Why are some insurance leads so bad, while others are very good?
When buying insurance leads, it is important to know how the leads industry operates so that you can make wise decisions with your marketing budget.
Let me explain why this is important to the quality of leads that you buy.
There are two basic business models in the insurance lead generation business; I have labeled them “Type 1” and “Type 2” and you should decide which type you wish to do business with.
Insurance Leads Company Type 1
Most large lead vendors (you know who I mean) will sell leads to 4, 5 or 6 (can go as high as 8) of their own agent customers. Then, they will sell the same leads to another lead company. That lead company will then sell those same leads to 4, 5 or 6 of their customers! With the technology that is available today, all of these transactions can happen within minutes, resulting in a very bad situation for consumers and for agents buying the leads. For lead vendors that operate this way, the short-term profits are great, but they continually lose clients because of very low lead conversion rates. Therefore, these lead vendors direct a large percentage of their huge marketing budgets towards gaining new clients or convincing old clients that their quality has improved. This system continues to work as long as a very large marketing budget supports it. These lead companies usually sell leads at very low prices, which is how they continue to attract new lead buyers. I am not saying that these leads do not have a use, they most certainly do. I would recommend these leads if you had a low cost telemarketing service call them for you. But if you are an insurance agent calling these leads, then do not realize how valuable your time is, and it will be very difficult for you to achieve your full potential.
Insurance Leads Company Type 2
The largest lead vendors are the most visible in the industry because of the size of their marketing budgets. But there are a handful of lead companies that actually provide very high quality leads that convert at rates above 25 – 30%. These companies are truly in the business to be a supplier of high quality insurance leads. They enforce strict limits on the number of times a lead is sold and they will not sell their leads to other lead companies. For these companies, the profit margins are much narrower and they spend their energies on “customer retention” rather than “customer replacement”. These companies do not have large marketing budgets, but instead rely on word of mouth and social media platforms, such as Linkedin. But these companies face a problem, which is created by the “Type 1” lead company. How do you overcome the industry’s bad reputation, which was created by Type 1 lead companies? This is not easy when a large percentage of your budget is spent on customer retention and maintaining the quality of your leads. Yes, the word of mouth is great…but it is also has a very limited reach because many agents think that if they refer colleagues to a good lead source, that that it will somehow negatively impact their leads supply. This is of course not true! The opposite is actually true…by using and referring colleagues to high quality lead suppliers; the bar is raised for everyone. The biggest producers will still be the biggest producers, but at much higher levels.
At ParasolLeads, we are a Type 2 leads company. We are focused on quality and customer retention, which is very obvious to agents from the very start of their relationship with us. We welcome the opportunity to show you how profitable a good lead generator can be to your business.