When I started in the industry I was told this would be the predicator of my success.

"The person who buys the most leads, wins."

I took this point to heart.

If there were leads available in a territory, I locked them down. If Facebook leads were on sale, I bought them. And somehow, after all of that cost. I ended up making good money my first year in the industry.

This is not the case for most agents.

You see, no one ever said "Matt, you should learn how to generate your own leads and marketing".

One day I found out that the average "Marketer" in the insurance industry takes a 250% mark up on leads. Now, I'm all about capitalism but in an industry that is so dependent on the next prospect I started doing the math...

If I could learn how to generate my own leads wouldn't that mean I would be 250% more profitable? Almost a laughable sentiment. But follow my math below.

Scenario 1: Buying leads from a vendor(taking 250% Markup into the equation)

$1,000 worth of leads at $20/lead=50 leads

You close these leads at 15%(because you're a rockstar agent of course)

That's 7 new clients! Woohoo! We'll say each client makes you $250 because who knows what the person reading this sells(Medicare, Life, P&C).

Revenue Generated= $1,750

(Boom! $750 of profit, we're cooking!)

Now you reinvest the $1,750 because you're a good business owner.

Round two:

Marketing spend-$1,750

Revenue- $3,300

PROFIT: $1,550

And the cycle continues. Don't get me wrong, you're making money, but it could be so much better.

Scenario 2: Generating your own leads

$1,000 worth of leads at $8/lead=125 leads

You close these leads at 10%(let's just say you're not as good this time)

That's 12 new clients! Woohoo! We'll say each client makes you $250 because who knows what the person reading this sells(Medicare, Life, P&C).

Revenue Generated=

$3,000

(Boom! $2,000 of profit, we're cooking!)

Now you reinvest the $3,000 because you're a good business owner.

Round two:

Marketing spend-$3,000

Revenue- $9,250

PROFIT: $6,250

So my question to you.

Is buying leads actually killing your insurance business?