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Unwrapping the Shared Insurance Lead Business Model

Unwrapping the Shared Insurance Lead Business Model

Every now and then we hear from an agent that is suspicious that a lead they bought from “Lead Company 1” was also sold to “Lead Company 2”.  These emails typically suggest some sort of conspiracy theory against agents.

I’ve seen enough of these come through to realize that transparency is an issue with the shared insurance lead business model.  Given the lack of insight I can certainly understand how agents can feel this way.

The truth is that many leads ARE sold to other lead companies.

However, this is not a shady or nefarious practice meant to screw agents out of their money.  The reality is that it is the only way an insurance lead can be sold in the $10-15 price range.

 Here is how it works:

  • Most reputable lead companies will declare how many times a lead can be sold.  Most are anywhere from 3 to 8 times.
  • Lead companies have an agent base of lead buyers.  When a lead comes in for a specific zip code and line of insurance the lead will go to buying agents that meet the lead criteria.  The average number of buyers for a lead for even the biggest agent bases average out to fewer than 2 agents per lead.
  • Lead companies must align themselves with partner companies to sell leads to when they don’t have at least 3 buyers for a lead.  In the event they don’t have enough buyers they will ping partner agent bases and pass leads on when they have matches for that particular lead.
  • Even with reselling the lead is not sold more than the number of times a company has stated a shared lead can be sold.

It is important to take a step back and look at the model from all angles.

There are 2 primary reasons this activity occurs:

1)      To ensure the consumer gets a response to their request for multiple insurance quotes.

2)      To be a viable business model.  Insurance leads are very expensive to generate.  If you’ve participated in Google Adwords you know that an auto insurance click can run in excess of $30.  Keep in mind that is for a click!  Even the best insurance landing pages don’t convert over 40%.  If you want to get a top end generic domain name to build a good website for organic lead generation you are looking at spending $100k or more.  The sale of Insurance.com was primarily a domain sale at $36,000,000.  Bottom line is that if shared lead companies didn’t resell leads the same shared leads you buy now would easily cost more than $30/each.

In most cases a shared lead with the top tier companies is not even sold 8 times.  Yes, I realize some consumers say they are getting too many calls but that is more than likely because they didn’t expect to get calls in the first place (which is more of an issue at the point of lead origination).  It only takes a person getting 2 or 3 calls to get frustrated when they didn’t expect to get any at all.  This is especially true when a lead buyer is calling multiple times to make a connection on a paid lead.

I’m not saying there are not issues in the industry or the current state of the shared insurance lead model as a whole.

What I am saying is that these companies aren’t out to get agents.  They would much rather keep agents happy and buying their leads.

I do think there could be a lot more transparency regarding the reselling aspect and agents would be more accepting of this practice.

I’m starting to see a lot more companies focusing on building and servicing their agent base and putting less emphasis on reselling.  More internal lead buyers mean less reselling to other companies.  This is a good thing as it will only help to drive higher lead quality.  The more control a lead company has in house the better.

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