Too often, real estate agents spend money on marketing but don’t feel they are getting a good return on their investment. It makes sense as there are a ton of different lead generation channels and options out there. Agents can invest in a custom property search website or do online Facebook marketing or pay for postcards to hit their “farm area.” All of these avenues might be good lead generation options for real estate agents, depending on their needs. But sometimes it can be extremely tough to tell if you aren’t keeping track of your numbers and truly understand where your money is going.
Without calculating some fundamental metrics, real estate agents can end up spending a lot of money with zero results. Spending money without cause or strategy is not good business and can hurt one’s bottom line or profit margin. In your personal life, you would never blindly spend money on something without knowing what you are getting. But for some reason, when it comes to business, we as real estate agents do just that.
Ultimately, one must know which marketing or lead generation strategy is doing better than the others. Which marketing strategy generates the most closings? Which lead generation tool will make my business the most money? Knowing this allows Agents to then reinvest their hard-earned dollars into what’s working best and, hopefully, multiply their results.
There are several metrics and figures you can look it to figure out which lead generation source is better. For most Agents, it is best to start by calculating cost per lead for all of your real estate lead generation sources. Calculating cost per lead gives you a firm understanding of how many leads a marketing or lead generation source is producing. It tells you, in straightforward terms, how much one lead with that marketing avenue will cost. Once you understand cost per lead, you can use it to help shed light on how your marketing efforts are doing. If you’re not doing, you might be making a colossal mistake and throwing money down the drain.
To calculate cost per lead is rather simple.
From AfterTheLicense.com on how real estate agents calculate cost per lead, “To calculate your cost per lead, you need to take the total amount of money you’ve spent on one marketing or lead generation source and divide it by the numbers of leads you’ve received. So if you’ve spent $50 on Facebook Advertising and that advertising generated ten leads, you would divide $50 by ten and quickly learn your cost per lead is $5.”
Calculating cost per lead allows you to know which lead generation source is outperforming the others. One lead generation source generating leads at $5 per lead might be a much better investment than a lead generation source generating leads for $50 apiece.
As we mentioned earlier in the article, some other factors and metrics need to be taken into account when analyzing your marketing, and the corresponding budget. But, figuring out cost per lead is a fantastic way to get started.