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Generating leads in a hyper-competitive market while lowering the cost-per-inquiry

Blue Cross and Blue Shield of Texas

Creating winning B2C insurance lead generation
takes more than luck.

For Blue Cross Blue shield of Texas, DMCG beat 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 at the time. The new DMCG Snap Pac Control shown in the second image below beat 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 better 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.

Self-Mailer Control Beaten by Snap Pac

Old Control

Old Control

SNAP PAC NEW CONTROL

INVITATION TEST PACKAGE

MONARCH MEMBERSHIP TEST PACKAGE

CARDED SNAP PAC MEMBERSHIP TEST PACKAGE

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 get a 1% response rate and convert 20% to sales, then your conversion rate is 20%. That 20% is converted to a cost per sale.

  • Assuming that your average premium comes in at $1000 per year and averages a retention rate of 3 years, then each sale comes to $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 10 leads. This comes to $1000 /10 or a $100 cost per lead.

  • A conversion rate of 20% yields 10 leads x 20% or 2 sales.

  • This equals 2 sales at $1000 or $500 per policy sold for the direct mail campaign.

  • This formula does not include extraneous costs such as commissions, claims or administrative costs.

  • For mail order direct marketing campaign, you might use an actuarily prepared cost per sale allowable called the TMC (the Total annual revenue divided by Marketing Costs).

  • This formula, for each product sold, provides the total marketing cost allowable because there is no commission. The TMC takes all other costs such as administration and claims into account.