How to build a 7-figure virtual insurance agency with pay-per-click campaigns

It can be hard to know where to start sometimes.

There are so many options and apps, it's hard to keep track of it all. You go to a seminar and hear an agent spew off a few apps or tools he's using, you write it all down furiously, and you get back to the office all jazzed.

You go back to your notes, invigorated with the ideas and ready to implement. "This is going to be the day!" you say to yourself. "It's all going to change now!"

Then reality sets in.

Does this app go with my contact manager? How does it work with email? Will I be able to use this font here?

And you get overwhelmed. Sound familiar? Trust me, I've been there dozens of times myself.

Success story

To look at the big picture, let's talk about an agent I've consulted with many times over the past two years. I love his story and I think you will, too, because it's a great example of how you can take simple tools and ideas from other markets and import them into yours.

You're going to hear about how a small one-man operation built one of the fastest growing insurance operations in California and then sold it for seven figures, cash — just 18 months later!

You'll discover the tools he used and the marketing system that fed his small, hungry team of agents. Along the way, I'll share with you exactly how you can duplicate this model, whether you're a one-person operation or a large, multi-advisor form.

Note: Though this was a health and life agency, the frameworks of virtual operations, digital marketing and workflow are applicable to all verticals with just a little shift in thinking.

The birth of a virtual agency

When Sy Wemhaner came into the insurance industry in his thirties, he noticed that the agents around him were doing an awful lot of driving, going from one appointment to the next.

When he suggested there had to be a better way, they scoffed. "This is the way we've always done it," they said.

And to Sy, that sounded like a challenge.

Sy grew his agency by looking at what worked elsewhere — and what didn't. By taking a look at traditional agencies, he noticed they had great retention, but fewer sales. Virtual agencies and call centers had great sales but terrible retention, due to the common "boiler room" mentality to get the policy sold.

So instead, he hired agents off Craigslist (of all places), to work his leads.

Craigslist may seem like an odd place to find agents, but you'd be amazed at the wide variety of people you can find there looking for a new gig.

Network of agents around the country

Next, to keep his operation entirely virtual, he used a simple VoIP phone system such as Grasshopper, so his employees could be anywhere in the world and still answer the phone as if they were right down the hall. He bought a standard VoIP phone for every agent at around $150 a pop.

And just like that, he built a network of agent employees around the country in less than 30 days.

Fast-forward a year-and-a-half later, when Sy sold the agency, they were averaging 1,700 policy sales a month with 21 agents.

The entire monthly cost of operations? Four-hundred dollars ($400) to run the whole thing.

No office space. No furniture. No commuting.

Because of this shift in thinking and operations, Sy was outperforming huge brokers with $40 million worth of property and 200 agents.

Could your agency benefit from using a VoIP service such as Grasshopper to create a professional image? What would it look like for you to move from your office to an entirely virtual operation? If you can't do it all at once, what about going virtual just one day a week to see how it works?

Generating leads through search engine marketing

Here's the part I love the most about Sy's strategy. He generated his own leads, but not the way you may be thinking.

Instead of relying on traditional lead companies, he started off with limited knowledge, generating leads through pay-per-click (PPC) campaigns and search engine optimization (SEO).

Here's how he did it:

To create effective and cost-effective PPC ads, Sy focused on individual communities instead of statewide campaigns. For example, he knew that trying to bid on a term such as "Insurance in California" was a no-win. The competition is very high for that phrase and really only worth it for lead companies or carriers.

So he shifted his thinking. He thought small and bid on terms such as:

"Chula Vista Insurance."

"Victorville Insurance."

"Palo Alto health insurance."

By thinking of communities, he was able to get a click to his page for as low as a $2 to $3, rather than $20 to $30.

Monitoring results and fine-tuning for success

Once the leads were coming in at the rate of a few a day, Sy closely monitored his agents' closing ratios. That's the next metric to pay close attention to.

What was key was that if they started closing less frequently, he assumed the problem was his leads — not the agents. So he'd focus on a different area.

Related: The lost art of closing sales

Carrier rates can fluctuate month to month, so it's important for you to find out what areas your carrier is hot in, then get leads in those areas, where you'll have a better chance of quoting a competitive rate.

At any given time, Sy had five different ad campaigns going on.

By paying close attention to clicks and conversions, he could fine tune his online marketing and lower his cost-per-lead and cost-per-acquisition.

Key metrics for successful PPC campaigns

If you're about to venture into generating leads, here are a few helpful metrics to consider for your first campaign:

Sy estimated his average CPL (cost-per-lead) as follows:

Health insurance: $18.
Life insurance: $29.
Small-group lead: $41.

From there, he calculated how many leads it would take to sell one policy (or his cost-per-acquisition). You can easily do this with a simple formula: Number of leads generated before a sale is made X cost-per-lead = cost-per-acquisition (CPA)

Example: 10 leads at $10 a lead to close one deal = $100 cost-per-acquisition

Sy's CPA was:

Health insurance: $90.
Life insurance: $130.
Small-group: $200.

These are good guidelines for you to use when planning your lead generation efforts.

A secret trick to closing more leads

By staying on top of his numbers, Sy learned that he got a better return on investment by focusing on health insurance rather than life insurance leads — even though he sold both.

For every 10 health plans he sold, he was able to add on 2.5 life policies. But when he sold life as the primary, it took him 18 sales to cross-sell one health plan.

By cross-selling life to his health clients, he lowered his CPA even more, because he could add the extra profit from the life insurance sale to offset the cost of the lead being generated.

Since life already had a higher CPA on its own, he focused on health policies to maximize his efforts.

What's 61% more profitable: Google or Bing?

While most agents focus on Google AdWords when they want to start generating leads, Sy found that by advertising on the Bing/Yahoo! platform he was able to generate leads at a much lower cost without sacrificing quality. The reason came down to simple demographics.

Google tends to attract younger, more tech-savvy consumers under the age of 35, while Bing users tend to be older, with families. The latter were within his demographic for selling health insurance plans for families — and they were more likely to fill out a web form.

He also found that Bing generated more traffic for key insurance-related search terms. As a result, his clicks were 61% cheaper.

Which is better, pay-per-click or search engine optimization?

Sy typically spent the same amount of money on PPC as on long-term SEO strategies.

About 20% of his revenue came from SEO. But that focus also required more time to manage: about 50% of his time. For that reason, if he were to do it again, he says, he would focus solely on PPC — and I would agree.

When you're starting out, there's always a risk that your efforts may not pay off with search engine optimization. Ever-changing search algorithms from Google can easily unseat weeks or months of effort.

But with a well-built PPC campaign, your returns are higher and more predictable — creating a kind of profit faucet. If you want more leads, you can turn the spigot to get more. When you want to relax, you can dial it down.

Steady stream of leads

What you've just read is a great example of how, with a few shifts in thinking, you can outgun even the biggest players with limited capital, resources and staff.

Your office can be entirely virtual, and your clients will never know the difference.

You can run the entire operation for a few hundred dollars a month, using simple telephone and web-based tools.

A steady stream of leads can feed your team if you implement low-cost, pay-per-click campaigns on Bing to start off, then move to Google once you've gotten your metrics in place.

Hey, it's all up and running, you might be able to put your agency on the same path to success that my buddy Sy did — and sell it for seven figures in just 18 months!

The takeaways

Consider using a voiceover IP service such as Grasshopper to help your operations go virtual.
Test drive a small budget of $100 towards a pay-per-click campaign on Bing, using targeted keywords that are community-based.
Keep track of analytics — specifically, cost per lead and cost per acquisition — and fine tune your campaign as needed.
Network with other like-minded virtual agencies at www.TheShiftNation.com.

Jeremiah D. Desmarais (jdesmarais@jeremiahdesmarais.com) is a 23-time award-winning financial marketer, TED Speaker and philanthropist that has been featured on Forbes, CNN, and Worth. His work has generated over two million insurance leads and helped advisors in over 51 countries. His #1 best-selling book, SHIFT: 201 Instant-Action Proven Marketing Strategies to Sell More Insurance and Financial Products Now is available at www.TheShiftNation.com.

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