Real Estate Lead Generation & Conversion

Posts Tagged ‘internet real estate lead ROI’

A key reason that Internet lead programs can be particularly desirable is that the return on investment (ROI) can be tracked. Unlike other forms of advertising where you don’t know which half of your spending is being wasted (with apologies to John Wanamaker for paraphrasing his famous quote), with Internet leads the ROI of 100% of the spending is theoretically measurable. 

The trackability of Internet lead programs allows you to quickly eliminate the ones that are wasteful, and to ramp up the efforts that are profitable. 

Measuring the ROI of Internet lead programs requires tracking the following:

• How many leads did you get?
• What are the attributes of the leads?
• How much did the leads cost?
• How many leads converted into sales?
• What was the all-in cost to generate a sale?
• What was your net commission per sale?

The size and complexity of your Internet lead program will determine your needs in regard to contact and customer relationship management (CRM) packages and Web analytics programs. While there are many excellent CRM packages designed specifically for the needs of real estate professionals, some agents find that off the shelf packages such as ACT or Salesforce are sufficient for their needs. And if you using your Website for lead generation and your vendor does not include a tracking program, the free analytics service from Google meets the needs of most brokers and agents. However, whatever system and programs you put in place for tracking leads, success will be far more likely if you can accurately track the six measures listed above.

How Many Leads Did You Get

A system for tracking “how many leads did you get” should allow for comparing leads on a period versus period basis, calculating trend lines to determine if lead flow is changing over time, and the capability to slice and dice the leads by specific time periods.  While sophisticated CRM packages are optimal for tracking leads, inputting result into a spreadsheet will suffice for many real estate professionals. 

What Are The Attributes of the Leads

The capability to segmenting leads based on attributes provided within the lead can make lead conversion phone calls and email much more productive. It also can provide clues as to the value of each lead. Examples of some of the potential attributes of Internet real estate leads include: 1) lead source and type; 2) full first and last name; 3) valid phone number; 4) valid e-mail address; 5) approved for mortgage status; 6) time frame to buy or sell; 7) price range of homes of interest for buy side leads; 8 ) specific home or neighborhood of interest, and 9) specific comments provided.

How Much Did That Lead Cost

Calculating the cost of leads is fairly straightforward if you are buying leads from a lead generation firm or if your primary source of leads is from a PPC program. A one dimensional  Internet marketing program can usually be accurately tracked if all lead submission “success” and “thank you for submitting your information” webpages are accurately tagged. Calculating lead cost can be fiendishly difficult if you have a multi-channel online and offline  marketing program. However, a reasonably accurate lead attribution model is critical to successful measuremnt of the cost per lead by source. In particular, the protocal for attribution of leads resulting from searches on your brand name can have a huge impact on the estimated cost per lead.  

How Many Leads Converted Into Sales

Tracking lead ROI requires that sales be attributed to the appropriate lead source. If you have a multi person team, this can be a more challenging task than might one might originally assume. Use of the whip may be required to capture this information. (Authors note – a lesson learned from personal experience)

The conversion rates of different types of leads and the competing vendors providing Internet leads can vary tremendously. Thus the answer to the question of how much is an Internet lead worth depends in large part on the quality of the lead and the lead to sale conversion rate.

In order to get faster measurement of lead program success it may be appropriate to track sales based on signed contracts and to: 1) utilize a “crater factor” (an adjustment that depends on the ratio of signed contracts that make it to the closing table – in some markets it may be appropriate to assign 80% of the value of a closed transaction to a sales contract ); or 2) adjust the results after the transaction is closed.

What Was The All-In Cost to Generate A Sale

In addition to the cost to acquire the lead, the other costs of generating the sale should be assigned to the lead. My suggestion would be to add in variable costs involved in managing all the leads from a lead program, including items such as mileage/transportation, mailing costs, copying, fees and/or wages directly associated with time and effort required to work the leads. However, it is probably not appropriate to assign overhead costs to Internet lead programs. Overhead costs that would remain unchanged if the Internet lead program is discontinued should probably not be assigned to the lead program.

What Was Your Net Commission Per Sale

Once you have determined the all-in costs of an Internet lead program, measuring the ROI is simply a matter of subtracting the cost from you net commission. Dividing your net profit from your investment/expenses will provide you with the ROI of Internet lead programs.

The Pay Off From Measuring The ROI of Your Internet Real Estate Leads