Success is a largely subjective term and can mean different things to different insurance agents. That’s why it’s important to examine some key performance indicators to see how you’re doing and ensure your results align with your objectives.
Here are seven specific metrics for the insurance industry that should provide you with all of the insights you need.
1. Number of New Policies
Your ability to sell new policies is one of the top indicators of your success as an agent and the overall direction your business is heading. Keeping a close eye on how many you sell within a given period lets you know if you’re hitting your targets, the time of year you’re most productive and if there are any issues that need to be addressed.
It’s also one of the easiest metrics to measure. Business dashboard software Klipfolio says you simply add up the number of new policies you sell over a particular period of time and compare it with your target goal and with past averages to see if you’re on track.
Ideally, you’ll look at the number of new policies by the day, week and month, writes Sandra Durcevic at business intelligence tool Datapine. She recommends using graphs and charts when reporting because it adds another dimension to your findings and allows you to easily visualize sales trends.
2. Conversion Rate
It’s also critical to know how many leads end up becoming actual insurance customers, which is where your conversion rate comes in. This term most commonly applies to the percentage of visitors to your insurance site or landing page that purchase a policy, writes Aden Andrus at Disruptive Advertising. This is known as a macro conversion.
However, micro conversions, which are smaller actions that move a lead toward making a purchase, are important to track too, points out marketing writer Jacinda Santora. Examples include newsletter registrations, eBook or whitepaper downloads, web form submissions and phone calls.
How do you calculate conversion rate?
“The formula for a conversion rate is the number of times a goal is completed divided by the number of people who had the opportunity to complete the goal,” says Carlin Leung, product strategist at content marketing agency Quietly. “If you made 100 sales last month, and 1,000 people visited your website, your conversion rate would be 100 / 1,000 = 10%.”
The average landing page conversion rate across industries is 2.35 percent, explains Larry Kim, founder and CEO of Facebook Messenger marketing platform MobileMonkey. However, the top 25 percent of companies have a 5.31 percent conversion rate, while the top 10 percent have an 11.45 percent conversion rate.
3. Revenue Per Customer
Also known as revenue per user, this metric lets you know how much money each customer brings in on average. Calculating it gives you a better idea of how much revenue you’re earning from existing customers, as well as how much you can expect to earn by acquiring new ones.
This key performance indicator plays a big role in determining how profitable you currently are and forecasting future financials. The KPI can also help you identify which insurance policies are bringing in the most revenue and which customer relationships are the most valuable, says Will Kenton at Investopedia.
The revenue per customer formula is straightforward. According to business analyst and entrepreneur Ryan Farley, you simply add up your total amount of revenue and divide it by your total number of customers. In the insurance industry, your total number of customers equals how many policyholders you have.
4. Top Performing Lead Sources
When you’re investing time and money into insurance marketing, you want to be sure your efforts are paying off. Otherwise, you may end up throwing money down the drain and wasting your time without having much to show for it.
That’s why it’s essential to identify your top performing lead sources. Doing so should ultimately help you figure out which channels generate high quality leads and have the lowest cost of customer acquisition, notes the team at marketing agency PR 20/20.
Search engine optimization, blogging, Facebook, pay-per-click (PPC) advertising and videos are some of the most commonly used marketing channels for independent agents at the moment, explains Betsy McLeod at online marketing company Blue Corona. If you were using any of these, your goal would be to determine which are generating the most leads and are the most profitable.
In order to track these channels, you have to determine the number of contacts you get per lead source, the number of policies sold per lead source and the amount of revenue per lead source. As an example, you may discover that video marketing is generating a high volume of quality leads — many of which end up converting to customers — without a huge investment. However, you may find out that PPC advertising is only generating a fraction of the leads and costing a lot of money.
In this case, it would probably make sense to focus more heavily on video marketing and cut back on or even eliminate PPC advertising.
5. Policy Renewal Rate
Acquiring new customers is obviously important. But it’s equally important that you retain the maximum amount of customers and get them to renew their policies. After all, it can cost up to five times more to acquire a new customer than retaining an existing one, writes Taylor Landis at marketing automation platform OutboundEngine.
So you’ll want to track your average renewal rate to see what percentage of insurance customers renew coverage with you once an initial policy has expired.
“The customer renewal rate is easy to calculate,” says founder and CEO of subscription revenue growth company ProfitWell Patrick Campbell. “Simply divide the number of customers who renew at the end of the specified time period by the total number of customers who were up for renewal, then multiple by 100 to convert that number to a percentage.”
If you had 50 insurance customers who were up for renewal and 45 of them renewed, it would be 45 divided 50, which equals 0.9. Multiply that by 100, and it would be 90 percent.
Ken Wohl, head of marketing at insurance application software Indio Technologies, says the average retention rate for the insurance industry is 84 percent, with top companies at 95 percent. You can use those numbers as a baseline to see how your agency is doing and as a goal to hit.
6. Customer Satisfaction
Customer satisfaction is extremely important to the health of an independent agent’s business. It impacts your policy renewal rate and is an integral part of forming long lasting relationships, plus increases your likelihood of gaining referrals.
This latter is crucial because customers gained from referrals are four times more likely to make a purchase, a 16 percent higher customer lifetime value and a 37 percent higher retention rate, says vice president of marketing at referral marketing platform Extole, Christoher Duskin.
Therefore, your customer satisfaction score is another metric that deserves continuous monitoring. There are many ways to measure customer satisfaction says the team at customer success platform Retently. One is by using surveys to identify how satisfied insurance customers are with your agency, how loyal they are to your brand and how likely they are to recommend you to friends and family.
It works by sending out single question surveys that ask respondents how likely they are to recommend your agency based on a scale of 0 to 10, with 0 being “very unlikely” and 10 being “very likely.” That can be followed up with an open-ended question to find out more information about what they did or didn’t like and what you can do to improve.
7. Annual Revenue Growth
Tracking your annual revenue growth is necessary to determine the financial trajectory your company is on year-over-year. This information tells you whether your revenue is increasing, decreasing or has stayed the same. In turn, you can adjust core areas of your insurance business and fine-tune your decision-making accordingly.
“Subtract total revenue in the previous year from total revenue in the most recent year to calculate the total revenue growth between the two years,” says Bryan Keythman at PocketSense. “Divide the total revenue growth by the revenue from the previous year. Then multiply the result by 100 to calculate the total revenue growth as a percentage.”
Gauge Your Insurance Company’s Success
Tracking your agency’s KPIs is important on many levels. You can monitor your progress, identify trends and resolve pressing problems, writes training and innovation manager Jessia Wishart at business planning software platform Rhythm Systems. It all boils down to extracting the right data and putting it to use.
Focusing on these seven metrics should provide you with the critical data needed to measure your company’s success and keep you moving in the right direction. That way you can be more profitable, minimize customer churn and gain a competitive advantage.
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