Initial value of an agent is nothing. A lead sent by an agent to obtain more information about a product is of no value. They are worth nothing, even if they sign a contract to sell your product. Many insurance product marketers believe that what they have currently acquired is enough to enable them to succeed. Every year, thousands of recruiters and distributors of insurance products fail to succeed. This is how and when an agent can potentially be valuable to you.
While they may be a good starting point for making money, your leads, lists, and contracts have no real value. This false hope leads to insurance marketers’ quick demise. An agent or broker who is convinced to sign a contract but never writes business, for example, has no agent value. Your marketing plan should be focused solely on finding agents who are willing to sell your product.
Consider the cost of recruiting before you get down to the details. What is the cost of recruiting? In other words, how much will it cost to break even on your investment? If it takes you $1,500 to get an agent to write 1,000 in the first year of override commissions, then this is a terrible practice. If $3,000 of your funds and time is spent on new agents, the return is $15,000 or more. Being a marketing professional is a requirement. This means adapting to new situations and learning new techniques.
Based on the feedback of hundreds of insurance marketing professionals, it was determined what the real value of an agent/broker to any type of insurance marketer. The figure increases each year as both marketing agencies and brokers become more knowledgeable, educated and better equipped to survive. The only way to determine value is not by the amount of overrides that a broker gives you in premiums that were written in the first 12 month. This figure should be projected to an equal amount over the next 36 months and 3 years. Overrides of at least 20% are typically received by product marketers for products written by their brokers. This number will vary from one marketer to the next depending on which type of insurance product is being sold.
The current value is $3,600.00 This means that you can make $108,000 if you hire 30 new brokers each year who write average production for the company. However, not all brokers will write business. Some of your first year or longer producers may be attracted to your competition. You should measure the success of each of your recruitment campaigns on producers writing businesses and nothing else.
This is a ridiculously low figure. It’s a good sign that you may think $3,600 is too high. This could indicate that your marketing techniques are more advanced than the average person in your field. If a marketer says no, I won’t pay $2,500 for a direct mail campaign to recruit people, this is usually a sign that they are inexperienced or low-cost marketers. A 5,000 broker mailing should yield at least five agents for every $2,600 spent. The cost of obtaining one agent may be $2,600 for a cheap marketer who makes phone calls after phone calls to obtain it. Marketers who are willing to invest virtually nothing in recruiting often find themselves with almost zero after expenses.
Here are some tips
Telephone prospecting is the most expensive method of acquiring agents. Although there are no printing or postage costs, your time should still be valued above the minimum wage. Agents and brokers are considered business-to-business mailings, not consumer mailings. Consumer mailings can return as high as 2 percent. Mailings to business agents are typically at.8 percent. Annuity products often have a lower return rate. Mailing semi-qualified brokers is nearly the same as mailing random agents. The ROI, or return on investment, is what you should use to calculate your results.
Don Yerke is a published author who likes to focus on the things you don’t know and what no one else dares print. It’s okay to tell it as it is.
His new paperback book will be available on Amazon in the spring. This book is full of great information about insurance marketing and recruitment.