Which is the better marketing strategy? Buying a higher volume of low-quality leads or a lower volume of more expensive leads?
Purchased leads have an image problem in the insurance industry. Yes, they can be expensive. But instead of being viewed as premium, purchased leads are often associated with mediocre quality. In fact, 84% of lead buyers say that lead quality is something lead providers need to improve the most.
Low-quality leads can mean wasted sales rep time and decreased productivity, as well as lower close rates. But is the amount of skepticism around the quality of purchased leads really warranted?
Contrary to popular wisdom, successful insurers and other organizations tell us that purchased leads can and do yield favorable results. Velocify’s newest study, “Lead Trends Report” found that high-growth companies (those with 20%+ annual growth) are relying more heavily on purchased leads than any other lead source. In fact, purchased leads account for a higher percentage of total volume for high-growth companies, regardless of company size.
Not only do fast-growing companies have a higher percentage of purchased leads compared to flat or slower growth companies, they are also less reliant on referral and direct mail leads.
The discussion of third-party marketing partners and leads is especially pertinent in insurance given that most prospects (89%) who submit leads to third-party insurance sites do not visit a brand site beforehand. This path to purchase can make third-party leads a valuable option for capturing new, in-market shoppers who aren’t likely to visit an insurer’s site.
You Get What You Pay For
But why are high-growth companies more successful with purchased leads than companies experiencing less growth? The major difference is that fast-growing companies are more willing to invest more per lead to get high quality than are most other companies. The average spend reported by lead buyers was $42 per lead, but companies with significant revenue growth spend $86 per lead.
Another difference is that high-growth companies regularly and frequently re-assess the performance of their lead sources. The study found that high-growth companies are 125% more likely than flat/declining companies to evaluate new lead providers at least quarterly. Regular performance evaluations indicate disciplined processes for measuring lead source KPIs and a willingness to change up their marketing program to optimize performance.
In contrast, some flat or declining businesses even go a few years without evaluating new lead providers—a practice not reported by high-growth companies.
Before increasing your investment in purchased insurance leads, be sure you are ready to follow these best practices:
- Follow up as soon as you get the lead. Ensure you have a way to automate lead capture into a lead management system that can distribute the leads within seconds to an available rep. Speed is critical when responding to purchased leads. The Ultimate Guide to Inquiry Response shows that conversion rates more than double when leads are called in under one minute.
- Be persistent. Process and strategy are equally as important to success as speed-to-contact. Make sure you are not only following up fast, but also persisting beyond the first few contact attempts with multiple channels of communication.
- Prepare for duplicate leads. Understand the policy for duplicate leads going into a relationship with a new lead provider and have a way to report back to your lead provider when you receive duplicates.
- Frequently monitor key performance indicators (KPIs). Take time each day, or at least each week, to better understand the quality of leads you are purchasing. Track KPIs like contact rate, qualification rate, and conversion rate and adjust your spend accordingly.
- Meet regularly with lead providers. Keep an open dialogue with lead providers by meeting monthly, or at least quarterly, so you can tweak your program to meet lead generation needs.
See also: The Insurance Model in 2035?
Clearly, purchased leads can be a more impactful part of your customer acquisition program than conventional wisdom would suggest. The key is to invest in higher-quality lead sources like hot transfers, exclusive leads, and leads that are scored or qualified in other ways for quality. Though generating a high volume of leads from free (or near free) lead sources like referral and web channels is a good strategy, our findings show the value of purchased leads cannot be ignored.