Fireside Chat Webinar: Chris Jones on Top Strategies for Auto Acquisition
In this hour‑long fireside‑chat, State Farm agent Chris Jones and host Bradley Hamner discuss how to acquire and retain auto customers in a competitive market. Chris outlines his personal background—12 years as an agent, a legacy MOA in Bothell, WA, and a partnership with his wife’s agency—then dives into his top acquisition tactics, emphasizing "X‑dating" (re‑engaging expired leads) and StateFarm.com leads generated through pay‑per‑click campaigns with a partner called Mellon Local. He explains how he tracks key metrics such as cost‑per‑lead ($10‑$15 for StateFarm.com leads, $19.84 overall), close ratio (25‑30% on high‑intent leads), average auto premium (~$150/month), and the resulting customer lifetime value (~$2,500‑$3,000 annually). Chris shares his method for calculating customer acquisition cost (CAC) by dividing total marketing spend by the number of autos written and then adding payroll costs for the acquisition team, arriving at an auto acquisition cost of $275.48. He discusses financial performance indicators like the Lapse Scan, scorecard, and ROI, showing how marketing spend ($33,763) and payroll expenses relate to a $20 M book of business. The conversation also covers benchmarking against peers using Club Capital and Fathom reports, the cadence of monthly financial reviews and annual fall‑planning, and the importance of comparing oneself to past performance. Finally, Chris talks about team culture—using shared meals and personal mentorship—to retain A‑players, and he offers practical advice for agents at any stage to set realistic ROI expectations, balance marketing and payroll, and continuously refine acquisition tactics.
Chapters
You know, when you say that, I'm like, we'll see how long the, uh, the content always takes to go through. I'm like, I mean, I got 15 minutes of good stuff, but with you, I feel like it's gonna— we'll stretch that out a little bit, get a little deeper in there. But I always feel like, I swear, I'm like, how am I gonna talk for that, you know, length of time when it's there? But it always ends up happening, right?
Yeah, you got way more than 15 minutes of content. There ain't no doubt about that for sure. Yeah. All right. As everybody kind of gets rolling in, hey everybody, just post in the chat or we'll use both chat and Q&A. Just post in the chat for those of you, we'll get started here in about a minute. Where are you guys coming from? I'm just kind of curious around the country where everybody is. And then, uh, what city and state would be awesome? James is in New York. What's up, Southampton? All right, James, are you a big golfer? You know, some good golf courses right there where you are. National Golf Links, Shinnecock. Never played them, so if you got connections, I'll hit you up. Glad to have everybody here. I'm looking forward to this conversation. All right, well, if you know somebody, I'll, I'll come up there. Okay, James, uh, look forward to this conversation with Chris. I think this would be really good. We were talking beforehand before we got rolling that, uh, we're gonna get to kind of go high level and then we're also going to go, uh, eye level. So you'll hear me say eye level to eye level, really going to get some concepts and some theory on some things, but also some really practical items, some of the things that day to day that you can implement maybe in the next hour or so in your business, some little tweak along the way. I believe skill acquisition is absolutely something all of us can be able to obtain if we have the right mindset. And so, Chris, I'm just so thankful for you to be able to come on and give some of your time. You're always so giving to other organizations and other people. And I mean that, I mean that seriously. So let's just kind of get started. People may not have met you personally, don't know you. Why don't you just kind of give a little bit of a background of you and kind of where you are today, and then we'll kind of get rolling into it.
Yeah. So I'm a State Farm agent. I got a legacy in a MOA. I always kind of draw it out like this. Washington is a big square. Two-thirds of Washington is all farmlands. We grow apples and hops for your beer. The other one-third of Washington is Seattle, Bellevue. We have a couple like local businesses like Amazon. Amazon, Microsoft, Expedia, small local businesses that we like to support, Costco. Um, so my legacy is one like just a hair above, um, Kirkland, um, in a little slice of paradise called Bothell, Washington. Kirkland is, you know, the head of Costco. That's where the Kirkland Signature kind of comes from. Um, so we're in a higher wealth area, a lot of tech jobs, um, people actually moving to Seattle. It is not as rainy here as everybody says it is. It's actually a beautiful day today. Um, I've been an agent for, um, let's see here, 11 years, 4 months, and 27 days, but who's counting? So coming up on, uh, 12 years here. Um, and I've had a MOA for 5 years, 4 months, and 27 days, but who's counting? Um, so I got into that MOA program pretty early. Um, I was fortunate enough to start scratch in both of them So that was, not only did I do it once, I did it again. So, you know, my business really started with me picking up the phone and cold calling. I mean, it literally got to the point where I was calling through the phone book just trying to get people. I got some of my biggest and best clients by calling out of like a digital edition of the phone book. So I've always been a pretty tech savvy person. A couple years ago, right before COVID I got married. I got married to a State Farm agent. Her name is Darian Okada. She was down in California. And we were doing long-distance flying back and forth, but we were lucky enough to be able to migrate her office just outside of where my legacy MOA is. So we have kind of a good triangle in that Western Washington, one-third of the state area where we have a lot of coverage on this north end of Lake Washington. And she's been an agent like 5 years. I should know that off the top of my head, but about the same time as my MOA. We share our team members, so that's been pretty beneficial to, you know, have some staff. And when we share from the finances, I think we're going to get some questions, but I'll be pretty open and transparent about money in, money out, what we're spending, where it's going. And I'm happy to share when it's said and done. I think the best part of this company is that we're all willing to share what we're good at and develop other people. We're standing on the backs of giants at the end of the day, and people like yourself who are always given to help, it's the least that we can do but pay it forward, right?
Yeah, that's awesome. Well, we are all a product of the experiences and the people that have poured into us. And so seriously, thank you for being so willing to be open and vulnerable. I do think financials is something sometimes, and at least was for me personally, it was almost a no-no. People just didn't talk about that. They, they would say, I'll talk about production, I'll talk about sales numbers all day long, and I'll talk about my team in general. I don't really want to talk about my financials. I don't want to talk about top-line revenue, and I don't want to talk about profitability. And I think that your willingness to be able to kind of break break that mold today and share some of those things with us is really awesome. So I appreciate that. Kind of where I want to start is around, you know, we're going to talk about auto acquisition and we're going to interweave that with, uh, financials as well. I first want to talk, talk about this word acquisition. I really love it. I love this idea because I think about acquisition— how do we actually get customers? Okay, how do we just simply get customers? What are some of the main ways that you have found that have been helpful to you? Because there's just so many different— it gets kind of put in the marketing bucket, right? But what are some of the things that you have found that have worked the best for you to acquire new customers in both of your offices?
This is going to sound weird, but the number one way of my acquisition is actually ex-dating. I find that to be the most effective. We're not always going to be the cheapest, then if you sell by price, you die by price anyways. But man, how effective is it if we call you 45 days before that ticket or accident falls off when the other company is rating for it? Same thing with homeowners. They had a claim or something that's going to come off. How effective are we at being really accurate with that X-dating? So we have an X-date team here at my office that is constantly reworking X-dates. So You know, it's like recycling, right? Reduce, reuse, recycle. And, um, I talked with another agent outside of Las Vegas, and he's been double trophy in Legacy and Mo at one point. And it was pretty early on in my career, and she's like, you know, you spend so much on marketing, you spend so much on leads, you know, eventually if you had enough and you did a good job with it, you kind of like would be doing less as time goes on. But it seems like Some agents, that's the opposite. They spend more. Others just keep spending the same. They do what they're doing and others keep trying new things. So there's, you know, a mix of where it is. But single best acquisition tool I think I've ever had is X-Date, specifically for StateFarm.com leads. Go, go, go.
All right. So, so let me dive into that a little bit. So let me take it out because in your, in your book, you have thousands, tens of thousands of leads at this point. Yeah, let's now take you and pluck you and bring you to the Deep South. I'm in Alabama and pluck you in and you're in a brand new place and you're starting scratch again. You've decided, I'm going to go this a third time, the trifecta, to start 3 times scratch. And so you don't have that list. And so you've got to be able to acquire leads and you need to acquire leads at a profitable rate. What is one of the levers that you would pull from a marketing perspective to even start getting some of those X states?
Yeah, I think, I think StateFarm.com leads are the best, you know, tool. So I've been working with a company called Mellon Local for like the last 3 years, pretty much since they started. We're spending on pay-per-click ads to be able to build up that amount of StateFarm.com leads because those ones are going to have more legitimate information because it doesn't do me any good calling a lead that was a fake number a year ago, guess what? It's still a fake number today. That doesn't really do me any good. So a high customer intent lead from the start, my probability of closing that is going to be way higher just as time goes on. You know, and my kind of philosophy has been like, you either buy or you die. And we just keep kind of recycling and keep going through it. You know, through my experience, it's been the most effective, like, cost wise.
What are some of the metrics, whether from a— if you have a marketing dashboard or something that you look at to be able to see that the cost of those leads, your, your, your customer lead cost is where it needs to be? What are some of the metrics that you wrap around that?
Yeah, so I dive into that on a monthly basis. I have a scheduled call that I sit down and do it. And it's hard because life gets busy. We're traveling. I have a, I have a 1-year-old and a 2-year-old at home. So I've got every excuse in the world not to be accountable to that. Um, but I really have said, okay, 12 times a year, I'm going to look at this on a monthly basis. And what I'm really looking at is what is my cost per lead? And I can't control close ratio necessarily. We are in a really tough environment in Washington right now. We have eligibility. Um, State Farm's paying out $1.47 for every dollar coming in on autos right now. So it's a very challenging time. I've probably had more ineligibilities. Than I've ever had throughout my career right now. I can't control that. Again, that just means we're going to fill that bucket up for the future. Um, however, what I can control is what I am paying for that data on the front end, knowing I'm going to have some form of close ratio, and that close ratio is going to increase as time goes on with our process that we've implemented in the office. So I'm looking to be somewhere between $10 to $15 per StateFarm.com lead. They cut StateFarm.com leads from me at the moment, so we're we have to, we have to audible mid-year, we have to change what's been working. And now we're going to more of those direct call, call-in leads that we've, that we've handled and, you know, had a, had a high close ratio on because, again, they're calling in. Now, my cost may increase in those, but the close ratio increases as well. And again, if you're taking a good look at your lap scan, it's not that difficult to be able to back into what can I afford to pay per, you know, lead and still be able to make a profit off of it, especially when you factor in scorecard.
Yeah. Okay, so that's kind of where I was wanting to go. And ultimately, we're kind of back this all the way into the financials in just a second, but that, that's where I want to go. Do you measure your CAC, your customer acquisition cost, on these different channels? Meaning, let's just go off $10 a lead because it's easy math and easy math. Okay, so how many $10 leads do you need to spend before you actually to get a customer?
Oh my God, it's, it's way lower than you think. Well, and again, I, I do have to paraphrase this, like, we still buy internet leads. We've never cut that off completely. Um, I think putting all your eggs in one bucket is a good way to like have a hole in that bucket and have it all dry up without you maybe even noticing it, or maybe you're 30 days late on that. So having a couple different marketing sources has really been effective for me. Um, there was a time when I was the king of events. So I know Bradley knows about this, I know Devin knows about it, but, um, I was a professional DJ before State farm. So you want to talk about like, I got the tent, we would go to apartments, I would have the sound equipment, I'd have the party, and I'm the life of the party because I'm the guy with the microphone, I'm the guy playing the music. I didn't sell all that stuff when I became a state farm agent. In fact, for 2 years I would DJ Friday and Saturday nights because New Market wasn't making any money for like 2 years at a minimum. So I had to do something to survive. So it's not like I hung that up or got rid of it. Um, I still have that stuff, so Um, before COVID I had a full-time marketing person that was going around. Um, so do I track each individual source? Not as well as I probably should, but I know through law of large numbers my StateFarm.com leads are going to be between a 25 and a 30% close rate, though, on the front end. If we know what our average auto premium— and for me, some of you guys might say, wow, it's really high, no wonder— my average auto premium is like $150 a month. So if I'm paying $10 a lead and I have a $150 a month average premium, Brad, help me out with the math of what I've got to be able to do to be able to close out on a low 20% close ratio. It's not very many. So it becomes a good acquisition cost of where I kind of go in there. Does that make sense?
It does. Yeah. So your 6-month premium is $900 roughly, something like that.
Yeah, roughly. And it's a blend between Standard and Mutual because we get a, we get a mix of the two. We have Standard Mutual out here. In Washington, so my standard's higher, my mutual's lower. You know, it's a blend between the two. But yeah, if you average the book, that's where we're at.
Okay. So, so let's take out some incentives and scorecard for a second. So if we're at $1,800 for the year, you basically have made $180 on that one vehicle, on the one auto, right? And so you kind of get into what's an average annual premium from a household that you, that you get? Because obviously I'm assuming you sell a lot of renters and townhomes in Seattle. Is that fair?
A ton. A ton. In fact, like more than I, you know, more than I would want. But that's what comes. But they grow up, right?
They do.
They rent and then maybe eventually they buy. So we've had there, we led the PAC Northwest zone in homeowners and everyone's like, how did you do that? I was like, well, for 11 years prior to, I led it in renters and here they come just kind of flowing in. Yeah.
So what I'm getting at is if the auto is one, auto is $1,800, What do you believe the total household value or customer value on an annual basis that first 12 months on average is for a new customer that you're bringing on? I'm asking you to like, is it 2.2 autos and where you are plus a fire policy?
More like 1.2 because we still write a lot of raw new business. So 1.2 autos. Our average fire premium is lower. We have low fire premiums in Washington. We don't have a lot of exciting stuff. We've got, you know, the fire that occasionally happens. So my, my homeowner's premium is like $600 to $900 a year, but we have a whole bunch of 125 renters thrown in there. So without having prepped on this and without wanting to make up numbers, my legacy's $3.7 million in FIRE. Okay. And my FIRE PIF is $5,368. So let's just do the math on this since he's asking me math questions. I should know off the top of my head. So it's $689 average premium. So it's higher than I would have made up had I not like ran that math real quick on there. And I'm privileged. I have some of my financials like pulled up in front of me since we knew we were going to be talking through this and going through this for this podcast today. Yeah, webinar. Yeah.
So let's say somewhere a new household, it's going to bring in on annual $2,500 to $3,000 is what a new customer on average for the year is going to pay. Is that fair?
So the number I come up with, and again, SMVC's max is about $200 a car that I'm going to make. So I get that twice a year. It's $400 and I get another $75 off of there. So $475. What number did you say? $500? Is that what you just said?
I was saying $3,000 in premium and then multiply it times, obviously, your commissions. And so, yeah, we're in the ballpark.
Yeah, we're in the ballpark. Yeah. Yeah.
Yeah.
Okay.
Yeah. So that gives you kind of an idea of like what you're actually making. And then obviously you've got commissions to your sales team that you're paying, et cetera. So here's my question in all of this. And so obviously we're diving— I said we're going to kind of dive deep into some of these analytics, but I think this is some of the stuff that people just don't talk about, right? And they want to hear it. But do you feel like then on an annual basis, that first year, that first year for a new customer, are you with the intent that if I can break even all in the commissions I paid to my salesperson, the cost of the leads, etc., if I can break out even that first year, or do you really want to make a profit that first year because you know you're going to get it on the backside? What's your philosophy generally with that?
Well, I'm going to show you some of the financial reports that I have through Club Capital. I don't care if I break even on the first year. I know that I'm my lap scan, you will show you what it looks like. They're not all leaving me in one year. So for me to be able to pay my team, be able to pay marketing, be able to staff what we have in one year and expect to break even, I think is a tall order. I think it's possible and certain markets can do it and like amazing for them. But remember, I'm in a high net worth area, which means like Seattle minimum wage, minimum wage that I can get somebody is $15 an hour. So that's a caller, that's someone who's just like a high school— like interns, um, with no licenses, no experience, first job ever. That's what they're wanting. But remember, that's minimum wage. So that's me competing versus McDonald's. I think I ask a heck of a lot more people. I ask a heck of a lot more than McDonald's asks. So the wage has got to be higher than that, because if they're making minimum wage, it's there. So we'll share what my employee expense is here in a minute, but My goal is not to break even in 1 year. I've got Scorecard, I've got incentive, I've got savings. Now, I'm not racking up a credit card bill to, you know, dive into debt for this. Um, and again, we'll show what the financials kind of look like, but if I can make money when those renewals start hitting after year 1, I'm feeling like I'm still winning. I'm feeling like it's there and my book continues to grow, especially when you factor in Scorecard and all these other incentives that kind of come through.
When you look at it as a whole, the marketing investment that you make, what is your marketing number percentage that you shoot as a target year in and year out as a percentage of revenue?
Oh my God. So again, the idea for me is not necessarily like, hey, this is a target of what it is, is, is my team busy? Are they actively doing it? So on marketing alone, I'm going to share my screen here because this is going to show— I think this is like a good transition to kind of go through because I have my, you know, financials pulled up. So forgive me if my eyes kind of shift up here. This is the financials of what we've kind of gotten here. If you look at the marketing, I have a— it's about a $20 million book of business and we spent $33,763 in marketing, which is down from $63,000 the year before. And when we start running my auto acquisition cost, you know, I'm paying $19.84. And I'll walk in, I'll walk you through how I came up with that number, what that number like actually means. Yeah, but remember, I have a team of people who are actively— I had a full-time, you know, event marketing person. So does that go into marketing expense or does that go into payroll expense? That's going to show up in payroll expense, but in reality, that's marketing. And And I also have a lot of team that's actively telemarketing, actively making phone calls. You know, I have a whole sales team that all they're doing is sales. Is that marketing or is that really in a sense, you know, your employee expense? So when we start kind of looking through this, if I'm comparing myself to the average one, which again, you know, Club Capital's platform will do. So I have a high revenue, but my total expenses are very high as well. Again, that's the— you're as a ratio, what we can do and kind of where we go, right? If we look at my employee expenses, I'm also, you know, one of the leaders in employee expenses. Yet, you know, marketing ROI, I'm also leading it on the other way, because my marketing ROI looks like it's through the roof. And that's a little bit where you have to like like you can't just have the financials, have them kind of roll and expect like nothing else kind of comes from it. You have to actually understand what these numbers are and kind of work through the math. Does that make sense?
Yeah, no, this is great. Oh, it makes, makes a ton of sense. What I think is great about this, and you've been willing to share this, is people can see it as the dials. What are the dials that you're dialing up or down? And the fact that you have such a, uh, what was this— did you go into from 2021 to 2022 with the intent to go down in marketing so much from one year to the next, or did that somewhat happen? Was that intentional? What was the thoughts there?
Well, so, you know, how this like webinar actually got created is I had, I had a lead company approach me and they're like, all right, Chris, hey, we want to pilot this new thing and we want to pilot it on you. Um, I've been working with them for a real long time. I've got a really great relationship on a personal and professional level with this lead company. And they're like, here's the deal, We're going to put our people, we're going to put some marketing people, they're going to go to the car dealer, they're going to go every day, they're going to make best friends with these people. We're going to pay them. Then what we're going to do is we're going to come back at you and we're going to ask you for these quotes. And what we're going to do is we're going to have you quote these just, you know, with all the information they have, all the data is going to be in their driver's license, date of birth, when they bought the car because they're at the dealership right away, all the information we would need to quote. Quote, and you're going to provide a quote. And if the customer likes the quote, and only if they accept your quote, you're going to get a direct transfer call with basically a customer ready to buy on the phone. So, so Bradley, I'm gonna, you know, ask you, this lead company approaches you, what are you willing to pay for that?
Is that—
what is that, $5, $10, $20? What are you willing to pay based off of your, like, I don't know, grass in the wind gut instinct?
What's that worth to Yeah, I'm certainly paying double what, uh, double what you just mentioned earlier. So I'm thinking my first stop is $25 to $30.
Okay, they, they said we want $100. Is that too much or is that able to be done?
Yeah, I think you'd have to run, actually see what, what it actually ends up being. I mean, the end of the day, if you close more customers from it, it absolutely can be worth it.
Yeah, and at the end of the day on that too, you also got to factor Okay, what's my payroll cost, right? So I have somebody who's quoting and they're going to quote that, but there's zero follow-up. So it's not like a $5 internet lead or a $10 StateFarm.com lead where we might have to call that person. There's a real cost to that time. So that's what started— this is where the, like, the webinar, like, idea came from, is that's the math problem and the analysis problem is if someone came and approached you and they said, you're only— oh, by the way, I'm only going to pay if that customer is like buying from you, right? I'm not paying for the data, I'm not paying for the lead, I'm not paying for it. I'm only paying if they buy. Um, and that was the, the premise that was basically brought to me by the CEO of this pretty major lead company. Um, and you know, it took me a long time to kind of think about it, and they had a bunch of things they had to work out of the pilot. So, um, that was where this webinar idea came from, and ultimately with me, yeah, I did it and yeah, it was worth it. And where you see the, where you see the marketing expense dip was that program terminated. Turns out the pilot didn't work as well as they would have thought. Dealerships are wheeling and dealing. They want money here, they want money, you know, it's that, that for them on a like grander scale to scale it didn't work out the way that they wanted to. But that's the reason why you're seeing from the $63,000 to the $33,000, you know, in marketing dip. Is that like calculated and something that I was like really looking for at that? No, I would still have loved to do it because if we kind of work through that math, you know, my auto acquisition cost with payroll included is $275.48. So if you know that math, would you pay $100? Yeah. And your number might be less like you scale that down or whatever that is. You're more efficient than I. I BS with my team too much. We, you know, chit chat, we have a good time. You know, there's stuff we could do that would drive profit better, like get on the phones, you know, crack that whip. But, but if a lead company approached you, do you have the math to be able to do that? And is that something that you would like even be interested in?
I got a question. I got a couple. Let me, let me go super high level for a second.
Okay.
Over time, you have really been able to start dialing in, and I've known you for a while. You are really good with tech. I mean, you're just tech savvy. I think you think that way. Um, genuinely. But did you— how did you begin to kind of really embrace the idea that I'm going to look at financials and tie these financial decisions, or the decisions I make on a daily basis, back to my financials? Is this something that you just began to kind of— you, you wanted to, or you felt like you needed to? Like, where did that come from if you go kind of look back years ago?
It, it came from agents that were bigger and better than me. Um, you know, I got pulled into, um, some study groups when, you know, the door's closed and there's 12 President's Club agents in a room and they start talking. And they, they would know their numbers, and they would know their numbers at the top of their head. What's average auto premium? What does this look like? Where is that? And they'd be able to like recite that so quickly and off the top of their head. And I'm sitting there like, I don't know the answer to that. I should probably know that. And as business owners, are we making decisions I always say it's like throwing grass in the air. And when I say that, it's like, you know, you're out in the middle of a field and you want to see what way the wind is blowing, you grab a handful of grass and throw it in the air. Wind's blowing that way. Um, yeah, it feels like lots of times we make business decisions based off like our gut or by like throwing grass in the air versus this is, this is backed up by data and science. You know, like numbers don't lie, people do. And sometimes when you start talking with people and you're trying to break that number down, Sometimes I'm like, this is— I claim BS, like, this doesn't make any sense. And you will like hope for that transparency. So that's been something that's been kind of nice, um, on this, you know, the Club Capital Financial platform, is that we can look at that and I can compare myself versus one person versus the next versus the next, and then try to help understand that number of, okay, there's, you know, another MOA agent who's about the same size as me who is spending 3 times as much on marketing but half as much on payroll. Where is that number kind of coming from? What can I I can learn from that. And again, it's not like a measuring thing that we're trying to do, how we stack up. It's more if I can understand what they're doing, then maybe there's something to gain there. Does that make sense? Does that follow?
It does. And I'll share— I've shared this maybe before. This may be helpful. There's this analogy of you're in Washington, Boeing is up there. And when you think about small planes, whenever you start to want to be a pilot, you are initially VFR rated, which means visual flight rules. So that means you can only fly on a crystal clear day and the best weather, perfectly operating plane, and you can fly by what you can see. Right. And so I think that that's how a lot of us kind of fly the business is like what we just can see with our gut, etc. But whenever, if you want to go fast, you want to go high, you want to file a commercial airline, airliner, you can't, you can't be a VFR. You have to be IFR rated, which means you're running the business or flying that plane by the dials and the switches, the instrument panel itself. And I think that that's kind of what you're saying is that you still have this gut and feel around culture. And obviously we're not talking about really that today.
Got to have that.
But you're also flying the business, you're sitting literally in the cockpit of your business every day looking at these dials and making decisions off of them. Is that fair to say?
I, I couldn't agree more. What a great analogy of kind of how that fits. Um, it just will make a decision. We'll, we'll, we'll dump a marketing company, you know, for instance, just because our team is saying they're not doing it. But like, like, you've got to back that up with the data. And again, State Farm's coming out with better and better tools, um, you know, for us. We still have to marry those to financials. We still have to see, you know, what that looks like on the credit card at the end of the month. But we're, we're getting better as a company with the data of being able to put that in. Like, obviously, garbage data in, garbage data out. But yeah, the financials never lie, um, um, on there. So, um, can we maybe, um, can we maybe talk about how we get this number and where this math comes from? Because this was an exercise that is stupid, stupid simple cool. But, um, I think it has some value that's kind of going there. So the way I came— yeah, go ahead.
Oh, you're good, you're good. Rock and roll, this is great.
Yeah, um, and hopefully everybody can see my screen. I'll kind of try to zoom in on a little bit more. Um, but this is kind of the way that it went, and I thought, again, be as transparent with this as possible. I'm sharing my new, I'm sharing my losses, sharing the gain of what it is. Um, and again, we've got 7,000 cards in the Legacy, we've got 1,863 in the MOA. Um, so lapsed can is always gonna be something that we battle, right? There's just no play against it. The bigger you get, the more you're going to lose. So we're kind of having to run, um, um, when it's said and done. So we wrote 1,700 cars, um, and this is the breakdown of each month of where it went. We grew, you know, just shy of 450 cars for the year, which is a pretty decent growth year for me. Again, there was years when I grew 1,000 cars every year, but I didn't have anything to lose, so it was a lot easier to grow when you didn't have anything to lose. Yeah, um, you know, FIRE, similar story. Um, um, probably should have, um, you know, done some totals there to make that number a little bit are, you know, digestible, but we're totally talking about auto acquisition costs. I'm a firm believer that if we acquire the auto, it makes sense for the fire to come. That doesn't always hold true, but, you know, I'd rather get into the biggest door in the house, and that's the garage door. That's the easiest way to get in. Um, I got some added, I got some transfers, reinstatements, um, you know, some of that stuff that comes along too. Some of that happens from marketing, some of that doesn't. It just kind of depends. So then what I did is we kind of broke down this marketing cost and— whoa, zoomed in too much for that. Um, let me make this work a little bit better. So basically what I did is I had 2 absolute, like, full-time callers. Um, this was another secret that's a total offshoot, but this is the way we've been able to be staffed. Um, I think as of date today, I have 23 team members. But one of the ways we've been able to staff is you meet that person who's really great great. Um, I mean, Orlando's out there. Orlando's fantastic. Um, Orlando didn't have the financial money to be able to, uh, pay for licensing, testing, all that stuff up front. He's like, I'm, I'm coming off of COVID He worked retail. The store shut down. He basically laid everybody off, said, well, we'll have a job for you when it comes back. And he's like, okay, I'm gonna go find a job immediately. But, you know, it took him a month or two to kind of do that. So he had eaten through some of his savings, and he's like, you know, Chris, I can't do this licensing before I come work for you, but I'll work really hard for you. So I'm like, great, we're going to make you a guerrilla marketer. You're going to get on the phones and I'm going to make you make so many phone calls till you quit. Well, he's been here for 2 years and he's licensed in P&C now, so he never quit. But he had this high level of activity that when he transfers over to being, you know, actually selling with— when you get the P&C license, guess what his activity is? It's still really high because he's so used to doing that. So I've got 2 callers that are there and then I've got a bunch of like basically the people who work for me, their breakdown of where it is. So topping out with the sales manager last year, she made $128,000. This year she makes $100,000. So basically what I did is I took the people who were basically affiliated with the sales and then I took my, you know, total number of autos of what I've done and I divided by my marketing, which equals $19.84 a pop as far as what it's costing me to get that. And then I add that in with payroll. And again, some other people, they might not need to add that in with payroll, or they might have a smaller team where it's, it's simpler, or they might have a hybrid where that doesn't make sense. But if you add up your total marketing costs and you divide it by your total number of autos, it's a real simple way to kind of get your, you know, cost per lead marketing-wise. But I think depending on how you do this, especially in my situation with people solely dedicated to sales, that doesn't show the real picture unless we enter in like the per cost with payroll.
Does that make sense? Yeah, it does. Let me ask a couple questions just to clarify for people, make sure that we're— because if they want to do this, they're going to want to make sure that they're, they're running the numbers on the same, running the, the formula based on the same numbers. So obviously, number one, you're talking about payroll for only the sales acquisition team. That's, that's important, right? You're not bringing in the other, everyone else. Number two, are you talking about the production just of the new autos from that year as well, correct?
Yeah, um, um, um, yes and yes. Um, but I do have to have the caveat, like, we're a pretty big book of business. Um, you know, we— our salespeople are gonna take a payment, they're gonna answer calls, they're gonna do reviews, they're gonna have that other stuff. But there's— I can't separate the payroll, and I'm not that detailed when it comes. So they do other stuff, they do take care of customers, they're going to have that thing, but they're dedicated as sales versus we have other people dedicated as retention.
That makes sense. Okay, now help me with perspective. So I run this, give me an idea. These are really helpful numbers to see this, but what if I'm at $500,000, right? Right, I'm at $42,000 a month. I'm, I'm, I'm just kind of getting started. I'm like, I'm not at that revenue number, I'm not at 2.2. Where, where should I be? Is this— what's the range? I like to kind of think of it as a range of success. Where should be for us?
Well, okay, so, so we got to back into that because everybody's situation is going to be different. So I guess the first question to ask yourself are, are you trying to break even in one year, or do you have some financial reserves, um, that are going to be there? Are you writing financial services off these people to where you know you're going to get something back on scorecard? Are we using a 10% commission rate because you're within your first 2 years, or using a full 11%, or has it been a while since we restarted that engine so we're at 8%? You know, you got to ask some of those questions to really kind of break that down. My numbers versus even your numbers as a massively successful agent are going to be different. So you got to ask yourself those questions. So I guess without preparing for this, which is just great, questions I'm going to ask myself is what's an acceptable ROI to you? Like on a how long do I need to keep that customer? So again, we did our math, we're making $475 $1,000 a year off of that auto average, like auto policy customer. So am I paying more than $475 per auto? I'm $275 with payroll factored in. So each auto, I write, I'm making like $200. Am I okay with that? Heck yeah, I'm okay with that. That's one year when it's said and done. But if I'm again going to get money back on Scorecard, that's obviously going to factor into this top number. and that's two agencies, you know, kind of combined as far as the way my financials work. Um, so, so it's going to break down that way. Does, does that kind of flow there too?
No, it does 100%, absolutely. And no, no question about it. Yeah. And I think it's the philosophy and the approach that you're taking is what is transferable from other people, because we can interchange the numbers with, with everybody can listening to this can put their own numbers in, but they need to be able to kind of say, okay, wait a minute, what is my specific situation? I thought you did a really good job there, telling, am I getting restarted? Am I at 8? Am I at 10? I'm at 11. Where exactly am I and where am I ultimately trying to go? I do have a question. What is the cadence that you have for yourself when you're reviewing financial statements? Like, we talk about communication cadence when it comes to our, uh, team, um, and, and meetings that we have. What's the cadence that you have for yourself? How often are you looking at financial on an annual basis.
Well, you know what's great is, and again, you know, we're on a Club Capital podcast, so we can, we can, we can, you know, support them and give the plug. But I get a report as long as I upload my stuff. I get a report like emailed to me and they email me. And literally the way I kind of feel it is like, hey, dummy, look at this, because they're emailing me what this looks like. Now, sometimes it's a little weird and it's going to take a second for this to load because there's so many reports, but Sometimes I might have like— we tried a new like lead company out of the beginning of the year and they're like, hey, if you give us $2,000, we'll match it by $2,000. So I might have like a big lead expense in one month for double agency, you know, $8,000 bucks, you know, um, um, on there, or $4,000, whatever it worked out to be. Um, so I might have that in one month and I need to, you know, keep a little mental note of that and kind of digest it. But at the end of the Hey, I got emailed this on April 20th for Marcus Financials. Now that's up to me to like actually go in there, look at it, view it, and download it. But I mean, with, uh, with an accounting company booking payroll, everything kind of tied in, yeah, I'm foolish if somebody took the time to do this. I'm foolish if I'm paying for it, I'm not looking at it. So the cadence is on a monthly basis, and then you probably want to put some time on your calendar to do your own fall planning. There's always like, oh man, I feel like I'm on a recorded webinar saying this, but there's always like our fall planning and there's about 2 hours of recognition and leadership talking about something or other that I'm there with my laptop and I'm doing my own like fall planning. So I'm going to take a couple hours either at the fall planning meeting, which we'd never admit that, or on my own where I can like really look at, hey, what did last year look like? And again, I'm comparing myself to myself. I'm comparing this year to the previous year. Um, you know, and some of those numbers are a little hard to swallow when you're kind of looking at it, right? So you're looking at like, okay, so your revenue was up, your expenses were up, my profit's actually, you know, down, down 4%. It's still a healthy profit. I'm still making enough money to afford the lifestyle and what I want to do. But I'm like, what could I have done better? And start kind of having some of that reflecting. Well, We had employee turnover, so we were regrowing team. I had to rehire people. People wanted more money. So even losing an experienced team member, hiring somebody new, sometimes even it ended up costing more. So there's some reasons and rationales to why those numbers are. But to take some time to understand that, to be looking at it on a monthly basis, I think is a bare minimum. I'm not the person who's checking this like every day where my job has now become the person in the back just checking financials. But I am the person that's looking at this. And if I'm having, you know, Club Capital do the CFO where I have a report every month, that's up to me to be able to review that.
Yeah, that's great. So I'm, I'm a second-year new business owner. I get to sit down with you, Chris, and you're going to share with me just some best practices around how to begin to kind of look at the structure of my financials. And what I mean by that is percentages, like what should I be looking at? I mean, some of the most important ones are right here on this report. You're at last year, 48% in 2021 employee expense, 53% in 2022. We talked about marketing, obviously, earlier. What are some of the things that you feel like I should be looking at in terms of making the investments, the allocation of resources, and one of those resources obviously being cash? What would be your recommendation?
Well, mine is high on this, right? So, um, and I, and I really appreciate that. I've always had a big staff. I've always been the person that's like, well, hey, if I just take that scorecard and I have $100,000 in life I need to write, and I divide that by like 20 people, wow, that number's a heck of a lot more achievable than if I have it between like one person, right? So the expectation is to max scorecard, you know, every year, and ideally do it in both offices, right? Um, um, so that's one of the reasons for the staff. But for me to tell you what your employee expense would be, I don't think I have the place because you may be in a higher environment, you may be— you may have high, high premiums, or you may be doing it with 2 people, um, like we all started, you know, with you and 1 person, or you— then it grew to 2, and then maybe it grows to 3. So I think that that's, um, something that you need to evaluate yourself of figuring out what that really is. But at the end of the day, um, I, I think having some of those Fathom financial reports, you can see what you're looking like average, and you compare yourself to people who are, um, more in your category or more in your line. So again, Fathom will let you say, okay, new market agents under 5 years of business, or, um, I look at the report like, um, State Farm agents with revenue that exceeds $50,000 per month because it's a better indicator of, okay, where do I stack up? And I can tell you where I stack up— super low on the marketing cost, super high on the payroll cost, because I know a big chunk of that of my employee expense is actually marketing expense as well, tied in Yeah, it goes back to what we said earlier.
You're just— that's how you've dialed the business in based on some of those numbers that you've got a philosophy around that, and it's ultimately made its way into the financials. I think that's fantastic. We'll close up here in just a couple minutes. I'll ask a couple other questions. If you have any questions, post in the chat a question, and I'll be sure to ask Chris as we're getting ready to, to wrap Chris, what about when you look at just overall profitability too? And one comment you made that was almost a passing comment, but I think you said when you were doing the fall planning, I'm comparing myself to myself, like almost year over year. I think this is so key. Then you go and you'll take a peek at the benchmark to kind of see what some other people are doing as almost to like to check yourself. But then you're really comparing yourself to yourself. And can you speak about those two things? Things?
Well, again, compare myself to myself. It's the most fair comparison, right? Where am I at? What am I spending? Where is that going? So that to me just seems like a no-brainer because who else has started at the same time in the same market with the same book of business, continued to invest of what I've invested? So that makes the most sense to me. The benchmarks, the benchmarks will be a little revealing because because it will help you understand your own numbers a little bit more. It would kind of baffle me. I'm like, "Man, am I paying my team too much with my employee expenses? Am I paying myself too much or my team too much?" But really, it's not so much about that. It's more about, "Okay, this is what it costs for me to maintain the team of what I need now." Granted, if I cut team here, cut team here, cut team here, well, okay, that would save me money on the employee expense. Expense, but what does that do to my production expense, and what does that do to the future of my agency? And I think sometimes agents get caught in this trap where they go, okay, if I make $475, as we established, per year per auto, but my, my cost or whatever, you know, we are higher than that. So your alternative is what, like slowly decline in revenue, slowly die, have your agency slowly, you know, stop doing that? And I don't know that anybody I don't know that I've ever talked with a single agent, no matter where they're at in their career, they can be 50 years into this, and I've never heard an agent say, "Well, my goal for this year, Chris, is that my income declines only slightly." Everybody wants to have a little bit more. They want their business to continue to grow. They want to win. And how you define win, I think, is really up to you. I don't know if I dodged your question completely, because again, me saying, "Hey, how do I compare this to this?" It really is just going to be on a year-to-year basis. And then me taking some reflection. I knew I had some turnover last year. We lost a couple key people, mostly to having babies, which, hey, I get it. And we have a couple people who went from full-time to part-time that I think have some efficiencies there. But that's, that's some of the explanation that I've come up with myself of why my employee expense is higher. But also, yeah, I gave people raises. We did a good job last year. We made money. I want to take care of them. So we've given, you know, pretty much universally everybody raises across the board to So that should increase my employee expense by, you know, some factor of percent, maybe not 34%. But if we add 2 team members and give everybody a 10% raise, that's how we're going to come up with 34%. That's great. All right.
I got 2 last questions for you. The best formula I've heard— I said it earlier— around any business is AAR. Are we going to get customers? Acquisition. How are we going to get them to pay more? Ascension. Retention and how are we going to keep them longer retention. You mentioned obviously competitive rate environment right now, challenging, even wage pressure out there is difficult. What are some of the specific tactics, uh, plays that, that you guys are running to help you keep more of the customers that you have?
Well, um, um, cheeks in the seats, right? So the more appointments you're having, um, that has a direct correlation in with your, your LabScan. I could do a better job of tracking that exactly, but it's something like, I don't feel like I need to be like, well, we had 37 appointments this month, or 52. So we have one of the, you know, compliant services helping book appointments for us because it's so important to my business. If, you know, Jenny's out sick, I want those appointments still coming. So we do that. So we do 100 appointments a month. And I think that's one of the greatest things. Secondly, we want to sell the full product line, which means we're not just like auto, home, you know, we're auto, home, we're life, we're health, we're IPS, you know, we're out in the earthquake zone. So maybe you're in a hurricane or sinkholes. We want to talk about some of those less done coverages because we're in a high earthquake risk zone. So we want to focus on some of the stuff that some of our competitors don't do or don't do as well as we do. Um, but I think that's key. And the most key is that liability limit. So if we looked at my Lapscan— and I don't know if my camera's on for everybody, but it's like this triangle, right? Um, um, $2,550, which is the minimum there. I run like a 50% Lapscan. If you go to, um, $5,100, the next level up, you cut that down by almost half. $25, wow, still pretty crappy. You go to $100, $300, now you're in the, you know, 10% range. You go to $250, $500, $100, now you're in that 3% range. So, um, what can I do to lower my lapse scan is I can have one upfront sell better coverage limits, because now we're talking about coverage and we're off of price. Number two, we can have reviews to, to, to get people up. Up, you know, meaning if it makes sense for them, they're not, you know, on disability, Social Security, maybe that never makes sense for them. That's a small minority of the population versus about 40% of Washington's driving around with state minimums. But if I can get them one level up, I just cut my lapse scan in half, go two levels up, I cut it in half again. And we used to have a marketing program that they sunsetted. Now I can't even— I think it's Agent Analytics or something like that where we could see and it would graph it. And once I saw that, it was like a light bulb. So how good are you at selling umbrellas and can you sell above a $3 million umbrella for those that qualify? That is really going to insight your book of business. It's really going to lower your lap scan. And I think you do that on the front end, you do that on the retention end, and you do that on reviews. Those kind of 3 things I think is really what everybody has to be on the same page for your agency at. Awesome. All right.
Last question, retaining team. You've done an awesome job creating a really good culture. What's one of the best things that you've done to create culture and retain some of your A-players?
So my old sales leader, the guy who hired me, his name's Lawrence Whitley, and he had this saying, and he says it all the time, I say it all the time, so I don't know who came up with it, but the team that eats together is the team that stays together. And you've heard it say that the family that eats together stays together, right? So we look for excuses to have the team over to to get the back room at a restaurant, to do those sort of things because the team ultimately that's eating together, I do think is the team that stays together. So I spend 8 hours, 9 hours a day with these people. If they haven't been to my house, that means they haven't been around very long. So we cycle through, have 'em over, you know, we cook, we make it good for 'em. If you follow my Instagram or my Facebook, there's a lot of food stuff on there. That's just who I am. I guess I'm a bit of a foodie. So I think that's been one of the keys to there. Have a good culture, have people get along, work on it. When you have a team of 20-plus people, half my job is like guidance counselor, therapist, psychologist, financial advisor, all of those things kind of wrapped up into one. But at the end of the day, I can't do this by myself, so I have to have the team and I have to have them play a humongous role. Want it.
Yeah, no doubt. Well, I'll tell you what, if you, uh, if you want Chris to fly out, cook him really good food, get him a really good seat on Alaska Airlines. I remember that about you. He loves Alaska Airlines, uh, for sure. And, uh, and he'll come out. DJ Chris, you were awesome. Appreciate you, my man.
If anybody has questions, um, my alias is UJM1. I'm happy to help. Again, we're all on the, um, shoulders of giants at the end of the day here, where we have all helped each other, and I wouldn't be where I'm nearly half of it if it weren't for other state farm agents who generously gave them— gave me their time. So I'm happy to do the same with anybody else when this comes up.
Awesome. All right, buddy. Appreciate you, man.
Appreciate y'all. Bye.
Thank you for joining. Thanks for listening.
