you get leads from us, you can rest assured that the leads are high-value. Nectar gives you the best opportunity to sell — and grow your agency. Reach out today to learn more.

This article reflects the features of Nectar as of the date of publication. Features are subject to change at any time. This article is meant for informational purposes only, it is not a guarantee that using Nectar will help you achieve specific business or financial results and is not intended to serve as the sole recommendation for any business financial decisions.


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