When it comes to Pay-Per-Click (PPC) Advertising, knowing your Customer Lifetime Value (CLV) is vital to understanding if your campaigns are generating a return on your investment.
In this webinar, BrightFire Sales Executive Rachael Stone and Senior Digital Advertising Strategist Bruce DeFoor offered insight on how to make informed decisions to strengthen your PPC advertising strategy using your Customer Lifetime Value.
A few topics Rachael and Bruce cover in this webinar include:
- What Customer Lifetime Value Is
- How to Calculate Your PPC Return on Investment
- Why CLV & PPC matter to Your Agency
- And More
Finally, Rachael and Bruce detail how BrightFire’s Pay-Per-Click Advertising service helps your agency quickly generate targeted insurance leads while making the most of your advertising dollars.
Watch The Webinar
Chelsea: Hello everyone! My name is Chelsea Peterson and I’m a Digital Marketing Coordinator here at BrightFire, as well as your host for today’s 20 Minute Marketing Webinar. Thank you all for joining us today.
Last month, we discussed How to Personalize Your Sales with Video Proposals. If you missed it, or any of our previous webinars in the series, you can access the whole 20 Minute Marketing Webinar series on-demand by visiting brightfire.com/webinars.
Our goal with these webinars is to provide you with digital marketing advice and discuss current digital marketing topics in a brief 20-minute format followed by a Q&A period to answer any questions you may have.
Today’s webinar will cover Why Customer Lifetime Value is Vital to Your Pay-Per-Click Advertising Success and will be presented by Rachael Stone, one of our Sales Executives, with guest panelist Bruce DeFoor, BrightFire’s Senior Digital Advertising Strategist.
They’ll discuss what Customer Lifetime Value, or CLV, is, how to calculate your Pay-Per-Click return on investment, and why it matters to your insurance agency to best enable you to make informed decisions on how to strengthen your advertising strategy and appropriately spend your advertising dollars.
If you have questions during the webinar, please use the Q&A feature in Zoom found at the bottom of the screen to submit them. We’ll do our best to answer any questions that come through; otherwise, we will personally reach out to you after the webinar.
As a reminder, today’s webinar is being recorded, so everything that we discuss today will be saved and emailed to you in the next business day or two so you can watch it on-demand for future reference.
With that being said, I’ll go ahead and hand it over to Rachael to kick off today’s webinar.
Rachael: Thanks, Chelsea, and thank you to everyone joining in today. Before we get started, I want to offer a brief background on BrightFire since we have a mix of current customers and agents that are new to BrightFire attending today.
BrightFire began by providing Insurance Agency Websites in 2000. Over the years as the needs of insurance agents grew, we expanded our digital marketing services beyond agency websites to also include Search Engine Optimization, Reviews & Reputation Management, Local Listings Management, Social Media Marketing, and what we’re discussing today – Pay-Per-Click Advertising, also known as PPC.
We currently provide PPC Advertising to hundreds of agents across the country, and we’re always proud to say that our first agency customer in 2000 is still a BrightFire customer today and also subscribes to our PPC Advertising service.
So with that brief background, let’s get started.
Rachael: I’m excited to have Bruce join us in today’s webinar since his main role as a Senior Digital Advertising Strategist is to manage the PPC efforts for our clients. So, today we’ll have a conversational interview to help you better understand the importance of Pay-Per-Click Advertising in the competitive insurance industry and how PPC ROI is traditionally calculated.
Then, we’ll introduce Customer Lifetime Value and explain what exactly it is and how it relates to Pay-Per-Click Advertising, as well as how it can alter the way you think about your current advertising strategy. We’ll discuss how you can enhance the traditional ROI calculation to incorporate your CLV, tips to improve CLV for an even greater ROI, and how to make the most of your advertising dollars.
Finally, we’ll dive into how BrightFire’s Pay-Per-Click Advertising service addresses each of these elements to support your agency’s need to quickly and efficiently generate targeted insurance leads.
The Importance of Pay-Per-Click Advertising for Insurance Agencies
Rachael: So, Bruce, the first thing I want to touch on today is why agents should use PPC ads. I’ve heard people mention that organic search drives 53% of website traffic, while paid search drives only 27%. So they think paid ads aren’t needed or as effective as organic SEO. Can you offer some insight into why agency owners should leverage PPC ads and not just stick to organic SEO methods such as writing blogs and using relevant keywords?
Bruce: Sure, thanks Rachael! PPC stands for pay-per-click, a model of internet marketing in which advertisers pay a fee each time one of their ads is clicked. Essentially, it’s a way of buying visits to your website, rather than attempting to earn those visits organically.
Speed is obviously the biggest factor, since SEO can take months, while PPC can be up and running in a matter of days. Also, PPC and SEO work together, with the biggest impact being maximizing how much real estate you take up on SERPs, which stands for search engine results page. Lastly is control, since you’re able to control a lot more of your messaging, and who you’re targeting demographically.
Rachael: One common question people ask me is whether or not consumers really click on ads. And while I’ve seen research that says sponsored ads account for over 64% of clicks on keywords that show a high intent to purchase from consumers, what would you say has been your experience analyzing the results of the paid advertising campaigns you manage for our clients?
Bruce: This really just boils down to the user’s intent. If someone is looking for a solution to a problem they have, and they take to Google to see what they can find, they’re going to be very likely to click an ad if the messaging in the ad speaks to their problem.
How to Calculate Pay-Per-Click Advertising ROI the Traditional Way
Rachael: So when it comes to measuring the effectiveness of your Pay-Per-Click Advertising, a buzz word you’ll often hear that we love to talk about is return on investment or ROI. Knowing your ROI will tell you whether your advertising efforts are actually paying off and helping you generate more revenue. We know that how ROI is measured has evolved over time, but can you first speak to how ROI has been traditionally measured by business owners?
Bruce: Yeah sure! So ROI has traditionally been measured in a very static way, focused on the initial revenue generated from a new client. If you were to try and calculate it the traditional way, you would need to subtract the cost of your pay-per-click ads from the revenue generated from them and divide that number by the cost of the ads.
To provide a simple example, if you spent $200 on an ad campaign that led to three purchases of a policy that pays a $200 commission, your ROI would be $600 minus $200, leaving $400 to be divided by $200, for an ROI of 200%.
This is further expanded on with CPA, which stands for cost per acquisition. You can use cost per acquisition to determine how much you are spending to acquire a lead. To calculate your advertising campaign’s cost per acquisition, divide your total advertising spend by the number of acquisitions generated.
If we revisit our original example, and let’s say that we generated five leads that led to three policies, your CPA would be $40.
Rachael: One thing you mentioned there that stuck out to me was the cost per acquisition. Can you dig a little deeper into some of the advantages or disadvantages of using this metric?
Bruce: Absolutely! As far as pros are concerned, CPA is pretty simple to understand, and Google actually includes this metric in their reporting dashboard. It helps advertisers understand how much they are spending on each lead their ads generate.
Some of the cons, like we touched on before, are that it doesn’t give you the full picture, it treats each acquisition as a one off event, and includes no attribution as far as future purchases or retention goes. So, you can’t judge the success or failure of your efforts if you only look at cost per acquisition.
Introducing Customer Lifetime Value
Rachael: That’s a great point, and brings us to the main topic of our webinar today, which is focusing on Customer Lifetime Value when running ad campaigns and really leveraging this metric to see a clearer picture of how your ads are performing in the long run.
Bruce, can you dig into what exactly Customer Lifetime Value is and why it’s beneficial?
Bruce: Sure, so Customer Lifetime Value, or CLV, tells you how much revenue you can expect one customer to generate over the course of their relationship with your business. To measure it, you just need to calculate the total average commission from writing a policy when expanded out to include renewals across the average lifespan for that type of policy.
To put it simply, if your average auto insurance policyholder renews every six months and stays with you for five years, the total value of that customer is the total of the commission paid when the policy was initially written, as well as the commission paid at each renewal.
CLV is also great for spotting customer trends. Let’s say you see clients dropping off a year earlier than they have historically. You can then start to analyze what factors have changed that are negatively impacting your CLV.
How to Define Your Pay-Per-Click Advertising ROI Using Customer Lifetime Value
Rachael: Great. So now we know what CLV is, why it’s important, and how it tells us quite a bit more of the full story compared to simply using Cost Per Acquisition or CPA. Going back to our traditional ROI calculation from a few minutes ago, can you share with us an example of how to use our newly defined Customer Lifetime Value to better understand the ROI of an agent’s PPC ad?
Bruce: Yeah, absolutely! So if we revisit our example, originally, you were looking at an ROI of 200% when thinking about the revenue received from a single purchase. Now, let’s include the commission from the renewal of those three policies across an average customer lifespan of five years. Since renewal commission rates are usually lower than the initial policy commission, let’s say that you earn $100 at each six month renewal, meaning those policies are actually worth $1,100 each if you take into account the full Customer Lifetime Value.
Using this simple formula, your ROI then jumps to your $3,300 revenue minus your $200 ad spend and divided by that same $200 ad spend, you get a new ROI of 1,550%. Now, that’s not taking into account any additional policies created in the future from the same customer, but hopefully, you get the idea.
With a lifetime value-based bidding strategy, you’ll be able to better gauge how much you’re willing to pay to acquire a new customer knowing that it will be profitable to your business over the long-term.
Rachael: Great, and like you mentioned, these numbers and formulas are simplified for the sake of timing and clarification, but can you briefly touch on some of the additional factors that an agency might want to take into account when defining their own ROI using Customer Lifetime Value?
Bruce: Yeah, of course. Some elements you may want to take into account when you’re determining your Customer Lifetime Value are whether you want to segment your policy types and common bundles. You receive a different commission for a commercial insurance policy than you do for an auto insurance policy, and your retention rates are different for them, too. By segmenting out your different policyholder types, you can get a better picture of what your CLV is for each segment and identify which policies you want to spend advertising dollars on.
If you really want to dig deep and make it more complex, you can consider the average revenue generated from cross-selling or up-selling additional policies or bundles later on. For instance, is it likely that someone initially purchases an auto policy, but adds on a house policy when they purchase a new home, or an additional car policy when their child turns 16? You can also consider customer churn rates, and how often different policies are cancelled.
Rachael: Hopefully after today, if you haven’t already, you’ll be able to at least get a good idea of what your CLV is.
Tips to Improve Customer Lifetime Value for a Greater Return on Investment
Rachael: Now, taking all of that information into account, what if you calculate your Customer Lifetime Value and realize that it could use a boost? We’re going to take a moment to cover some key back-office tips you can implement to improve your CLV and customer experience as a whole. Not only will a stronger CLV create more loyal customers that won’t move their policies over to your competitors, but research also shows that loyal customers are 59% more willing to recommend you.
So, Bruce, can you touch on a few ways agents can improve their close and retention rates?
Bruce: Sure! One of the easier tips that has a huge impact is just to make sure you’re recognizing and thanking your policyholders. Recognition doesn’t have to be expensive to make an impact. In fact, it could be something as simple as sending annual thank you notes, or maybe even a $5-10 gift card.
Second, I would say know how customers came to you so you know how to best reach them. Did they respond to an email? Did they find you through social media? Maybe they responded to a direct mail piece you sent out. By knowing how they came to you, you can better understand their communication preferences and know how to best reach them.
Next, I would say to audit your customer service. Are you training your customer service team every so often and making sure they are set up for success? Are you recording and monitoring phone calls to better understand the relationship between your CSRs and policyholders, and ensuring any customer objections are answered professionally? Is there any area of your customer service team or process that needs to be updated? By auditing your current efforts and making any necessary updates, you can improve your customer satisfaction and increase your customer lifetime value.
Kind of in the same realm, your team can take notes on each customer call to get to know them better and follow up with them on the life events they share with you. If you have a CRM or customer relationship management platform where all of your contacts are stored and managed, everyone should be able to add notes and see other people’s notes for a seamless and complete picture of the customer’s journey. In taking notes to get to know your customers and their life experiences, you’ll be able to really personalize your communication with them, the policies you recommend, and their overall experience with your agency.
Another good one that may seem obvious is to just be available for your customers. Not only does this mean answering your phone or email after hours, but it can also mean making sure your voicemail is set up and that you are checking your messages frequently. It can also mean being available through a number of channels, including social media. If your leads are coming to you on Facebook, and they are wanting to continue contacting you through Facebook when they become a customer, you should make sure you’re available to assist them in the manner they want to be contacted and in a timely fashion.
The last one I’ll mention here is to ask for and listen to customer feedback. Occasionally send out emails, phone calls, or direct mail pieces, asking your customers for reviews on the service they’re receiving from your agency. By continually listening to your customers, you can spot patterns, such as reasons why customers love your agency, as well as areas for improvement that can cause churn. All of these tips can help strengthen your customer satisfaction and CLV to allow for a greater ROI in your marketing efforts.
Rachael: Absolutely. Customer feedback is such an important part of improving the customer experience and CLV as a whole. Another great way to receive customer feedback is through Net Promoter Scores, or NPS Surveys. These surveys ask customers to rate how likely they are to recommend your agency to friends and family on a 0 to 10 scale, and they can tell you a lot about the level of customer experience you’re providing.
Research shows that a 5% increase in retention rate can lead to an increase in profit between 25% to 95%. Now imagine if you take feedback from unhappy customers, actively improve their pain points, and transform them into loyal customers. That can mean huge increases for your agency just by paying attention to their complaints, needs, and wants.
You can even take the positive feedback and ask policyholders to share their opinions publicly through an online review site such as Google, Facebook, or Yelp. Then, you can maximize the visibility and impact of your positive reviews by highlighting them on your website, social media channels, and additional marketing materials. Featuring customers in this way and giving them a shout-out publicly can improve their customer experience and improve their Customer Lifetime Value by making them feel special and valuable. In fact, 94% of consumers who believe a company has a great customer experience are likely to purchase again.
Make the Most of Your Advertising Dollars
Rachael: So, now that we’ve discussed how to improve your Customer Lifetime Value as a whole, I think it’s a good time to cover a number of concrete ways your agency can make the most of its PPC advertising dollars. Bruce, what are some of the most important elements you pay attention to and strategize when creating a PPC campaign for one of our agency clients?
Bruce: The first thing I would have to say is something I mentioned on the last slide – make sure you’re available. If you’re running ads, it’s imperative that you are able to respond right away. That might mean you don’t want to run ads on the weekends so you have a quicker response time. With consumers expecting immediate responses from brands these days, they are not likely to leave a voicemail and just wait for you to call them back. Instead, they’re likely going to continue researching and contacting companies until they receive a response and a quote that satisfies their needs.
Next up I would say define your Unique Selling Proposition. What makes you and your ads different from competitors? If you have the same message with the same ad design as everyone else in the industry, how will a prospect know that they should choose your agency over the next? Take some time to really dig into what sets your agency apart, and then reflect that Unique Selling Proposition into your advertising strategy.
Another way to make the most of your advertising dollars is to better track your phone calls received from ads by creating a separate phone number or using a phone tracking service for deeper analytics. In doing so, you can know they came from your PPC ad even if they don’t click or call right away, but instead write your number down to call your agency at a later time.
It’s also a great idea to leverage the different ad strategies and tools that platforms like Google Ads and Facebook Ads have to offer, such as Smart Bidding, Customer Matches, and Similar Audiences. As Google explains it, Smart Bidding is an automated bid strategy that uses machine learning to optimize your ads for conversions or conversion value in each and every auction. And tools like Customer Match and Similar Audiences allow you to take your customer data and then segment your audiences to either target those exact contacts or create similar audiences based on certain demographics or interests. These are just a couple of tools that ad platforms offer to help you optimize your ad spend and generate higher quality leads.
As you should with any sales or marketing efforts, you should always analyze the results of your ad campaigns. Say for example you know that your average CLV for an auto insurance policy is 5 years, and you’re finding that your leads from PPC ads for auto insurance are only sticking around for one year before finding another agency, then that ad campaign is probably delivering the wrong sort of traffic. If you see that happening, you’ll want to optimize your audience targeting to better reflect the interests and demographics of your customers who have a higher CLV.
Lastly, I would just have to encourage you to be patient. Yes, PPC ads can offer faster results than your organic SEO efforts, but it may still take some time to really define your target audience, optimize your ad spend and bidding strategies, determine what devices, social media platforms, or search engines your customers use most, what time they are online, and so on. If you decide to give PPC ads a try, commit to a certain timeframe like three months, six months, or even a year to really see what your ads can do to generate more leads for your agency and help you stand out in the competitive insurance industry.
Rachael: Wow, that’s great. Thank you for sharing so much insight today, Bruce. I know for our attendees, we’ve given you a lot to think about and several next steps to take regarding optimizing your PPC Ads or even simply getting started.
How BrightFire Helps with PPC Advertising
Rachael: Fortunately, that’s where BrightFire’s Pay-Per-Click Advertising service comes in to help. Our team of Digital Advertising Strategists and web and graphic designers can support your efforts to build a strong advertising strategy. After we have discussed your agency’s goals and needs, we’ll be equipped to design ad campaigns that will target your ideal audience and help you stand out against the biggest names in insurance.
In addition, BrightFire is an official Google Partner. We’ve earned this designation by continuously demonstrating our expertise in Google Ads, and we have both Google Ads Certified and Google Analytics Certified experts on staff.
We work with Google Ads, Facebook Ads, and Bing Ads, which was recently rebranded as Microsoft Advertising.
We provide everything you need to be successful and generate leads with pay-per-click advertising, including account setup for each ad platform, copywriting, graphic design, and custom ad design, a custom landing page for each campaign, and monthly reporting and consultation calls with one of our Digital Advertising Strategists like Bruce.
With the help of our Google Ads certified experts to take care of your campaigns, you’ll be able to spend more time tending to your leads, saving you time, energy, and money.
How to Get Started with Pay-Per-Click Advertising
Rachael: So how can you get started? BrightFire’s Pay-Per-Click Advertising service only costs $100 per month per campaign, not including your ad spend. We do require a minimum monthly ad spend of $200.
Like all of our digital marketing services, there are no setup fees or contracts, and a 30-day money-back guarantee is always included.
Our onboarding process is designed to take the burden off of you as much as possible and consists of one 30-minute phone call. During this initial consultation, we’ll figure out your goals and target audience. Then, our team of experts will configure your campaign to target your audience as closely as possible. Typically, we can launch a PPC campaign within a week of your onboarding call.
As a thank you for attending today, we’re offering a $50 promo to webinar attendees. You can receive a $50 account credit for signing up for our Pay-Per-Click Advertising service. This promo ends on May 5th.
To get started with a successful PPC campaign, please visit our website at www.brightfire.com or you can also speak with a BrightFire expert at 888-778-4393.
Q&A on Pay-Per-Click Advertising for Insurance
Rachael: That concludes our presentation on Why Customer Lifetime Value is Vital to Your Pay-Per-Click Advertising Success.
I’ll now pass it over to Chelsea to start the Q&A session if anyone has any questions!
Chelsea: Thank you, Rachael and Bruce! As a reminder to our attendees, we’ll do our best to answer any questions that come through. If we do not address your question during the webinar, someone from BrightFire will follow up with you via email later to answer your question. Let’s get started.
“What does the recurring cost cover?”
Rachael: It covers the creation, monitoring, and management of your ad campaigns. Within your website, it covers the creation and management of a unique landing page. You also receive a monthly metrics report and ongoing consulting from one of our experts.
“What should I expect from BrightFire’s PPC Advertising service each month?”
Bruce: Once your campaign is live, we’ll monitor its performance and make tweaks as we see fit based on results. At the end of the month, you’ll receive a report detailing your campaign’s most important metrics. You’re also invited to a phone call with one of our consultants each month. We also provide a one-time ROI analysis at the end of the third month for each campaign.
“How many leads should I expect each month, and how do I know if the campaign is a success?”
Bruce: This varies wildly depending on numerous factors, such as the type of insurance you’re advertising, the area you’re targeting geographically, and your budget. As a basic example, you can imagine that a campaign targeting downtown Miami versus rural Mississippi would be totally different.
“Can you go over the cost again? Does that include the cost of the advertising budget for Google, Facebook, or Bing?”
Rachael: No, it doesn’t. We only charge you for our services. Your ad spend is paid directly to the advertising network by you. We require a minimum monthly ad spend of $200.
Chelsea: Alright, I think that is all the time we have for questions today. Thank you to everyone who submitted a question, and again, we’ll follow up with you individually after the webinar if we didn’t get to your question today.
Before we close, I’d like to remind everyone of our upcoming 20 Minute Marketing Webinars.
Upcoming 20 Minute Marketing Webinars
Chelsea: Our next webinar is, “Recent Local Search Trends to Help Your Insurance Agency’s Business Listings.” Since 97% of people learn more about a local company online than anywhere else, it’s imperative your agency stays on top of local search trends to rank as high as possible in Google.
In this webinar, we’ll cover recent local search trends, offer tips to effectively manage your local business listings, and discuss how local listings play an integral role in your agency’s overall efforts to reach more people and improve your website’s SEO.
This will be held Thursday, May 27, at 2:00 p.m. Eastern or 11:00 a.m. Pacific.
And then our webinar in June is about, “Common Insurance SEO Myths Debunked.” Keeping up with search engines’ algorithms and ranking factors can be difficult, time-consuming, and confusing. Plus, it can be difficult to identify what advice is accurate and based on fact. Is content still king? Are backlinks still relevant?
Join us in this webinar as we identify and debunk common search engine optimization myths to help you create a successful, long-term SEO strategy that will increase your insurance agency’s visibility in top search engines.
This webinar will be held Thursday, June 24, at 2:00 p.m. Eastern or 11:00 a.m. Pacific.
You can reserve your spot at these webinars by visiting the webinars page on our website at brightfire.com/webinars.
So that does it for today! From me, Rachael, Bruce, and the rest of the BrightFire team, we’d like to thank all of you for attending.