Many agents have a difficult time deciding whether to buy shared or exclusive leads. Before we dive in with a recommendation, lets take a look at defining both types:
Shared leads – these leads are sold to multiple buyers. Depending on the lead seller, it could be sold between 3 and 6 times. Most sellers use the notion of shared “legs”. The purpose of legs is to ensure that a lead is not sold to 2 captive agents from the same carrier. Here’s a quick example of what the legs might look like on a 5 leg shared auto insurance lead:
1) State Farm agent
2) Nationwide agent
3) Liberty Mutual agent
4) Independent agent
5) Independent agent
As you can see, no carrier receives more than 1 leg. This improves the quoting experience for the consumer and agent alike.
Exclusive leads – these leads are sold exclusively to a single agent. The length of the exclusive period will vary by seller and it is extremely important to know how they define it. The lead may only be exclusive to you for a short amount of time. This gives you a head start but makes it critical to reach and quote the prospect before it is sold again. Exclusive leads are generally 2-3 times more expensive than shared leads.
Now that we know what shared and exclusive leads are, which type should you buy? Most agents favor shared leads due to price. Additionally, some sellers do not offer exclusive leads because they can not make as much money from them. Shared leads make up the bulk of the insurance lead market.
Our recommendation is to try buying both types. Variables like number of shared legs and exclusive period length are going to vary by seller, which can have a big impact on lead quality and volume. Track the amount of premium written for each type and divide it out by lead costs to see which produces more business per dollar spent on leads.
Here is a simple example:
Shared: Bought 100 leads @ $8/each. Wrote $6,000 in premium. $6,000 / $800 = $7.50 in premium per lead dollar
Exclusive: Bought 100 leads @ $15 each. Wrote $10,000 in premium. $10,000 / $1500 = $6.66 in premium per lead dollar
In this example, shared leads perform better than exclusive leads. It would make the most sense to buy mostly shared leads from this seller. However, you shouldn’t just run a one time test and stop there. The lead marketplace is constantly changing with buyers entering and exiting the market. Accordingly, prices and performance can change quickly. Our recommendation is to continuously be testing and optimizing your lead sources and types.
There are some ways to get creative with shared leads to make them a better value. Here are a couple things you might try:
Buy leads on evenings and weekends. Most agencies are open from 9-5 Monday through Friday and buy leads during those times. If you buy outside of those, not only will there be fewer buyers (less competition) but you can normally negotiate much more favorable pricing. Sometimes as much as 50% off!
Use automation to increase “speed to lead”. Being quick to contact the prospect is extremely important no matter what type of leads you are buying. If you are buying data leads, the lead seller has likely already tried calling the prospect to attempt to sell them as a call transfer first. This means the person may be screening their calls and/or would prefer a different form of communication. If you can send an automated email or text (SMS), it differentiates you from other agents that are hammering them with calls and puts you in a unique position to communicate with them on their terms and timeline.
To recap, every lead seller has slightly different standards for shared and exclusive leads. Every agent also operates slightly differently. As a result, some agents love shared leads while others hate them. Our recommendation is to try them both out and see which perform better for you.
If you are interested in learning more about what FEQuotes.com can do for you and your business, get in touch with us today to find out.