Lead Generation Smackdown: Which Method is Best?

By Dylan Brooks, Lead Digital Marketing Account Manager | March 4, 2021

This post is part of a series sponsored by ITC (Insurance Technologies Corporation).

Leads.

They’re an insurance agency’s lifeblood.

Loyal customers and strong relationships with carriers can help your agency operate day-to-day. But, they won’t set you up for the future.

The revenue from your existing customers isn’t everlasting because no one retains 100% of their clients. The policies you write from referrals can buffer against the eventual revenue hit from lost clients, but they won’t help your agency grow.

To grow and thrive, you need new business. And, to get new business, you need leads.

So, how can you get leads?

The Three Lead Generation Methods

When considering lead generation methods, it helps to define what a lead is.

A lead is more than a phone call or a form fill. It’s a result.

In particular, it’s the result of getting in front of a captive audience or an audience looking for what you offer.

So, the first step in lead generation is reaching this audience.

There are three main ways to do that:

  1. Inbound marketing
  2. Outbound marketing
  3. Lead buying

Here’s a closer look at each one.

Inbound Marketing

The premise of inbound marketing is straightforward.

Let consumers control the buying process. Show up with solutions at the consumers’ moment of need and reap the benefits.

Accomplishing this often requires extensive planning. It demands that your agency looks beyond the point of sale. Not all consumer needs come when their credit card is in their hands. Some need to be nurtured first.

Consumers have plenty of other concerns when dealing with insurance. Coverage can be confusing, and the claims process is not always straightforward. Add in the variable rates for premiums, and there’s plenty for consumers to ask questions about.

If you can answer these questions on your insurance agency website, you can build a loyal following. Then, when consumers are ready to buy, they seek out your agency for a policy.

The process requires intricate planning, and there’s not much instant gratification. But, if you’re patient and persistent, the rewards can be profound.

Outbound Advertising

Outbound advertising is the lead generation method we’re most familiar with. It’s on the television when we turn it on. It’s on the side of the highway as we drive. It’s online as we browse social media or read the news. Every day we’re hit with a barrage of ads.

Many of these ads are insurance themed. They’ve brought business to Allstate, GEICO, Nationwide, and State Farm, among others.

But if you’re planning on following in the footsteps of these industry giants, think twice. The major insurance carriers have a head start at outbound advertising. And, their budgets are at levels most agencies can’t match.

Even if you were to pay for an outbound ad campaign, it wouldn’t yield the same return the big companies get. Consumers recognize those brands already. So, they are more likely to trust them based on a single advertisement. Not to mention, your audience for this form of advertising is much larger. That may sound like a good thing, but your goal should be to find the right audience, not a large one. Your spend per lead is often going to be higher than other methods because you have to reach a large audience to find the few who are interested and shopping for insurance.

While you might see modest success with advertising, it shouldn’t be your bell cow.

Lead Buying

Plenty of companies sell leads to insurance agencies. These lead providers often receive a commission in return.

To the uninitiated, this model seems similar to that of a bank ATM. Enter payment information. Get leads.

There’s far more nuance behind the scenes.

The lead providers present themselves as online insurance solutions. They take on the burden of advertising. They provide shoppers a simple way to request a quote.

But, once consumers hit Enter, they stop working with that lead provider. Their information gets transferred to the agent, or agents, who paid for access.

This transition is subtle. So subtle that the consumer has no idea they’re working with a different entity.

Leaving that detail aside, lead buying can provide your agency with sales opportunities. Plus, the return on spend can often be reasonable.

What is the Best Lead Generation Method?

Each of these lead generation methods can get your agency in front of new audiences. Which one leads the pack?

We’ve already mentioned that outbound advertising is cost-prohibitive. While it might be useful in small doses, it’s not efficient over the long haul.

That leaves us with two contenders: lead buying and inbound marketing.

At first glance, lead buying might seem like the best bet. It’s hard to beat access to consumers at the moment they’re ready to buy.

But, turning those prospects into customers can be tricky. There’s no guarantee that the leads will be the type of consumers you seek. Even if they are, you might not have the policies or prices they’re looking for.

Plus, consumers might pump the brakes if they find out that your agency is separate from the lead provider. No one wants to get passed around like a hot potato during the buying process.

None of these are trivial concerns. Lead buying is only cost-efficient if your agency can close leads into customers. If your close ratio goes down, your customer acquisition cost (CAC) goes up. This makes the tactic ineffective.

It’s impossible to know how many of the leads you buy will be a fit ahead of time. So, in essence, lead buying itself is nothing more than a high-stakes gamble.
Inbound marketing doesn’t share this problem. Why? Instead of buying leads, you earn them.

Yes, consumers control the inbound marketing buying cycle. How? You can’t get a new customer with this strategy until they’re ready to buy. But, you can improve your odds by creating a target audience of people who are more likely to buy from you. This isn’t a cold call. You are specifically tailoring your marketing strategy to consumers who need your services.

You can generate website content to prove your agency’s insurance expertise. You can use social media to engage with consumers. You can make it easy for consumers to take the next step in the buying process.

This process might not yield the volume of inquiries that lead buying does initially. But, there’s a good chance the close ratio will be better. Without any commissions to lead providers to worry about, the CAC will be lower.

The benefits of inbound marketing for lead generation are clear. It’s without equal at turning inquiries into policies. Plus, it won’t break the bank.

So, avoid that temptation for a splashy ad campaign. Stop rolling the dice with lead buying.

The most sustainable way to grow your agency is by earning leads. And the best way to get there is through inbound marketing.

Want to learn more about generating leads? Check out these free resources:

Was this article valuable?

Here are more articles you may enjoy.