Cost Per Acquisition

[geoagency]

Can anyone share what they are paying to acquire a new household via Internet leads. I am currently paying $177 per household and averaging 3 policies per household. My fear is this is not a sustainable cost to obtain a customers long term. At some point I'm gonna run out of money.

This is a simple COA calculation, I'm am simply looking a pure marketing spent on Internet leads divided by number of households you bring in during the month.

Any advice would help.

 

[1reason]

Can anyone share what they are paying to acquire a new household via Internet leads. I am currently paying $177 per household and averaging 3 policies per household. My fear is this is not a sustainable cost to obtain a customers long term. At some point I'm gonna run out of money.

This is a simple COA calculation, I'm am simply looking a pure marketing spent on Internet leads divided by number of households you bring in during the month.

Any advice would help.

I was running some numbers (in my head) when I came across your post. I welcome any corrections as I'm new and this is a constant thought for me.

I'm thinking of trying datalot leads at about $40 each (home or auto that owns home). At a 20% closing ratio, my lead cost is about $200. Add in other costs during the sales cycle and maintenance of account and I'm up to about $260 ish.

If the average annual premium is $2000 and the commission is 13% (higher, but I like to be conservative), that results in about $260 gross profit per year. I estimate (hope) to sell an additional policy through referrals for every five policies ($260-$30)*.2= $46. That brings me up to $306 in gross per lead generated sale.

Out of six policies, one would hope for a life, LTC, or some other type of sale, but we can call that bonus.

Doesn't sound exciting, but before asking for a job app at Wal-mart on the next visit, we must remember that we will keep (beg and hope) over 90% of our customers. Because I don't want to use a spreadsheet, my back of the envelope math says I should generate on average something on the order of (and I could be way off as I'm tired and about to go to bed) $260 -$30 expenses = $230/yr * 9 years = $2070. Add another referral during that time discounted 50%, and we're now up to $3000 gross profit per household obtained before life etc....

Finally, add the increase in book value of 1.5% (because we give our kid a deal) and it's another $270 gain. Discount it further for a book over 10 years old and call it $200 for a total value of $3200.

I know my numbers aren't correct because I'm using simple math, but I think they're in the ball park (hope so, my marketing budget is based on similar numbers). Wisconsin appears to be a lower cost for insurance state, which makes the ROI not as attractive.

It has me thinking I should try to market in other states. A $40 lead anywhere in the country should generate a higher premium sale all else being equal in MN where insurance costs are higher.

 

[geoagency]

Interesting, I've tried data lot. But I couldn't stomach $200 per sale. I didn't use them long enough to say anything about them. Took about 20 leads and they were so bad, I turned it off and asked for a refund. They kept sending me leads that didn't meet my filters and that were insured with my primary carrier. I wish you luck in your market with them. Get your close ration to 33% and you will be acquiring households for $120. You can spend that all day.

 

[1reason]

Interesting, I've tried data lot. But I couldn't stomach $200 per sale. I didn't use them long enough to say anything about them. Took about 20 leads and they were so bad, I turned it off and asked for a refund. They kept sending me leads that didn't meet my filters and that were insured with my primary carrier. I wish you luck in your market with them. Get your close ration to 33% and you will be acquiring households for $120. You can spend that all day.

That doesn't good at all......"they were so bad, I turned it off and asked for a refund"

I get why not honoring a filter is bad, but no sales from them? Couldn't you at least resell the lead (I'm not sure how, but probably will learn sooner or later) if you couldn't write it? Really wondering how bad is bad? going to ask in the leads thread also. I think the more feedback I get the better before I spend $$