The Insurance Marketing ROI Recipe

If you’re like most insurance agency marketing teams you typically have two thorns in your side. The first one (arguably the biggest one) is identifying marketing channels that bring in the dough. The second is actually figuring out how to measure what worked best, what didn’t, and why.

On one hand, not knowing where to invest leads to two problems. Either you spend waste a bunch of money trying to strike gold and end up disappointed or you don’t invest at all and have stagnant growth.

On the other hand, not knowing how to measure and attribute ROI comes with similar agonies. You’re still wasting money on channels that don’t work but you can’t tell which one and it completely kills your forecasting.

Insurance agents, fear no more! Identifying where to invest and measuring ROI isn’t rocket science. We can break down these problems and backtrack our way into the root causes of the thorns. In this post, I’ll help you ease the pain of these two thorns from your side by using a simple formula. And as a bonus at the end, I’ll share 10 evergreen solutions to get rid of the thorns for good!!

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First, our formula is simple, we take the amount of money we spent on said marketing channel and divide it by the results that we got. After we’ve found that figure, we’ll multiply it times the value of a new policy/relationship to get our revenue figure. Finally, ROI will come by dividing our revenue figure by the amount we’ve invested.

Obviously, that’s a really cut and dry calculation. To really understand we have to look underneath the hood to determine and examine the drivers of this calculation.

Breaking Down The Metrics

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Marketing Budget

This how much gas you put in the tank. Your marketing budget is the monthly amount of money that your agency spends on marketing.


Tahoe Insurance Agency spends $2,500/month on direct mail campaigns + $750/month on live transfer leads + $5,000/month spent on community outreach. Tahoe Insurance’s total marketing budget is $8,250.

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The Number Of Leads Generated

This is exactly what it says it is, it’s the number of leads that were either delivered to you by a vendor or the number of qualified contacts from said marketing channel.


Attending a conference, getting business cards from 25 business owners who require commercial lines policies.

100 leads delivered to your CRM or email from an internet lead vendor

25 inbound phone calls from your digital advertising or your Google ads campaigns 

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Cost per lead

This is the first step in our equation, identifying how much a “lead” costs from our marketing efforts.  In some instances, this figure is cut and dry. However, channels like referrals, events/conferences, and traditional advertising can be a bit more difficult to assign a value to. Not to mention, it’s a retroactive measurement, meaning you don’t know if it worked or not until after the fact. Unlike digital forms of marketing, with straightforward and real-time ROI measurement, you’d simply divide your outlay by the number of leads generated to get this figure.


A referral (this is the hardest and most arbitrary) comes in 5 times/wk, you offer your current clients $20 gift cards every time they send you a referral, your cost per lead is $20 per lead.

Paying $25/lead for a shared internet lead

A $ 10,000-month billboard (with a tracking number) driving 100 phone calls has a $100 cost per lead.

insurance marketing

Number Of Sales Generated

This is the number of sales generated from said marketing. The hardest part of this is attributing sales to marketing channels. The best way to do this using traditional forms of marketing is through tracking numbers. Your billboards and direct mailer campaigns should have them. Logging in-person activity in a CRM can help with community and networking events. Even referrals should be tied back to the original client’s source.


A billboard resulted in 7 calls to the tracking number which led to 3 closes.

5 people used our promo code associated with the direct mailer which led to 4 closes.

Our Bing Ads reporting logged 12 phone calls, 8 of those numbers are currently in our CRM as clients.

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Closing Ratio

While your closing ratio is one of the “sexy” metrics, it’s not the end all be all. Revenue and profit are not factored into this metric. When only considering closing ratio, you lose sight of the channels that bring in more profitable policies. The percentage of leads that turn into sales is your closing percentage only tells us that, how many you closed from how many you sold to.


20 purchased dental insurance leads, 3 resulted in sales of $100 each, our closing ratio is 15%.

10 people call our office per day for umbrella policies, of those 10, 5 want quotes, of those 5 we quote, 2 buy, our closing ratio is 20%.

We receive 7 ,15/30/5 auto insurance referrals every day, 6 turn into customers, our closing ratio is ~86%.

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Cost Per Sale (Client Acquisition Costs)

This is basically how much it costed you to acquire a client. Given the nature of insurance, this number is relatively large when compared to most services. For good reason, brands with deep pockets are able to go into the red to acquire a customer. Having the cost per sale equal to the first year commission generated is incredible. Having the number slightly outmeasure the first year commission works too because the money is in the renewal. Your cost per sale is the amount of money that you spent on the marketing divided by the number of new sales or clients you made.


$10,000, 3-day conference resulting in 10 sales, $1,000/sale

$500 monthly lead purchase resulting in 3 sales, $167/sales

2 $20 in referral gift cards given away resulting in 2 sales, $20/sale

insurance leads

Client Lifetime Value (CLV)

The money is in the renewal. While client lifetime value calculations can get pretty crazy considering the opportunity to upsell, referral potential, etc. , we’re going to keep it simple. This is the commission value times the number of months in a year times your average client retention period. This number should be estimated because it sets the standard for what you are willing to pay to get a new client. (Not to mention, this is why it’s important to bucket your clients!)


Client A is a 47-year-old single male that buys a state minimum auto policy and remains a client for 3 years: est. CLV $300

Client B is a 52-year-old business owner, she has 3 children, 4 cars, and a rental property. She refers all of her friends to you as well and remains a client for 10 years: est. CLV $9,000

Client C is a 33-year-old professional, he rents a condo, has 2 cars and a motorcycle, and will likely never switch: est. CLV $3000

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Current Revenue Generated By Marketing

This is the amount of money you’ve “made” today.  You reach this figure by multiplying your total number of sales by your CLV. This is the metric to pay attention to. This number should be compared directly with your marketing spend to determine whether you made money or lost money. Of course, the value of $50,000 five years from now is not the same as $50,000 today, but if your outlay was $5,000 and you’re generating $50,000, its safe to assume that you’re on the right track.


A $1,000 direct mail campaign for generated 10, $500 CLV clients resulting in $5,000 in revenue today

Our $8,000 trip to a conference generated 1, $2000 CLV client resulting in a loss of $6,000 in revenue today

The $5,000 in Google ads generated 12, $800 CLV clients, resulting in $9,600 in revenue today

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Return on Investment (ROI)

Take your current revenue (for the current period) and divide it by your marketing budget and you’ve got your ROI percentage.


$6,000 in current revenue (5 years period) driven from a $1,000 outlay is a 43.1% annualized ROI (500%)

$52,000 in current revenue(5 years period) driven from a $50,000 outlay is a -.78% annualized ROI (-.3.85%)

$3,000 in current revenue (5 years period) from an $8,000 outlay is a 21.67% annualized ROI (167%)

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Wrapping It Up

By breaking down and applying this formula to all of your marketing activities, you’ll easily be able to remove the thorns from your side. Evaluate what you’re doing now against each individual metric from the formula to find and measure your winners. Following these steps will help you make better marketing investment decisions and forecast sales numbers more accurately. IF you enjoyed this breakdown, be sure to check out these 10 strategies that you can implement today to improve ROI.

*Bonus Content*

Want the 10 insurance marketing strategies to increase your ROI today? Download the PDF guide here!









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