Insurance Acquisition

Generating Leads In A Hyper-Competitive Market While Lowering The Cost-Per-Inquiry

Creating winning B2C insurance lead generation takes more than luck.

Blue Cross and Blue Shield of Texas

Self-Mailer Control Beaten by Snap Pac

For Blue Cross Blue Shield of Texas, DMCG surpassed a three-year standing control for an individual health insurance lead-generation direct mail package using A/B testing. The Client ran several DMCG-created direct mail packages to beat the trifold self-mailer control package the Client was using. The new DMCG Snap Pac Control, shown in the second image below, outperforms the control, increasing response rates by more than 30%. The cost per lead dropped substantially.

The DMCG list portion of the test also increased the Client's circulation by more than 40%.

In 90% of direct mail tests for sales leads that require a personal sales follow-up, self-mailers come in last. Some professional mailers consider the self-mailer a last-resort format for testing because of its historically low response rates compared to envelope-enclosed packages.

Insurance Industry Direct Marketing Campaign
Evaluation Criteria

Most insurance companies evaluate their direct marketing efforts based on the conversion rates coming from their leads.

If you achieve a 1% response rate and convert 20% of those responses into sales, your conversion rate is 20%. That 20% is converted to a cost per sale.
Assuming your average premium is $ 1,000 per year and your average retention rate is three years, each sale generates $3,000 in revenue.

This is the calculation: Assuming a cost of $1,000 per thousand mailed with a response rate of 1%, you would generate ten leads. This comes to $1000 /10 or a $100 cost per lead.

A conversion rate of 20% yields ten leads, or 20% of ten, or two sales.

This equals two sales at $1000 or $500 per policy for the direct mail campaign.

This formula does not include extraneous costs such as commissions, claims, or administrative costs.
For a direct mail order marketing campaign, you might use an actuarially prepared cost per sale allowable, called the TMC (Total Annual Marketing Costs divided by annual revenue).
This formula provides the total marketing cost allowable for each product sold because there is no commission. The TMC takes into account all other expenses, such as administration and claims.