Insurers Can Salvage Lead-Generation Programs

To compete against direct insurers, many traditional agency insurers have implemented lead generation programs — and have been disappointed. Their disappointment is understandable given that they've viewed lead generation as the total solution when, in fact, it should be just the first step.

To understand insurers' plight, look at how most corporate-sponsored insurance lead generation programs work: The home office develops a direct response TV spot or direct mail campaign targeted at prospects. Responses are collected and dispersed to the most geographically appropriate agent. The agent calls the leads. If a prospect has an existing policy that isn't up for renewal, the lead goes into the agent's personal tracking system, which may consist of a bottom desk drawer. Sometimes the leads are pulled out again and sometimes they're not.

The result? All parties are frustrated. Home office marketing personnel are frustrated because they spend a lot of money and effort to deliver the leads, yet they're not seeing a good return on their investment. And agents are frustrated because the prospects — while interested — aren't truly qualified, so, in essence, the agents feel like they're still cold calling.

But there is hope. Agent-based insurers can salvage their lead generation programs by transforming them into full-circle lead management programs that support a continuous flow of information back and forth between the home office and agents. The benefits are significant: increased agent productivity and satisfaction resulting in increased sales and agent retention rates, plus a greater knowledge of and enhanced relationships with customers.

Contrary to perception, lead management programs are not full-scale operational systems that require millions of dollars and years to implement. Lead management programs are essentially marketing systems. And, thanks to the Internet, they can now be implemented affordably within a few months. There are several components of a lead management program:

* Lead qualification. Most insurers simply pass on all responders to agents. A lead management program allows insurers to first qualify responders using predictive modeling technologies. A predictive model analyzes numerous factors, such as age, income and risk, to forecast a desired outcome. The outcome might be likelihood to purchase or premium likely to be generated. The model then rank-orders responders accordingly, so insurers can pull out the most qualified to share with agents.

* Lead distribution. Many insurers continue to distribute leads via a hard-copy roster. A lead management program allows them to distribute leads electronically to speed delivery and provide a foundation for tracking leads.

* Lead tracking. While some agents already use some sort of personal tracking system such as an off-the-shelf contact management program, those programs aren't designed for collective data analysis. A lead management system is. It allows the home office to generate reports and measure the effectiveness of various follow-up practices. And the system should be programmed to include a tickler or reminder system that notifies agents when follow-ups are needed, such as when a prospect's competitive policy is up for renewal.

* Lead analysis and modeling. At this stage, data from agents is analyzed and used to create predictive models (see description under lead qualification). By applying the models to new responders, insurers can fully qualify them before sharing them with agents. The result is more targeted marketing and quicker successes for agents. The latter benefit, while seemingly minor, becomes significant against the industry's new-agent attrition rates, which are as high as 80 percent at some companies.

* How to gain agent buy-in. With the recent prominence of direct insurers, agents may view company-sponsored lead management programs as a threat. To ensure agents will support and use the program, it should include:

1) Agent education. A mandatory program will be doomed from the beginning. Instead, companies should recruit agents to participate by educating them on the objectives and benefits of a full-circle program. The key benefit to agents is that they receive more qualified leads, which shortens the sales cycle and frees them to be more productive. But insurers shouldn't expect to get agent buy-in from a newsletter or e-mail alone. Companies must conduct face-to-face meetings to demonstrate the importance and sincerity of their efforts.

2) Lead fees. Insurers who aren't already charging a lead fee might consider doing so to demonstrate the value of the leads to agents. And insurers who already charge a fee might want to test several price points to determine which amount is most effective at conveying the value of the program.

3) Phased approach. Insurers that attempt to create a full-scale program from the start are usually disappointed and fail to gain agent support. The key to success is to first conduct a test program with a small group of enthusiastic agents, who can help fine-tune the system. Insurers might consider offering these agents a discount on leads in exchange for their help and endorsement.

While a lead management program requires further investment by insurers, it will pay for itself quickly by allowing insurers to reduce acquisition costs through more qualified leads; increase agent retention, which reduces recruitment and training costs; and enhance customer relationships, which leads to increased customer retention and revenue.

Sue Ann Freeborg is vice president of insurance services at DynaMark Inc., St. Paul, MN, a database marketing subsidiary of Fair, Isaac.

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