Learn why free final expense leads may not be worth the hidden expense, especially as a new agent to the final expense business.
Today's article is about free final expense leads! Is there such a thing as free final expense leads, or is there a hidden cost?
We're going to talk in detail about the cost of free final expense leads, what you're losing as a final expense agent when you allow your agency to pay for your final expense leads.
Before we get started, don't forget to check out my ultimate primer on all-things final expense leads. I go into great detail regarding direct mail final expense leads, as well as final expense telemarketing leads. It's a must-read.
There are a lot of new final expense agents that "don't know what they don't know." Many final expense agencies offer free lead programs, and the agents think, "I just take these leads, I go out there and work, I make money."
Getting involved in the final expense business, you have to look at it as a business. Every single business has some kind of operating cost. Business have costs of goods, raw materials, etc. Most business have to invest their money into something, before realizing a profit on selling the good.
In final expense, at least for brand new agents, that cost of goods sold is tied up in the marketing and lead investment portion of the business. It takes a solid $3,000 to 5,000 if you do it the right way with direct mail final expense leads, preferably fresh leads and not final expense aged leads. But a lot of agents don't have that getting started.
If I run across a final expense agent who is flat broke and has an indomitable desire to succeed, I will recommend a final expense company that will provide free final expense leads. In many cases, it is better to go this route than to use crappy and questionable final expense lead sources like voice mail leads or pre set final expense leads.
However, there are long-term consequences shacking up with an agency providing free leads in many cases -- very commonly they will NOT allow you to increase your commissions and build you up into a self-sufficient final expense agent paying for his own leads.
The Numbers Behind Free Final Expense Leads
In truth, it’s better for a final expense agent to work a weekend job, or work extra hours at the full-time job to bankroll their final expense lead program. This is truly how to start selling final expense the right way.
But let's take a look at the long run and why free final expense leads is problematic:
1) There Is No such Thing As A Free Lunch. Somebody has to pay for your free final expense leads. And if you're not paying, then your agency is. And I can guarantee they want to make a sizeable profit on your work given the risk they are taking providing you free final expense leads.
Here's how they do it. As a new final expense agent, you're going to start between 80% and 100% contracts in most organizations. This assumes your agency is willing to help develop, train, and support you into becoming a competent and independent final expense agent.
2) Your income-earning capability is cut in half. With the agencies providing free final expense leads, you'll start between a 45 to a 55% commission level.
Let's crunch numbers to see if this proposition makes sense. First, take a guy doing $15,000 in issue paid business a month. This is what I would call a top 10% agent. He's getting free final expense leads. He's on a 50% contract, so he's making $7,500 before minor expenses like gas, wear and tear on his vehicle, etc.
Now let's look at an agent with 100% contract. He's doing $15,000 as well. And he's paying for his own leads.
As an aside, an agent paying for his own leads AND producing 15,000 in business most likely will be making between 110% to 120% average first year commissions, but I want to use 100% commissions as a conservative example.
When you consider final expense lead expenses, let's say he's needs 25 leads a week. Twenty-five leads a week at $30 each lead is $750 a week in lead spend. That's $3,000 a month.
$15,000 in gross commission minus $3,000 in lead spend gives this agent $9,000 in net income.
Comparing each agent, the agent paying for his own leads makes an additional $1,500 a month in net income, or an additional $18,000 a year. That's much better!
But wait, there's more. The renewal difference between free final expense lead providers and agents who buy their own leads is dramatic. Many times, agents getting free final expense leads do NOT have renewals.
The agent at a higher contract paying for his own final expense leads will have an approximate renewals commission of about 5%. Doing the math, $180,000 gross annual commission multiplied by 5% is around $9,000 in additional annual income!
Nine-thousand dollars in annual renewal commission compared to zero renewal commission is a big difference, don't you think?
The Best Agents Lose Out On Lots Of Commission Using Free Final Expense Leads
Obviously, agencies providing free leads want to manage their risk in buying leads for their agents, but where they make the big bucks is on getting the renewal commission. Over time, an agent receiving free final expense leads is leaving mid-five figures on the table. And we're only talking about renewals, not first-year commissions!
The idea of managing a final expense lead program is not complicated. It's simple once you get the hang of it.
We work with a program at Final Expense Agent Mentor where we get fixed price final expense leads. In the beginning, you have to give up some first year commission to be trained properly in this business. But when you turn into a top 10% final expense agent, agencies should be bending over backwards to earn your business. So getting paid what you are worth should be easy to get at this point.
The important takeaway is to ensure you're getting value out of your final expense relationship. And while having free final expense leads when you're broke is pretty valuable, I may be willing to exchange higher commissions to have free final expense leads.
But when you are experienced, you are taking money off the table, and this final expense company is not providing you any more additional value.
So if you're in this position, is it worth having free final expense leads over the long run? Compare your production numbers to 100% or even 110% contract to be safe. You'll be amazed at how much you're leaving on the table.
Lastly, the best free final expense insurance leads I recommend are senior seminar leads. They are a great way to develop high-quality final expense leads at a low price while retaining your higher commission levels.