Chasing the Lowest Cost-Per-Lead? Consider This.
Why ROI is ultimately more important, and how to rethink your strategy.
In real estate, leads are the nucleus of your business. So it’s no surprise that a monumental amount of time is spent generating and nurturing them. While referrals are enough for some agents, many rely on generating new leads through sources like Zillow, Facebook, or Google AdWords.
Chances are, you’re not an expert in search engine marketing and analytics – and that’s okay!
Whatever your level of expertise, you can either tackle digital lead generation on your own, or utilize a search engine marketing service. Some CRM platforms offer lead generation as a built-in service, which is a good way to maximize the ROI from your ad budget.
Agents want what any other business owner wants – the highest return on investment at the lowest cost. In the past few years we’ve seen a sweeping obsession with the lowest possible cost per lead (CPL). And while achieving a low CPL is great, to be truly successful it can’t be your only focus. So, we’re breaking down some important details to know about CPL, as well as a few tips and tricks for improving your conversion rate (and ultimately your ROI).
How Many Leads Do I Need?
Obvious, but important. You have to determine how many leads your agents need before investing the time and money required to generate those leads. If your agents have too many leads and can’t properly nurture them, you are buying leads that will likely never get contacted – money out the window.
Do a little research within your team. How many deals are your agents closing compared to how many appointments they take? How many leads do they need to nurture in order to land an appointment? Nail down these numbers and you’ll have a better idea of what a reasonable database should look like for your agents.
What Platforms Should I Use?
Zillow, Google AdWords, Facebook, LinkedIn – all very different platforms that generate leads in different ways. With Google Adwords people are actively searching for something specific. With Facebook, people are passively browsing and need to be targeted. To a certain degree, the more the merrier, when it comes to which platforms you should use. However, with a less flexible budget you will want to strategize what you invest in.
We recommend if you are just starting out in real estate, get your feet wet with Zillow. If you are expanding and have a team of agents that require a database of leads, Google Adwords is your best bet. Finally, add Facebook into the mix if you have a solid system in place for working and managing your online leads.
Variables that Influence Cost Per Lead
An expert digital marketing team can lower your CPL, however there will always be variables within the industry that are out of your control.
Seasonal Trends
Online searches rise in January and demand peaks between April and June. As spring and summer hit, more people begin actively looking and seeing houses with the intention of moving during the summer. In July things begin to plateau, and demand dips between October and December. The combination of search/demand and the number of advertisers throughout these peaks will change your CPL.
Market Forces
External factors will affect your CPL that are entirely out of your control; natural disasters, shifts in the economy, election years, housing market, etc. Always have your finger on the pulse of these market forces and be aware of how they might influence your CPL.
Location, Competition, Demand
A $500 ad budget in small-town Texas is going to go a lot further than in San Francisco or New York City. Keep tabs on the state of the market in your area, the number of competitors, etc., and understand that your CPL can only go so low if you are in one of these hot locations.
Low CPL is Important, but a High Conversion Rate is More Important
The age-old quality vs. quantity conundrum. Ultimately, it’s a balance of both. With lead generation, you are going to get some trash leads no matter what. It’s not a perfect science and frankly never will be. However, whatever pool of leads you are working with, there are ways to improve your conversion rates, and thus improve your ROI.
Build an Effective Landing Page
Your consumer website should be designed with the intention of maximizing conversions. It needs to be visually appealing, easy to use, and strategically prompt the user for their information. Some CRMs will build this page for you, which is ideal because they have built-in data and expertise on what works. If you’re building this page on your own, do your research and consider hiring a coach or consultant to make sure you do a good job.
Invest in Nurturing Leads
When it comes to ROI in real estate, patience is a virtue. With every pool of leads, there will be a small percentage of hot leads that are ready to buy. The rest of that pool holds a wealth of “warm” leads that may not be ready to buy yet, but eventually they will. The agents with an effective long-game nurture plan, will have a higher ROI over time because they’ll close more of those warm leads over time. Nurturing leads requires strategic contact through drip emails, texting and phone calls. These strategic touches keep warm leads informed and engaged, and they will allow you to see which leads might be ready for direct contact.
Create Compelling Ads and Copy
The ad itself is the catalyst for generating a lead, so the copy needs to be compelling and concise, with a clear call-to-action. The image needs to be professional quality. If you’re working with a CRM, they’re likely doing a lot of this work for you, but if you’re not, make sure you are paying attention to these details. A/B testing will improve your ad campaigns.
Broaden Your Scope of Keywords
People browsing for homes are more likely to search with general/broad keywords. For example, even if someone is looking for a luxury home in Isle of Palms (small sub-city of Charleston, SC), they will likely still search for, “Charleston Homes.” In these broader searches, there is often less competition and higher traffic.
Invest in Technology
If you couldn’t tell by this point – CPL and search engine marketing can be complicated little beasts. There is a ton of nuanced strategy that goes into securing the highest ROI. If you can budget it, invest in a CRM. They will have a team of experts that are dedicated to these tasks for you. When you outsource this piece of the puzzle, you can spend more of your time doing what you do best; managing your agents, growing your business, nurturing new leads, and closing more deals.
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