What Is Lead Source ROI in Insurance?
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
AgencyIQ is free during beta for Founding Members. Real ROI by provider, live.
Last updated: 2026-04-18