Many an insurance marketing agency plugs along, struggling by each and every year they manage to exist. An enormous problem that is overlooked is that no prospecting plan exists. Finding out the ROI, return on investment, is a critical step before an agency market plan can be enacted.
Prospecting for new clients is a step where countless agents fail to manage time and cost in an effective way. In turn, prospecting for contracting new brokers is the bloodline to survival for the insurance marketing agency. An abundance of ineffective use of time and money, along with a foolish prospecting plan is what leads to the demise of both groups. In insurance marketing, money is overwhelmingly the key issue. Along with money available to spend, it must also be understood that time is money. The ultimate goal of insurance representatives is making sales. With marketers, it is recruiting brokers that make sales.
To implement a prospecting plan without maximum benefits is detrimental to a rising insurance career. This planning must be preceded by calculating your ROI, return on investment. How much is it going to cost to make a sale, or what time and cash investment is necessary to contract a producing broker? You cannot afford to just break even. Therefore, you analyze your prospecting methods to make sure that executed sales provide you with an income profit.
There are five main modes of prospecting. They involve direct mail marketing, cold call prospecting, email blasting, internet leads, magazine or print advertising, and the combination of direct mail marketing along with select follow up calls. For this article, the profit potential, ROI, will be honestly evaluated with facts on direct mail marketing and on cold call prospecting.
Determining Return on Investment
Your intentions are multi-purpose. As a result, two basic objectives are required. First is figuring out just how much in physical dollars and time dollars it is costing you to obtain a producing broker. The other factor is determining what is termed your agents Lifetime Customer Value. In the insurance field, that is calculated by how much money a broker will provide you over a three-year period. You project this, by analyzing your present writing brokers, and average their past net value to you.
The ROI is usually a single digit number, like 3, 5, 7. or maybe even an outstanding ten. Look at this in easier to understand $1,000.00 terms. If your ROI is 4, it means if you spent $3,000 on a certain marketing recruiting plan, you could by past history, expect a return of a return of $12,000 over the next 3 years. In a similar manner if you learned how to increase your ROI to 5, you would have the same $3,000 investment, but now the return would rise to $15,000. The bulk of your competitors have no wordly idea of ROI planning.
A factual examination on agent cold calling prospecting
If you are using an unrefined list of agents to phone call, 30% are overly captive, like the heavily yellow page advertisers representing Allstate, Farm Bureau, and numerous like insurers. In addition, of the remaining 20% are too inexperienced, plus add another 5% to 10% as being life licensed stockbrokers, telemarketers, and home office personnel. This leaves 40 to 45% of which half might have the slightest interest in your particular product.
A hard to swallow fact is the 55% of residential phone numbers are on the do not call list, similarly at least 60% of the phone numbers you might obtain are home phones. A phone campaign killer is also the fact that it is illegal to cold call agents on their cell phone numbers. Some of the highest quality agents do not use an office number, and reserve a cell phone number exclusively for their insurance business matters.
Use this optimistic example. You envision your income at $100,000, which equates to $40.00 per hour. As the initial investment is cheap, you elect to do call calling prospecting to recruit agents. Figure that because of no answers and wrong numbers you will reach 10 agents per hour. As explained above, only two of the 10 could have a remote interest or meet your qualifications. Assume that you have 5 days, 5 hours each devoted to phone soliciting. Using these figures, you complete 250 phone calls. Of the 50 with a remote interest, say a high figure of 2 actually sign a contract. One of these produces an average amount of agency business, the other broker none.
The results: Your total time expenditure of 25 hours at $40 an hour, plus 2 hours contracting time equals $1,080.00. Add $20 for list and phone call costs. The total expense is $1,100. Your normal writing producer over the next 3 years is worth say $3,300. To get your ROI you divide your average Lifetime Broker Value by expenses. The ROI equals 3. That means that for every $1,000 you spend, you will get $3,000 back. When you consider that this is spread over 3 years, your first year gain is minimal. That is why random broker cold call prospecting puts many marketers without time allowance for their buildup of brokers to mature. Consequently, you have a financially stressed situation.
Examination of intelligent direct mail marketing facts
In this example, an insurance marketer who purchased a list of semi-independent agents and independent brokers of different products are used. 5,000 identified brokers are mailed a well-written oversized postcard. These cost of the list, printing, printing services, and standard mail postage equals $4,000. Now .8% to 1% is a normal business-to-business response, where a consumer response is often double. Using the conservative .8% return ratio means that 40 agents respond back to the mailed message.
Of these 40 responders, 11 are quickly weeded out as not qualified or interested. Of the remaining 29, a very moderate number of 14 sign a contract. Again 50% or 7 of these turn out to be average agency writers. $4,000 has already been spent, so add to this, 20 hours of phone scheduling meaning $800 of time value used. Therefore, you have a grand total of $4,800 spent. Your writing producers at the same $3,300 worth each would total $23,100.
To get the ROI, divide the $4,800 spent into the $23,100 three-year broker value. The figure is 4.812, an improvement than the other example. Every $1,000 invested means $4,812 returned. This added amount very often provides recruiting capital to invest in an ongoing direct mail campaign. Please think about your dignity, inflicting a phone scar and numb fingers is easy to prevent. Keep in mind the producer financial values used here were below average.
Increasing your ROI ratio consists of two items. Increasing the percentage of positive relies to your offering.. This can be solved with the quality of the list used for prospecting, an overall very minor expense. The second is based on your skills of providing agents with more materials and communication so more than 50% will actually write cases. In addition, work on ways to get producers writing additional products in your portfolio.