What Is Lead Source ROI in Insurance?
Published · Updated
Lead source ROI is the return you get on every dollar you spend with a specific lead provider. It's the one number that tells you whether a provider is paying for itself — or quietly bleeding your agency.
In this guide:
- The short definition
- The formula
- How to measure it fairly
- Healthy ROI benchmarks
What is lead source ROI?
The net commission you earned from a lead provider divided by what you paid them.
Formula:
(commission earned − lead spend − service cost) ÷ lead spend
Example. You spent $4,000 on a provider in Q1. Those leads bound policies that generated $14,000 in first-year commission. Rough service cost: $3,500.
ROI = ($14,000 − $4,000 − $3,500) ÷ $4,000 = 1.6x
How to measure it fairly
Minimum thresholds for reliable comparison:
- 300+ leads from the provider
- 60+ days of data
- 10+ bound policies traced back
Below those numbers, the ratio is too noisy to trust.
Healthy ROI benchmarks
| Year-1 ROI | What it means |
|---|---|
| 3x+ | Strong — scale spend |
| 2–3x | Healthy — keep investing |
| 1–2x | Breakeven — investigate |
| Under 1x | Losing money — cut |
The hidden trap: year-1 ROI can look fine while 18-month retained ROI is terrible. Always check how the provider's policies retain.
Why it matters more than total premium
Two agencies both wrote $500K from leads. One spent $80K. The other spent $30K. Same top-line, dramatically different economics. Without ROI math, the gap is invisible.
Frequently Asked Questions
Should I include referrals in lead ROI?
Yes, as a $0-cost provider. Referrals have infinite ROI, and including them makes the comparison against paid providers stark.
Does ROI include renewals?
Year-1 renewals, yes. Year-2+ usually considered organic and excluded. See the complete lead ROI guide for the 5-year math.
What's a good ROI target for a new agency?
Aim for 3x+ on at least your top 2 providers. Less than 2x means lead spend is funding your provider more than your agency.
Stop guessing which providers pay off
ROI for every lead source, after spend and producer commission.