New to Medicare biz, but the math doesn't work

[BennyTrenton]

Best thing I did was to call 10,000 t65’s before I bought one lead. No reason to waste money until set until I got better at that skill set.

Great idea. I will do this during start-up to get the basics down.

 

[BennyTrenton]

(caveat, not an agent)

Hey guys, remember OP is a new agent building a business plan from info in a 6 year old book. I can't remember post details here from back in 2016/2017 but I suspect a $10 lead was a much better quality lead then than it might be now.

If that is the book I'm thinking about, I thought it was a pretty good book for a new agent and it contains a lot of very good "undated" selling tips from experienced agents, you would recognize many of the contributors as forum members. It's just that this particular piece of information is a dated piece of financial information rather than an undated piece of information about dealing with people or situations.

Edit 12/09/2022:
https://insurance-forums.com/practi...mbers-focuses-on-final-expense-and-med-supps/
End Edit.

Yes, thats the book.

100% agree, good book. Just the numbers are outdated.

 

[BennyTrenton]

That's not what I heard. I heard he's running the country as a shadow President under Biden.

Back to the point, as an Independent Agent, you will start out at a loss. Which is why you should assess lifetime value of a client.

For example, if you sign someone up for new to Medicare and an MAPD, you can expect to keep them for 3-6 years, reasonably.

You paid 300$ for the sale.

Current MAPD fee:

Year 1 600
Year 2 300
Year 3 300

Medigap comm (I'll use MI because we're the worst)

Year 1 400
Year 2 400
Year 3 400

So, you spent 300$ to acquire a customer that will pay you 1200 over time.

That's a 25% cost and considering most businesses want a 30% profit, you're coming out way ahead.

Thanks! I hadn't looked at it that way, but you're right it works.

 

[Bevo]

Thanks, yes, that's a good point. Market has likely moved on significantly from then. But I assume that people buying $40 leads are still somehow making enuff money to justify it.

There are many factors not being taken into account when it comes to others being able to justify a higher lead cost. An entity may pay closer to $90 or more for an exclusive Med Supp lead, and not expect to make money until months 21-24 on that client. They'll likely also attempt to cross-sell: Part D, FE, D/V/H, Cancer policies, walk-in tubs...I've heard it all. Then, they might even re-sell the lead after they get the client. (Don't laugh, it happens)

What you're not seeing on the backend is how flush they are and how long they can wait for their ROI.

 

[kgmom219]

Is Justin even still in the biz? He used to be very active here but I haven’t heard his name in several years. Anyone know?

Oh he's got quite the thing going on, go look at FB.

I got kicked out because I said "no" to a conference at at golf course, which is just another way of men getting people to pay for them to play golf. And its not like I was invited to play.

 

[kgmom219]

Back to the OP....
You need 500 policies to make $150K. That assumes $25PMPM average. Some people are great at leads and selling them. Some people (like me!) suck at it and do better networking.

At the beginning, having a second job or doing this part time is a great way to start. Trim your personal budget to the bone. Its a great business, but its also "get rich, slow". You need to pick an upline with great training and support. Figure out what works best for you and go for it!

 

[DonP]

My business model is that if I ONLY break even on Year 1 marketing costs, I will continue with that particular marketing strategy.

Break even ? If your doing very high vol you should have zero marketing costs . I got around $60 k of marketing reimbursement last yr which covered 100% of all costs . Between fmo and carrier reimbursement high vol ( 300 apps a yr or more ) should have zero costs . Even averaging 150 apps should have minor costs . Carriers are throwing money at agents with decent vol .

 

[jdeasy]

Yes, thats the book.

100% agree, good book. Just the numbers are outdated.

It's not just outdated. he was never really in the business. He was more of an insurance groupie. Went by EmptyEternity here.

Seemed to be a good guy. But someone selling FE and/or Medicare products for a living he was not.

 

[Travis Price]

2) There are limits on the amount of leads received. An agent probably would not be able to depend on this as a sole source of new prospects.

I disagree.

You can max out at 1500 names per month, per mailing. So, March April May would pushed 4500 letters for the month. 1% call rate is 45 leads, or 12.45 calls per week.

I do a two step sales process sometimes (but, most people want to deal with it.

Less time on the phone with quality leads is ALWAYS more profitable than more time one the phone with crap.

I mean, you can scale with more money, you only have a fixed amount of time.

 

[Travis Price]

My business model is that if I ONLY break even on Year 1 marketing costs, I will continue with that particular marketing strategy.

Ditto. I always suggest that new agents either have a reasonable amount of cash OR just start slower and keep your job.

I prefer to have a full time job and treat my business as a side gig. I have a really flexible job and I like the honesty I can have with myself on who I want to work with.