45 Per Cent

[papa]

A friend recently came to me, and wanted some advise. He was offered a contract for FE expense sales that paid only 45 per cent commission. The hook was the representation that he would receive 20-30 direct mail leads per week. He lives in an area where one can typically expect to receive only a five tenths of a per cent return from direct mailers. While he doesn't have an unlimited budget himself, he was tempted to take this position to get a regular lead flow. However, he asked for my opinion. I don't want to lead him a stray since I know he has limited resources for leads so I told him that I would post it and we would see what the range of opinions were.

What do you think about this outrageously low commission rate? Are agents out there really making a living with this type of agent contract?

 

[KRobby]

He lives in an area where one can typically expect to receive only a five tenths of a per cent return from direct mailers.

Who concluded this? The same people that are offering 45 'per cent'?

 

[axeman462]

A friend recently came to me, and wanted some advise. He was offered a contract for FE expense sales that paid only 45 per cent commission. The hook was the representation that he would receive 20-30 direct mail leads per week. He lives in an area where one can typically expect to receive only a five tenths of a per cent return from direct mailers. While he doesn't have an unlimited budget himself, he was tempted to take this position to get a regular lead flow. However, he asked for my opinion. I don't want to lead him a stray since I know he has limited resources for leads so I told him that I would post it and we would see what the range of opinions were.

What do you think about this outrageously low commission rate? Are agents out there really making a living with this type of agent contract?

I worked for BLC for about at year at one point, and their FE commission was 45%, and they provided leads also. albeit, not quite 20-30/week, but I would say on average at least 10/week. And it was still very hard to make a living.
at 45%, your average annualized commission would be something like $250. At BLC i was taking a full 12 month advance so I could get that $250. many companies dont even offer 12 month advances.

I would say no, dont take it. If you live in an area where you cant do much FE, then sell a different product. Don't try and force a product on the market.

 

[papa]

Unfortunately, this is typical return on direct mail leads in San Diego. It's a sad fact , but that is the normal return irrespective of the company that processes the mailing.

 

[jdeasy]

A friend recently came to me, and wanted some advise. He was offered a contract for FE expense sales that paid only 45 per cent commission. The hook was the representation that he would receive 20-30 direct mail leads per week. He lives in an area where one can typically expect to receive only a five tenths of a per cent return from direct mailers. While he doesn't have an unlimited budget himself, he was tempted to take this position to get a regular lead flow. However, he asked for my opinion. I don't want to lead him a stray since I know he has limited resources for leads so I told him that I would post it and we would see what the range of opinions were.

What do you think about this outrageously low commission rate? Are agents out there really making a living with this type of agent contract?

Vs a 110% contract if he makes 4 sales per week he would be giving up $400 per sale. Paying $1600/wk for those free leads.

Yeah, that sounds like a good deal?

 

[GreenSky]

It's unfortunate that the only kind of insurance ever invented is FE.

Rick

 

[bboman23]

This is what one life offers. If so run from them.

 

[axeman462]

Unfortunately, this is typical return on direct mail leads in San Diego. It's a sad fact , but that is the normal return irrespective of the company that processes the mailing.

Afterthought:

at 45% he would also be paying through the nose for leads. Think of it this way:

you could get a contract for 100% and buy your own leads. which means you giving up 55% of your commission. On a $50/mo sale that is $330/sale.

Out of 30 leads, lets say you only close 20% or 6 leads. Which would mean you essentially paid $1980 for 30 leads($66/lead) , and made $1,620 in commission (assuming $50/mo premium).

A similar scenario if you did a mail drop through monumental life at 110%:
You would pay about $1800 for a 6000 piece drop to get a .5% return for 30 leads($60/lead). Sell about 20% or 6 leads and make $3,960 in commission (assuming $50/mo premium at 110% commish)

I understand you said he doesn't have an unlimited budget, but it is something to consider (even if he did it with smaller numbers, and worked his way up). Or bought on a per lead basis (I believe Lead Connection does it for something like $28/lead, which is significantly cheaper than the other 2 scenarios.)

 

[tyler1129]

A friend recently came to me, and wanted some advise. He was offered a contract for FE expense sales that paid only 45 per cent commission. The hook was the representation that he would receive 20-30 direct mail leads per week. He lives in an area where one can typically expect to receive only a five tenths of a per cent return from direct mailers. While he doesn't have an unlimited budget himself, he was tempted to take this position to get a regular lead flow. However, he asked for my opinion. I don't want to lead him a stray since I know he has limited resources for leads so I told him that I would post it and we would see what the range of opinions were.

What do you think about this outrageously low commission rate? Are agents out there really making a living with this type of agent contract?

Lemme guess: one life America?

 

[wingateexpress]

A friend recently came to me, and wanted some advise. He was offered a contract for FE expense sales that paid only 45 per cent commission. The hook was the representation that he would receive 20-30 direct mail leads per week. He lives in an area where one can typically expect to receive only a five tenths of a per cent return from direct mailers. While he doesn't have an unlimited budget himself, he was tempted to take this position to get a regular lead flow. However, he asked for my opinion. I don't want to lead him a stray since I know he has limited resources for leads so I told him that I would post it and we would see what the range of opinions were.

What do you think about this outrageously low commission rate? Are agents out there really making a living with this type of agent contract?

I've never heard of a return rate that low unless you are you using a grossly unattractive mail peice, or mailing in Antarctica. Moreover, unless your friend needs training, and a manger to hold him accountable, he needs to go independent and invest in his own business.