Building & Managing Your Funnel — It’s a Numbers Game

November 18, 2021

Everyone has their own perspective on how best to build and manage the sales funnel of a business. Advice on this subject is a cottage industry. But at the end of the day, when you’re building your book of business as an independent insurance agent, it’s a numbers game. And those numbers start with determining the revenue you need to generate.

Grab Your Calculator. To keep the math simple, let’s establish a goal of generating $10,000 in revenue. To reach that goal, you need to understand how much premium you’ll need to sell. With a nod to Glovebox, an insurance tech platform for insurance agents, we’ll calculate how to reach our $10,000 revenue goal using a basic numbers model shared by the technology company.

Using an 80 percent commission split as an example, and the agency average gross commission split of 15 percent, the numbers look a bit like this:

                    $10,000/.80/.15 = $83,333

By running the numbers at the beginning, you know exactly how much premium is needed to achieve your revenue goals. From there, you need to figure out how many new clients are needed to generate that amount of premium. To do this, you need to know the Agency Average premium. For our purposes, let’s say that’s $6,000. Take your premium goal, which we’ll round to $83,300, and divide by the Agency’s Average premium:

                    $83,300/$6,000 = 13.9

This means you need about 14 new clients to hit your revenue goal. If you know your actual 90-day close ratio, run the numbers again to determine how many new monthly leads are needed to generate 14 new clients. Let’s assume a 40 percent close ratio. Divide the number of new clients by 40 percent, and in our example the answer is 35 leads per month. Divide by the number of days you work a month, and you can quickly figure out how many new leads need to be generated per day to meet your ultimate revenue goal.

Interpreting the Numbers. To manage your sales funnel effectively, you must understand and apply realistic math. Once you have the numbers down, it’s a matter of building out a marketing plan that focuses on achieving the goals you’ve set using these numbers. Again, everyone has their own approach to developing an independent agency marketing plan, and there is no shortage of options to consider when focusing on meeting your sales funnel goals.