double POSITIVE Marketing Group, Inc.

Post By
Brian Ocheltree

I wanted to post a whitepaper we just developed on the recent consolidation within the Insurance Lead Supply industry.  You can read the full version below, or download a PDF version here.

Insurance Lead Supplier Consolidation

How Having Fewer Supply Sources That Are Difficult to Add Impacts Lead-Buyers in Need of More Lead Volume

Summary

• The Insurance Lead Supplier market is consolidating
• One supplier now holds major market share
• Buyers can negotiate during transition
• Though current options for high volume suppliers are limited, new options are emerging
• The typical Technology Integration hurdle for Lead Buyers looking to add new suppliers is aided by new Quick-Connect options

When Giants Collide

Every insurance carrier and large agency knows the value of getting inbound phone calls from contactable, interested and qualified consumers who are ready to talk to an insurance-sales professional. Insurance carriers also understand the value of having multiple Lead Suppliers to allow for optimization to the best performers.

What few carriers know, however, is how a consolidation in the Lead Supply market will directly affect them. The number of high volume Lead Supply options is limited and getting smaller. Furthermore, the effort and cost to connect physically to the pool of small to mid-sized Lead Supply sources is excessive and can take months or years for many Lead Buyers.

The State of the Current Supply Market

Never before has there been such a shake-up in the supply of Internet-generated leads for the insurance sector. When Bankrate acquired NetQuote (the leading insurance lead seller) in July of this year, they became the 600-pound gorilla in the vertical. Bankrate had already acquired the #2 player in the space, InsureMe, back in February 2008. These deals have positioned Bankrate as the market leader by quite a margin.

Behind this new Bankrate market giant seems to be a relative new comer, All Web Leads, out of Austin, TX. They have experienced fantastic growth over the past two years, and are being watched closely by all.

InsWeb, another top volume producer and the only publicly traded player in the group, hasn’t gotten as much press as the others lately but may be set for a resurgence. In addition to some leadership changes internally, they announced in August of this year the acquisition of Potrero Media of San Francisco, CA. Although a relatively small transaction, it is an intriguing one, for sure. In our experience, Potrero Media produces some of the highest quality leads available, which we believe are all Search generated. A challenge for Potrero, however, has always been a lack of volume. We respect InsWeb’s insight in finding this high quality producer, and truly hope they can apply InsWeb resources to help grow the Potrero volume without too much of a sacrifice in quality, thus raising the volume of high quality leads for everyone in the ecosystem.

HometownQuotes out of Nashville, TN rounds out the top volume producers, and you have to wonder if they are not in someone’s acquisition sights, or looking to bolster their position with an acquisition of their own.

The Impact Consolidation on Lead Buyers

What does this mean for Lead Buyers? The news is both bad and good. On the one hand, before the mergers, there were only five or six suppliers who had substantial daily lead flow. Seeing that number decrease hurts the buyer, who loses the advantages of competitive pressure. Ideally, every buyer will have as many suppliers as they can, allowing them to optimize their lead flow to the top performers. Less competition yields less optimization capability.

On the other hand, buyers still can claim some negotiating power, especially if they are buying from both companies being merged. They may be in a position to demand the better rate between the two former competing suppliers, which could lower their current cost per lead. As time passes, however, rates will adjust, and this window of opportunity will close.

Independent of the number of options available to you, we still recommend that Lead Buyers diversify their supply sources as much as possible. This not only gives you more volume to draw from as needed, but also allows you to create a Champion/Challenger environment where the top performer puts pressure on the weaker performers. We have found suppliers to be very receptive to receiving their performance (cost per sale, for example), as long as they are given some conversion data to help them optimize on their end, based on what converts the best. This is especially true if they know this could raise the lead volume that you purchase from them.

New Suppliers Come Forward

Unfortunately, as stated above, the community of volume-capable suppliers was small before the recent consolidation, and is even smaller now. However, this is changing as we speak.

The demand for insurance leads is at an all-time high, creating a lot of attention from new firms eager to break into the space and grab a piece of the growing pie. We have seen very capable lead generators from other industries with strong brands enter the space this year, like LendingTree and LowerMyBills. We have also seen a rash of new startups enter the space this year with leaders with impressive resumes. AgileClicks,a relative new comer to the space, is generating significant volume of insurance leads already, we believe through their affiliation with the rocket scientists at Adverplex, which drives many of the EDU lead generation platform out there today. CoverHound, a new Auto Insurance Lead Supplier, was founded by Basil Enan, son of InsWeb Founder Hussein Enan. And another InsWeb alumnus, Jaimie Pickles, has a new startup in the space. Pickles, formerly the President of InsWeb, is now the Founder and CEO of Canal Partner, LLC.

In time, the pool of high volume insurance Lead Supply options will increase, so large Lead Buyers should keep their ears to the ground for new activity.

Connecting with Suppliers Gets Easier – Third Party Connectivity Services

As we have mentioned, we recommend that all large Lead Buyers connect with as many Lead Supply sources as possible, providing the ability for buyers to optimize lead flow to the top performers. However, we have seen firsthand from many carriers that getting connected to new suppliers is quite difficult. It can take months, if not a year or more, due to the technical and testing requirements with each data feed. This level of complexity and cost prevents most carriers from engaging with any but the largest of Lead Suppliers, at least initially, thus limiting their supply diversification.

One solution to this problem is to utilize a third party connectivity platform. These are basically platforms that have already built XML connections to the suppliers. They can handle the connectivity and translation issues required, typically much more quickly and cost effectively.

For example, DoublePositive offers their Lead Funnel for this express purpose. The Lead Funnel was designed to solve this exact problem, and consists of robust physical connections to all Lead Suppliers, combined with a proprietary Translation E
ngine that handles the entire custom data mapping per supply source. By building one connection to the DoublePositive Lead Funnel, a carrier can be connected to virtually every supplier, large and small, overnight.

In addition to reducing the time and cost of connecting to new supply sources, this type of third party platform allows large Lead Buyers to justify building connections to smaller suppliers, thus increasing the pool of available supply sources.

Add New Suppliers Overnight by Eliminating the Data Feed

As we have indicated, Lead Buyers are facing a Catch-22. You know you need lots of supply sources to give you room to optimize to the best performers, but because it takes so long and so much work to connect, you can only justify the effort of connecting to the biggest of the big. Another idea to consider is simply testing new supply sources through your inbound call center before bothering to build a feed to each of them. This can be set up overnight, and requires no data feed to be built. All you have to do is use a third party Hot Transfer service to convert the new suppliers’ leads into inbound phone calls.

For example, DoublePositive is currently connected to virtually all of the active insurance Lead Suppliers, and can turn any of their leads into inbound phone calls in minutes with their Hot Transfer service.

There are two ways this can be accomplished. The first is to use regular long form leads, and have your sales professional look the lead data up in the Hot Transfer companies lead interface. They then can re-enter the data into your quoting engine as they verbally review it with the consumer.

The second method is to request short form leads from your suppliers. With these short form leads, the consumer has only provided contact information, so when the transfer is made, there is no need for your sales professional to use two systems. They simply capture the information for the first time from the consumer over the phone. You could argue that these short form leads are of lower quality, since the consumer hasn’t had to spend as much time or effort to complete. However, the volume should be higher, cost lower, and when combined with the Hot Transfers company’s ability to provide a layer of filtering at the call center level, they may convert just as well.

Review

Where does the market consolidation leave the insurance leads buyer? Let’s review the facts.

1. The acquisitions have happened. Buyers have fewer options for Lead Supply today.
2. However, the wisdom of maximizing your lead sources remains. Putting plans in place to do so may be worth it as new supply sources seem to be right around the corner.
3. Though building connections to new supply sources is costly and difficult, new options are becoming available all the time to help, such as the DoublePositive Lead Funnel, and the Short Form/Hot Transfer bundle. Therefore, we recommend that all large Lead Buyers continuously search for new supply sources to consider.

 

Download a PDF version here