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The Pros and Cons of Buying Insurance Leads

Buying Insurance Leads
Apr 28, 2022
minute read
Nectar Team
The Pros and Cons of Buying Insurance Leads

Identifying leads and having a steady flow of prospects is the most difficult part of any insurance agent’s job. The number of insurance agents continues to grow annually, exceeding 500,000 in total already. All these individuals are seeking leads and trying to sell insurance, making a competitive playing field.

So what is the best way to compete in this landscape? Buying insurance leads is one tool that's benefited many agents, and it's worth considering if you want to grow your agency. However, it's important to understand the benefits and the downsides of buying insurance leads before you commit to it for your business.

What Kind of Leads Are You Looking For?

Leads are a necessity for any insurance agent.  Without leads, you're not selling any policies. However, all leads aren't created equal.  Some leads show promise, while others will result in a waste of energy and time.

There are two categories of leads you will deal with in the insurance industry. Understanding each can help you determine the value of a lead provider and decide if the service is right for you.

Cold lead

Cold leads are the traditional leads you think of when you're making cold calls in the sales industry. A cold lead is someone who is a completely random contact. If you look in a listing of names and phone numbers, like a virtual phone book, that contact is a cold lead.

Warm lead

A warm lead is someone who shows an interest in a particular product.  Requesting an insurance policy quote, for instance, is a sign someone needs or wants insurance. A unique, real-time quote request is the ideal warm lead for an insurance agent.

How Buying Insurance Leads Works

According to a recent study, generating traffic and leads was the number one challenge for 61% of marketers.  Lead buying is designed to help you circumvent this challenge.

Consider how lead buying compares to organic lead generation. The latter occurs when clients find you directly, through social media, referrals, etc. Buying a lead is different as you are purchasing a lead from a pool of prospects seeking what you offer.

The process of purchasing leads starts with working through the lead provider. You'll typically use their software to select filters to identify the types of leads you seek. In the best cases, you can get leads on your terms, in real time. You may also be in a position to bid on a promising lead, depending on the lead provider's services. In the simplest terms, you provide the online vendor with information about your location, products, and the types of leads you need, and they present you with options.

Purchasing leads is a great way to support your business from the start and fill any gaps in your sales cycle. It takes time to get your marketing and other efforts running seamlessly. Lead generation providers can help you buy time — and prospects.

Benefits of Purchasing Insurance Leads

Buying leads can be a great way to get things off the ground for your insurance agency or give your business a necessary boost. Here are some of the biggest benefits.

You get a steady flow of new prospects that match your needs

For an insurance agent to be successful, it's critical to keep a constant flow of leads coming in. To keep your business going, you need to move from one lead to the next. Lead generation allows you to connect with one lead after another, work sales opportunities, and steadily bind new policies.

You can focus your energy on work vs. lead generation

Think about the time it takes to identify leads. Cold calling traditionally only shows a success rate of around 2%. With cold calling, you could spend an entire day making phone calls only to convert two of those 100 calls into an insurance policy sale. And for many agents, managing marketing efforts can be just as time-consuming.

But what if you could have that time back?

Instead of chasing lower-quality leads or monitoring and optimizing your marketing campaigns, you can focus your energy on growing your insurance business by connecting with warm leads already in the market for what you are selling.  

With lead generation, you have interested leads at your fingertips, cutting out wasted hours you may have spent reaching out to folks with no intention of buying insurance from you, or managing marketing campaigns that may not be providing positive ROI. Purchasing leads helps you talk to interested, qualified leads.

It's a great way to kickstart a new insurance career

It's difficult to get off the ground as an insurance agent. It can feel as though you are on an island, with no one to reach out to for assistance and no sound guidance on what to do first. Think of lead generation as a tool to help you get off the starting block. Once you start making sales and building momentum, referrals from those sales and renewals will begin to propel you to next-level success.

You can begin to build a network

Insurance agents operate best when they can build up a network of customers. Those first sales become new relationships that you can build over time. When that individual or business hears of a friend also needing insurance, they send them your way. As you use a lead generation service to establish new clients and grow your network, this will lead to more organic lead generation over time. Buying leads can be a starting point for this process.

Downsides of Buying Insurance Leads

There is a downside to everything in the business world. While purchasing insurance leads seems ideal and easy, it is not without its issues. Understanding the downsides of buying insurance leads can help you make the best decision for your business.

Buying poor-quality leads

You need to know what you are getting when you buy insurance leads. Some lead providers offer unique, real-time leads of high quality. Still, other lead generation providers sell the same lead multiple times, making it a race to see who can reach them first. You need to know what you are getting before you invest the capital in buying leads.

An insurance lead should be something with a target. It should be geo-centric, matching where you are selling insurance. On top of that, the lead should be delivered in real time. Someone who was looking for life insurance six months ago is irrelevant today. You need leads who are interested in buying right now.

Tracking down false information

The lead is only as good as the information that led to its creation. Sometimes people give false information when they are looking for an insurance quote. You may be tracking down someone who doesn't exist — and paying for it in the process. Again, it's critical to find a provider that only sells verified, high-quality leads.

Purchasing leads requires capital

Organic leads or a referral might cost you little or no capital. When you purchase leads, however, you are putting money out on the table. This will cut into your commissions and your overall profit margin. That means it's only worth it if it truly helps you close more sales.

Is Buying Insurance Leads Right for You?

Everyone has their own preferences for how they get leads for insurance sales. Some will opt for more lead buying, while others will opt for an organic approach. Ideally, you will strike a balance of using both techniques to fuel business growth.  

Marketing is not for everyone. Some folks have no interest in learning the craft of advertising. Instead, they want to focus solely on selling insurance. The path you take is your own, and it's up to you to identify the “right” answer when it comes to growing a business as an insurance agent.

Where do you stand in your journey as an insurance agent? Are you just starting, and the prospect of beginning a network of clients seems impossible? Are you a veteran looking to break into a new set of insurance coverages to expand your client base? Buying insurance leads is something every insurance agent can try, regardless of how long they've been in the business.

Some will find purchasing leads to be an essential part of their business. Others, with more mature networks of clients, may not see the long-term rewards. Until you try purchasing leads, there's no telling the value it can add to your business.

Pull the Lead Generation Lever When You're Ready

When you purchase insurance leads, it's important to be sure you're working with high quality leads. You need real-time leads that match your business and what you have to offer. You also need unique leads fresh to the market so you can avoid wasting your efforts. In addition, purchasing leads should come with technology to manage who you contact and when to help ease the tracking of a traditional sales cycle.

Nectar packs all of the positive attributes as a top-tier lead provider, with none of the downsides we looked at here. With the power of Assurance IQ's proprietary technology, Nectar connects you with real-time prospects who want what you offer. Sign up today and try out our leads. There's no pressure for any long-term commitment, and you can cancel anytime.

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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