Seven proven tactics for higher lead conversion, Pt. 4Article added by Clint Jones on November 12, 2009
clintjones

Clint Jones

 ,  

Joined: June 03, 2009

My Company

Norvax

Part one of this series discussed how the health insurance industry offers greater opportunities for entrepreneurs and self-motivated individuals, while part two delved into the first two tactics for higher lead conversion and expanding your business one lead at a time. The most recent article examined the role of persistence as well as the potential benefits of straying from the pack. This article will discuss tactics five and six.

Tactic No. 5: Understand what really counts

If you're focused on your cost per lead instead of your cost per application (CPA), you're making the biggest mistake in lead management. But don't feel too bad -- this is the most common lead conversion mistake with health insurance agents. Plus, although calculating your cost per lead is easy, measuring your CPA takes a little more time.

The good news is that you now have an effective method for quickly improving your conversion rates -- and bottom line.

Your cost per application metric gives you the whole picture. It takes into account all the extra costs involved with cheaper leads and it lets you see the potential savings and greater opportunities you get with higher quality leads.

To really understand the difference between cost per lead and cost per application, let's take a look at this comparison matrix of three lead types.

This scenario assumes three factors:
  • A lead budget of $1,000.
  • That it takes you an average of 15 minutes to work each lead and that your time is worth at least $50 per hour.
  • An average commission of $500 (20 percent on premiums of $2,500).
Source 1Source 2 Source 3
Cost per lead $5.00 $10.00 $20.00
Number of leads 200 100 50
Total lead cost$1,000.00$1,000.00 $1,000.00
Conversion rate3%7%12%
Submitted applications676
Total commissions $3,000.00$3,500.00$3,000.00
Time spent on leads 50 Hours 25 Hours 12.5 Hours
Cost of your time $2,500.00 $1,250.00 $625.00
Total cost $3,500.00 $2,250.00 $1,625.00
Cost per application
(total cost / submitted apps)
$583.33 $321.43 $270.83


When you compare the three lead sources, you can see that Source 3 offers the best value for your money. Source No. 3 leads aren't the cheapest, but their higher quality level helps you earn bigger profits with less overall costs.

More importantly, this reveals that the cheapest lead source is actually a money loser. The cost per application on cheap leads is more than the potential commissions!

Another down-to-earth metric also supports the advantages of going with lead source No. 3.

When you compare the gross revenues, Source No. 3 actually pays you more per hour.

Source 1Source 2Source 3
Total commissions $3,000.00$3,500.00$3,000.00
Time spent on leads50 Hours25 Hours12.5 Hours
Revenue per hour$60.00 $140.00$240.00

Solution
    1. Calculate ROIs and CPAs regularly. Take the time to regularly measure and analyze your lead ROIs and CPAs. Look for sales automation and lead management tools such as BrokerOffice, that can provide real-time ROI calculations in seconds.

    2. Identify your strongest niches. Measure your ROIs and CPAs on different types of leads and various providers. For example, see whether you do better on shared, exclusive or live transfer leads.

    3. Adjust your lead budget. Tweak your budget to put more money toward leads that give you a lower cost per application and eliminate the money-losing leads.
Tactic No. 6: Never stop testing and tracking

What would a 1 percent increase in your conversion rate do for your bottom line?

If you currently handle 100 leads a month, that's one additional submitted application or another $350 to $500 in commissions.

For larger operations working 100,000 leads each year, a 1 percent increase in their conversion rates is 1,000 more submitted applications and about half a million dollars in additional revenue.

If you can increase your conversion rates without increasing your lead price, that extra revenue is free money.

That's also what you get with a lead tracking system. By regularly calculating your ROIs, CPAs and lead conversion rates, you can make on-the-fly tweaks to your lead budget. And, if you have a team of agents handling those leads, tracking their lead performance can also help you determine which agents should get more leads.

Successful call centers have people specifically tasked with monitoring lead conversion rates, but you don't need to hire anyone new to implement a lead tracking regimen. You just need to know what to look for -- and have the right tools.

Solution
    1. Lead tracking program. Your first step is to find a health insurance lead management program that comes with lead tracking features. You won't have to hire anyone to "run the numbers" when you can get real-time reports with a click of the mouse.

    2. Set benchmarks. When you first set up your lead tracking program, you need to establish your benchmarks. Determine what your current closing ratios are on the different types of leads you work, but also take a look at geography, demographics and, most importantly, lead providers. This is your starting point. From there, you can start making adjustments to see if your conversion rates and cost per application improves.

    3. Eliminate your weak spots. One way to quickly improve your bottom line is by looking for your weakest spots. An effective lead tracking system can expose those underperforming parts of your marketing and sales program. Once they're identified, see if you can realistically improve them. Otherwise, you should consider eliminating them -- especially if they're costing you money.
This series explores the seven most effective methods used by top producers to help you immediately close more leads and submit more applications. Stay tuned to Producersweb.com as they continue to introduce the seven tactics. I recommend applying a single tactic at once, and building on your success over time.

Tactic 1: Speed Kills
Tactic 2: Get and Give Quality
Tactic 3: Persistence Pays
Tactic 4: Do Stray From The Pack
Tactic 5: Understand What Really Counts
Tactic 6: Never Stop Testing and Tracking
Tactic 7: Automate So You Can Close More

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