This guest blog post was written by Logan Strain, Digital Content Specialist at NextGen Leads. It was originally published on NextGen Lead's blog and republished here with their permission. NextGen Leads takes a unique approach to lead generation for insurance agencies that allows them to deliver exceptional value to their customers in three distinct areas: Lead quality, technology and customer experience.
Calculating return on investment is so simple that a fifth grader can figure it out. But it’s so complex that it keeps business owners and CFOs from getting their recommended eight hours of sleep at night.
It’s calculated like this:
ROI = (Gains – Cost)/Cost
So if you buy a hat for $10, and your buddy takes if off your hands for $15, then you have an enviable ROI of 50%. Not bad for an amateur hat retailer.
But things start to fly off the rails when you try to find ways to increase your return on investment.
There are two simple ways to boost your ROI: increase gains or lower cost. When people buy leads, they naturally want to lower the “cost” side of the equation. Providing people with the highest quality leads for the lowest price is what lead to the creation of our second price auction model.
But there’s one complication people forget when they try to boost their ROI. Lower cost only increases your ROI when it doesn’t also lower your gains. So going to the bargain basement in order to shop for leads probably won’t give you the revenue-boosting result you’re looking for.
What happens when you prioritize cheap insurance leads above all other considerations? Expect to run into at least a handful of these headaches.
Gently guiding insurance prospects to accurately fill out a web form with their info is a delicate art. Doing it well requires a combination of marketing know-how, user-oriented design, and psychological insight. And even when you get it right, you have to split test different variations to see which funnels result in the highest quality leads.
Someone peddling cheap leads isn’t going to take the extra time or effort to ensure they’re collecting genuinely accurate information from interested prospects — because they can’t. They either don’t know how to, or they prioritize getting more leads over getting good leads. That’s great for them since they can sell more cheap leads at a higher volume.
But it’s bad for anyone buying the leads.
Poorly Targeted Leads
Leads aren’t just a name and a phone number on a spreadsheet. They should be the name and phone number of a person who is interested in purchasing insurance right now.
But companies who sell cheap insurance leads gloss over that tiny detail. The information they sell doesn’t always represent an actual person who is in the market for coverage.
You ever see those guys who wander around the beach or the park with a metal detector? They wave the detector over the grass or the sand, hoping to stumble on something valuable enough to take to a pawn shop.
It looks silly, but they’re not stupid. Occasionally people actually stumble on something worth real money. In fact, just a few years ago an amateur treasure hunter stumbled on a seventh century gold cross worth thousands of dollars. It’s a fun hobby that has a slim chance of a windfall. But it’s no way to make a stable living.
But that’s basically what insurance agents do if they try to focus their lead buying strategy entirely around aged leads. Sure, there might be a few good gems in there. But you’re going to have to sift through an awful lot of dirt just to find them.
It’s better to mix in a significant amount of shared, exclusive, and live transfer leads.
Massively Shared Leads
With the right infrastructure and strategy in place, shared leads can affordably earn you new customers. If your company employs an army of representatives who dial up leads en masse, it can be effective.
However, the quality of those shared leads is determined by how often they’re shared. If a lead is sold three, four, or five times, you’re golden. You’ll see a solid ROI as long as you know how to pursue those leads. But what if those leads are sold to every insurance agency? Forget about it. Trying to close leads that are sold 10,15, or 20 times is unfair. And not worth the effort.
If you pay $100 for a top-shelf watch from a guy in a bar who claims he got it from his friend at the Rolex factory, you probably don’t expect very good customer support. When those made-in-China gears bunch up and freeze the minutes hands, he’ll be long gone.
While I’m not suggesting cheap lead providers are quite that shady, there’s an undeniable correlation between dirt cheap prices and dirt-quality support. You need a team behind you who knows how to build a successful lead buying campaign, can resolve any issues quickly, and can help you get up to speed on efficiently using their platform.
That’s just not going to happen if you prioritize price above all other concerns.
Of course, the quality of help from your lead provider is important. But equally important is how easily you can help yourself.
Are you the captain of your lead buying strategy? Or are you strapped into the passenger seat while your lead provider takes you down roads you don’t recognize like a deranged Uber driver?
Tweaking the flow of leads shouldn’t have to involve playing phone tag with your account rep. You should have complete control over every aspect of your campaign right from your dashboard.
So, how is your campaign doing? Can you create several different campaigns and measure the performance of each one independently? If you’re a stats whiz, you could plug your numbers into Excel and get performance facts. But why should you have to?
Cheap leads don’t make it easy to see whether your revenue line graph is flat or climbing steadily upwards. Firstly, the lead provider doesn’t have the resources/knowledge to produce instant analytics in your dashboard. But on a deeper level, it’s not in their best interest to provide you with those kinds of numbers. The more closely you look, the more obvious it will be that your investment in cheap leads isn’t getting the return you want.
No Live Transfer Leads
Data leads are fantastic. They’re an essential part of your lead mix. But it’s also valuable to diversify with the help of high-converting live transfer leads. Since these kinds of leads are live on the phone, their conversion rate is highly dependent on your personal sales skills.
Don’t Get Stuck With Cheap Leads
What does that all add up to? A weak ROI, regardless of how cheap those leads are.
If leads don’t make you money, they aren’t worth the time you spend calling them up. If you want to experience lead buying done right, use NextGen Leads. At NextGen Leads, we offer leads that are vetted for quality. We give you the power to build and tweak campaigns online. We provide support from account managers who are experts and building winning lead campaigns. And we provide you with instant analytics so you always know how your campaigns are started.
Ready to see how lead buying should be? Get started by creating a NextGen Leads account now.
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