- 4,690
You are absolutely correct. It's not the CONTRACT level %, it's the CONTACT level % that determines your success (unless someone is abused with an unfair low contract).
Lead and High Contract Relationship
- Thread starter pomfin
- Start date
seethelight
New Member
- 6
Glad to see that there are people out there that still believe in the old school practices!
- 129
I think it all depends on the marketing plan and business approach of the GA. For instance, I know an IMO who runs a preset appointment operation that is advantageous to both the IMO and agent.
For instance, the IMO....
-drops 1,000 direct mail pieces every week for the agent
-receives the leads back
-has his in-house telemarketer call the lead, make sure they ARE interested in buying insurance, pre-qualify them and set the appointment
-calls the prospect the day before the appointment to confirm their interest one more time.
All for a 50/50 split on the case.
I know some of you will say that this is an excessively low contract and the IMO is just making money off of the backs of hard-working agents.... but the IMO is the one bankrolling the marketing and consistently putting the agent in front of interested buyers.
The only risk the agent takes is the gas he burns on the way to the appointment. The IMO has no interest in setting up garbage appointments with people who really have little to no interest in insurance. The point is that he isn't selling the appointment to the agent or financing leads.... he actually has a vested interest in the agent..... if the agent makes nothing, then neither does the IMO..... add to that he risks losing thousands a week in operating costs.
Win/Win if you ask me, especially for a new agent cutting their teeth.
1,000 piece direct mail @ 1.5% response rate = 15 leads
15 leads = 8-10 pre-set appointments for the agent
average AP of $1,000 @ a 50% closure rate
$4,000-5,000 AP per week.... @ 50% contract
Agent walks home with $2,000-$2,500 per week with no marketing expenses.
Even at a 25% closure rate, the agent is making more than they would otherwise, without any expense or risk.
An new agent could do this for a while and make some money as he learns. After he develops his skills and gets a little more confident, he's crazy if he doesn't leave the arrangement and start bankrolling his own marketing at a full payout.
For instance, the IMO....
-drops 1,000 direct mail pieces every week for the agent
-receives the leads back
-has his in-house telemarketer call the lead, make sure they ARE interested in buying insurance, pre-qualify them and set the appointment
-calls the prospect the day before the appointment to confirm their interest one more time.
All for a 50/50 split on the case.
I know some of you will say that this is an excessively low contract and the IMO is just making money off of the backs of hard-working agents.... but the IMO is the one bankrolling the marketing and consistently putting the agent in front of interested buyers.
The only risk the agent takes is the gas he burns on the way to the appointment. The IMO has no interest in setting up garbage appointments with people who really have little to no interest in insurance. The point is that he isn't selling the appointment to the agent or financing leads.... he actually has a vested interest in the agent..... if the agent makes nothing, then neither does the IMO..... add to that he risks losing thousands a week in operating costs.
Win/Win if you ask me, especially for a new agent cutting their teeth.
1,000 piece direct mail @ 1.5% response rate = 15 leads
15 leads = 8-10 pre-set appointments for the agent
average AP of $1,000 @ a 50% closure rate
$4,000-5,000 AP per week.... @ 50% contract
Agent walks home with $2,000-$2,500 per week with no marketing expenses.
Even at a 25% closure rate, the agent is making more than they would otherwise, without any expense or risk.
An new agent could do this for a while and make some money as he learns. After he develops his skills and gets a little more confident, he's crazy if he doesn't leave the arrangement and start bankrolling his own marketing at a full payout.
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seethelight
New Member
- 6
I think that the example you gave is a good example of what a new agent needs to learn the business and "cut their teeth", and then again you have a large population of agents out there who are lazy and would not even be successful in this scenario. The agent that takes what their GA gives and obtains referrals and builds there book of business is the agent that will be successful in this model and would be deservant of a higher commission. I provide my agents with pre-set appointments for pre-need and final expense and some of them just sit and wait for the rotation to get to them and they conduct no prospecting or phone clinics to obtain their own which eventually leads to them being skipped in rotation. I think it's a fair system, but it's hard to find people with the same work ethic that you or I may have. Let's face the facts we run businesses whether individually or building an agency. Some agents are simply meant to be agents and nothing else. They need the guidance, leadership, motivation, training, marketing, etc,
- 608
Why should top contracts and good leads be mutually exclusive? Top producers know it is cheaper to buy leads and get the best contract than it is to take a hit to get free leads.
When an agency gives leads, it has to keep a large margin because not all the agents will produce up to par. So the marginal producers benefit and the top producers are penalized. Of course if are a socialist then you dont mind paying for those that don't produce as much as you do.
When an agency gives leads, it has to keep a large margin because not all the agents will produce up to par. So the marginal producers benefit and the top producers are penalized. Of course if are a socialist then you dont mind paying for those that don't produce as much as you do.
What if an agent with an agency received 55% contract, and inhouse leads which he paid $20/each...but has to call the leads to set up the appointments and invested his own $$$ into his own prospecting system...For instance, I received 20 leads from the agency, but I pay the agency $400 whether it turns to a client or not upfront. Is this a good deal?
- Thread starter
- #27
It is you who decides if it is a good deal, not somebody else. If you are good and can turn the lead into the sales, you never have to stay in low contract. But if you cannot prove you can produce, even if you get a high contract does not mean anything to you or the agency. It is your skills which count. The better the skills, the better chance to negotiate better contract.
I used to give agents high contract and let them do what they can. But most of them do very little, nobody happy. Now I provide a system for new agent to learn and make money from the beginning, even at lower contract, both the agents and the agency are happy.
Let's take the logic of attending a private school or public school. You decide if it is worth your money to attend which school. You pay the price to learn for a LIMITED time, whether it is in public school or private school. I don't think you would want to attend a school who charge high price with low quality. At the same time, don't expect high quality school to charge less for you to attend.
seethelight
New Member
- 6
Good point Pomfin!
There is a cost associated with doing business, in reviewing your post you made an important statement that "you invested money in your own prospecting system". That would lead me to believe that you have taken some ownership in "your own business" Again, I believe in paying dues and while all agencies don't operate in this fashion that does not mean that it can't work. Take advantage of any leadership and training you might recieve and continue and take ownership and build your business and in return you will have more options.
There is a cost associated with doing business, in reviewing your post you made an important statement that "you invested money in your own prospecting system". That would lead me to believe that you have taken some ownership in "your own business" Again, I believe in paying dues and while all agencies don't operate in this fashion that does not mean that it can't work. Take advantage of any leadership and training you might recieve and continue and take ownership and build your business and in return you will have more options.
- 608
NoFault, using your leads to placed cases ratio, run the numbers. Where would YOU make more money; 55% with $20 leads or 95% with $30 leads? If the former, stay where you are, if the latter, then start looking around for options. But keep in mind that commission and lead costs are not the only factors to success.
