Lead ROI for Insurance Agencies: The Complete Guide
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Lead ROI tells you whether the money you spend on a lead source comes back, and when.
The numbers behind it
Each has a page of its own:
- Cost per lead: what you pay for one lead.
- Quote rate and close rate: the share of leads you quote, and the share of quotes that become policies. See What Is Conversion Ratio?
- Cost per policy: lead spend ÷ policies written. See What Is Cost Per Policy?
- ROI: (what the source earned − what it cost) ÷ what it cost. See What Is Lead Source ROI?
How much do insurance leads cost?
What a lead costs depends on the vendor, the product line, your state and whether the lead is shared or sold to you alone, so the useful number for your office is cost per policy, not cost per lead. Work it out as lead spend ÷ policies written from those leads. Example: $3,000 on 300 leads that become 15 policies is $200 a policy.
Year one is only part of the answer
A policy that renews pays you again each year it stays. So a source can lose money in its first year and still pay back later, if its customers stay.
Example. You spend $5,000 on 250 leads and write 25 policies of $1,000 premium each: $200 a policy. Your agency earns 12% in the first year and 10% on each renewal, and 80% of customers stay each year.
- Year 1: 25 × $120 = $3,000. ROI = ($3,000 − $5,000) ÷ $5,000 = −40%.
- Year 2: 20 policies renew, earning 20 × $100 = $2,000. The total reaches $5,000, so the source has paid back.
- Year 3: 16 renew, earning $1,600. Three-year ROI = ($6,600 − $5,000) ÷ $5,000 = +32%.
These sums leave out the cost of servicing the policies, which pushes every year down.
Retention decides which source wins
Two sources can cost the same per policy and still end far apart, because their customers stay for different lengths of time.
Example. Change one thing in the example above: only 60% of this source's customers stay each year. Year 2 earns $1,500 and year 3 earns $900, so after three years it has earned $5,400 on its $5,000: +8%.
Compare sources on what they earn after renewals, not only in year one.
Compare sources fairly
- Judge a source once it has enough sales that one more or one fewer barely moves its rates. A few weeks of leads is mostly luck.
- Compare the same kind of lead. Fresh, shared and aged leads from one vendor are different products at different prices. Track them as separate "providers" in Producify even when they come from the same vendor.
- Compare the same months. The same source can do differently in January and in October.
Tying each sale to its lead
ROI needs three things in one place: what you spent, the leads, and the sales they became.
Producify matches on the name, the dates and the place (ZIP or state); it does not use phone numbers or email addresses. See How leads are matched to sales.
Before you cut a source, try fixing it
- Tighten the vendor's filters, such as the ZIP codes you buy.
- Call new leads sooner. A lead that waits has often talked to someone else first.
- Send the leads to the producer who closes them best.
If its cost per policy and its net after renewals still trail your other sources, move the money.
How Producify works it out
The Marketing ROI tab on the Leads page shows what each lead vendor cost, what it sold, and what your office kept after paying producers.
Its Source Breakdown table shows Spent, Policies, Cost per policy, Premium, You earned, Return and Pays back for each source.
Pays back counts renewals at your office rate and is the first renewal at which the source's net reaches zero. It has no retention figure by source: the pay-back estimate applies your office's one lapse rate to every source. See Read the ROI page.
Frequently Asked Questions
What's a good ROI for internet leads?
One that pays back before its customers leave. Compare each source with your others on cost per policy and on its net after renewals.
Should I track lead ROI weekly or monthly?
Monthly. A week holds too few sales to tell you much.
Should referrals be on the ROI page?
Yes, as a source that costs nothing. In Producify a source shows on the Marketing ROI tab once it is set to Track marketing spend. With no spend entered its ROI reads as a dash, so compare it on Policies and Net today.
See your own lead ROI
Every lead source in one table: what it cost, the policies it sold, its ROI and when it pays back.
Run your own numbers with the free insurance lead ROI calculator.