New to Buying Internet Leads. Any Advice?

[TomWiecek]

Hey Guys,

I just started buying internet leads. Been in the business for a number of years. Thought about buying leads before but heard too many horror stories. Now I think I've figured out a way to convert enough leads to make buying them profitable. I've built out a follow up system for our leads in my Agency Autopilot system and looking for some advice. Here's what I've got and please let me know what you think...

1. Leads come in and is automatically loaded into CRM

2. New lead follow-up begins automatically (this is series of emails going out immediately, telling them we are working on their quote, why they should beware of "cheap" quotes and other tips on deciding on who they should do business with us.)

3. As soon as we get the lead (which seems to be the next morning since they tend to request at night), we call with the quote, offer multi-line discount, and by following scripts sell. If sold, move into new client follow-up sequence. If not, move into quoted prospect sequence with a series of emails going out for the next 2 renewals.

So far, we've received 4 in the past few days. We've sold one which was cross sold and so far a positive first year ROI. But I want more. I know that over time, we'll convert the leads in my funnel as the database continues to build and renewals come up. They are x-dated automatically and will get our follow-up messages.

What are you guys doing to make this more profitable? Do you have someone up all night picking these up when they come in? What other steps are you using to close more leads?

Like I said, buying leads is new to me and I have heard it can get very expensive. I have also heard it can be very profitable.

Thanks in advance,
Tom

 

[Aaron_4SIGHT]

Here's what I've learned working with lots of agents, some of whom are successful with Internet leads and some aren't:

Track, track, and track. Most people pay attention to cost per lead, but what really matters is cost per sale and revenue per hour. Figure out which lead sources produce the lowest cost/sale for the least amount of time. It's probably not going to be the cheapest leads that produce the best results.

Follow up as soon as you can. Immediately, if possible.

If everyone else is working leads 9-5, Monday - Friday, seems like it would make sense to try working leads 12 - 9 pm M-F and 8 - 12 on Saturday morning. I've talked to agents who are very successful relaxing when everyone else is working and working when everyone else is relaxing.

 

[TXINSURANCE]

8 is a tad early on Saturday.

 

[moonlightandmargaritas]

Most people pay attention to cost per lead, but what really matters is cost per sale and revenue per hour.

Neither of these is as important as return on investment (if you're "for-profit" that is). Every other metric is academic.

 

[Aaron_4SIGHT]

Neither of these is as important as return on investment (if you're "for-profit" that is). Every other metric is academic.

You're right - return on investment (ROI) is ultimately what matters. If you have an average cost per sale of $200 and an average revenue per sale of $150, you won't be in business for very long because of the negative ROI. Just make sure you factor in your time as part of your investment!

However, ROI can be misleading if you don't factor in cost-per-sale. If you have a 25% ROI, you can spend $100 and expect to make $125. But if you have a 25% ROI and a $200 cost per sale, you can spend $100 and expect to make $0.

 

[CHUMPS FROM OXFORD]

You can not have a 25% ROI and make $0. Expenses are factored in the ROI...at least that's the way I always did it.

 

[moonlightandmargaritas]

You're right - return on investment (ROI) is ultimately what matters.

If you want to make money that is...

However, ROI can be misleading if you don't factor in cost-per-sale.

Nope. ROI encompasses (and transcends) ALL other metrics -including "cost per sale".

25% ROI, you can spend $100 and expect to make $125. But if you have a 25% ROI and a $200 cost per sale, you can spend $100 and expect to make $0.

If you have a 25% ROI, you would expect $2,500 back from every $100 spent.

Example: if I put $100 in the bank, and at the end of one year due to interest I have $106, the return on my investment has been 6%...

 

[Aaron_4SIGHT]

You can not have a 25% ROI and make $0. Expenses are factored in the ROI...at least that's the way I always did it.

Jeez Moonlight and Chumps, you're getting nit-picky on me! We could keep going back and forth about what you should track with leads (don't confuse 25x with 25%, etc.), but I don't think it'd be much fun for anyone besides the two of us.

 

[CHUMPS FROM OXFORD]

Not nit-picky. Just wanted to keep people from getting confused.

 

[moonlightandmargaritas]

Jeez Moonlight and Chumps, you're getting nit-picky on me! We could keep going back and forth about what you should track with leads (don't confuse 25x with 25%, etc.), but I don't think it'd be much fun for anyone besides the two of us.

A simple explanation of why "cost per sale" is meaningless. We've got two agents, Agent A and Agent B. They each buy ten leads for ten dollars each for a total cost of $100 per agent.

Agent A reaches three of them for a "contact ratio" (another totally meaningless stat) of 30%. He sells two for a "closing ratio" of 20%, and enjoys first year commissions of $540.

His "cost per sale" is $50.

Agent B reaches only two of them, and sells only one, but at a first year commission of $770. Lower contact ratio, lower close ratio.

His "cost per sale" is $100 - twice as high as Agent A, but he also has $230 MORE in first year commissions!

If you're in it to make a profit, ROI is the only stat that matters.