We haven’t done personal lines marketing in some time. Primarily because most of our clients are insurance agencies and the volume of calling needed at that level isn’t cost effective when you consider the compliance issues associated with the Do-Not-Call Registry. However, when calling on one’s existing customers the do-not-call laws are not applicable, so recently we have been testing actually selling insurance on behalf of our clients. We hire and train a staff of licensed personal lines sales people and call single policy home and auto clients on behalf of our clients to sell an additional personal lines policy.
Insurance marketing to single-policy holders can result in long-term profits. We recently called on a database of over 5,000 single policy homeowners clients to sell auto insurance and while the short term profitability, based on commissions alone, is elusive over the long-pull, say three years, it can become very lucrative. Especially when you consider carrier support on the front end of the effort and contingency payments to your agency on the back end. Here is what we found…
By making 110 outbound telemarketing calls per day to single policy holders, a trained licensed personal lines sales representative will quote 3-4 times per day and bind 15-20 bound policies per month. The average cost of a skilled personal lines sales representative is $40,000 per year plus a 20% burden for payroll taxes and benefits which averages around $4,000.00 per month on top of which you will need to add recruiting, hiring, and training fees, we went through five people to get our current staff of two, and general overhead including phones, rent and management. Let’s call it $5,000.00 per month against 15% commission, or in this case $2,250.00. If you look at the fully burdened expenses against the sales over a five year period the results are pretty impressive. No wonder the big boys are spending so much money on advertising and SEO strategiestrying to gain market share.
The table below calculates new commissions based on consistent sales of $27,000.00 in new business each year less 10% annual attrition against consistent sales overhead of $60,000.00.
|Five Year Plan||Year 1||Year 2||Year 3||Year 4||Year 5|
Hope this helps. If anyone has numbers they want to share or comments on the ones I’ve posted, we would love to hear from you