How Much Does One Customer Cost?

When comparing lead companies, the first thing you look at is the price per lead, right? But comparing leads on price alone isn’t apples to apples.

How many leads from each source do you need to work to write one policy, and gain a customer?

The costs involved in generating one customer is called your cost per acquisition (CPA) or cost per sale.

Let’s compare two scenarios:

Lead Source A: You buy 50 leads at $1. You call all 50, and write one policy total. Your CPA is $50.

Lead Source B: You buy 5 leads at $10. You call all 5, and write one policy total. Your CPA is $50.

The difference? With Lead Source B you only need to call 5 people instead of 50 to get the same CPA. Knowing your CPA helps you work smarter — and lets you focus on the leads that bring you the most deals with the least time investment.

What’s Your Conversion Ratio?

This goes hand in hand with your CPA. Keep tabs on the percentage of leads you close from each lead source.

Comparing the number of leads you’ve received from all your sources and how many you closed helps you get a snapshot of which lead sources you should invest more money into, and which ones to shut off.

Are You Working Enough Leads to Meet Your Sales Goals?

First, ask yourself how many sales you need to make a week to be profitable. For this example, let’s say you need 3 closed policies a week.

Next, analyze your lead pipeline. Assuming you get a 10% closing ratio — a realistic average for most agents — all your marketing efforts need to bring in a minimum of 30 leads a week for you to reach your goal of 3 sales. That’s 6 leads a day.

Following this example, if you wanted to double your sales, you would need to increase the number of leads you bring in a week to 60, or 12 a day.

Not getting enough leads from your traditional marketing methods, or have periods when they slow down to a trickle? Consider increasing your internet lead order to fill in the gaps.

Tip: Your lead company should let you access your account online any time you want to adjust your lead order and add funds to your account so you always have a full pipeline.