In this article, the main topic of discourse is what numbers a final expense insurance agent needs to track to determine his or her level of success, as well as what agents need to do to improve their odds.
Managing such ratios as closing ratios and average case size is important to do on some level. When challenges arise, it’s sometimes difficult to see what the problems are if you’re not tracking these basic ratios. By tracking your numbers, you’ll find whatever weakness needs to be managed and improved upon.
One thing that’s really cool about tracking your numbers is that this activity alone will immediately improve your outcomes.
It has been proven across a number of surveys and studies, amongst businesses and sports teams, that if the numbers are managed and inspected, outcomes improve.
What Your Peers Are Reading
Keep reading for the top metrics an agent needs to monitor to measure levels of success and to discover what needs to be tweaked. Along the way, I’ll also point out some basic benchmarks for success-minded agents.
Related: A word about sales metrics
Sales metrics to manage
Note: Please assume with all of these ratios that we are referencing direct mail final expense leads. There will be some variation depending on the lead types, which will be mentioned.
8. Application to lead ratio
This is defined as how many policies you write compared to how many leads you purchase. This is a dependable litmus test to see if your production is on par relative to the average.
What I have found is that successful agents have a ratio of about 25 percent. This isn’t always the case, but 25 percent is a goal that every agent should strive for. This means, if I have 20 leads, I should be able to convert five applications.
It’s important to understand that this isn’t a closing percentage to lead ratio. In many cases, you may sell to two couples and a single person, which is five deals, but there are 17 leads left you didn’t successfully sell.
As long as you’re converting 25 percent, no matter whether these sales are to couples or singles, you’re doing well. Anything above and beyond that is excellent.
The reason 25 percent is a good number is, it allows for the highest chance, on average, to cover your expenses, but it’s also scalable. As you will see, it’s harder to scale up when you have a 15 percent closing ratio.
Arrange your leads by type, come up with a total, and then divide the number of cases according to the type of lead total. That’s your application to lead ratio.
If we were looking at another source of leads, such as telemarketing, a good conversion ratio off of pretty much any final expense telemarketing lead is about 10 to 15 percent, assuming final expense telemarketing leads are competitively priced.
Final expense telemarketing leads are more difficult to work, and are not as high quality as final expense direct mail leads on a consistent basis.
See also: 5 key ideas for new insurance agents
Your appointments to lead ratio refers to how many appointments you are actually setting over the phone and by door knocking compared to how many leads you purchase. (Photo: iStock)
7. Appointments to lead ratio
In my mind, you should be setting appointments with at least 50 percent of your final expense leads over the phone, and you should be getting in another 10 percent or more on door knocks.
As a trainer, my belief is that every agent should be door knocking and appointment setting or doing some kind of appointment-setting activity. With door knocking, you are going to get a much higher percentage of your leads converted into presentations than what you would if you exclusively called.
As many trainers will attest, the difference between success and failure for new agents’ is often just showing up at the door. You can’t discount that.
With a combination of these two activities, you should be able to set appointments with at least 60 percent of your leads every single week with the hopes of actually getting in the door and selling something. I would say this metric is also the same for avatar final expense leads or any telemarketing lead. I think it’s very possible to get close to the same metric.
6. Appointment conversion ratio
This ratio essentially measures what your closing ratio is when you actually sit down with a prospect. A good number is between 50 percent and 70 percent. If you’re closing in that range, you’re doing great.
Closing ratios below that tend to indicate that you are not doing something critical to the sales process. A consistently low closing percentage indicates you are probably going to have to look a little bit closer at what you’re doing in the sales call and have some analysis done to make some changes.
The average case size in final expense is around $50 a month. It will vary depending on your sales style as well as your market. (Photo: iStock)
5. Average case size
I personally have a lower average case size. I know there are many people who think the $50-a-month average is not realistic. My experience has been, in mathematical terms, the average is higher than the median.
If you stack all your policies up in order of size from smallest to largest, the one right in the middle is going to be a lot smaller than the average. This is the definition of a median. And why does it matter? It indicates you’re going to write a lot more $20, $30 and $40 cases, but the $100+ cases tend to push up that average.
The key point is that it takes time to get to that average. This means you have to work your leads hard. You’ll eventually hit the home runs and grand slams, all of which will have the effect of raising the average.
If your case size is below $40 a month, you may get better results by simply selling the premium, which is the old Tim Winders-popularized approach to selling final expense, or by offering face amounts that start at $40. Then, see if somebody will take one of those over something cheaper. The point is, you may need to stop offering smaller premiums in order to raise your case size.
4. Lapse ratio
When calculating the average lapse ratio and what to expect in revenue, you have to anticipate lapses and not takens.
I always take 20 percent off the top in my management setup to account for those who lapse on me. As we know, the reality is a lot of these people keep their plans 3, 6 or 9 months. You’ll have a smaller chargeback than just a flat 20 percent, so it may be a little bit higher. But you also have people who buy and then change their minds. So if you just take 20 percent right off the top, you’re being conservative from the get-go.