Two of the most popular lead sources for entrepreneurs are Google PPC (pay-per-click) ads and Facebook ads. Ask around, and you’ll probably get mixed reviews for both.
But if you’re using these to generate real estate leads, you need to quantify exactly what they’re doing for your business before you can adjust your ad spend to get the most bang for your buck.
Last week, BAM co-founder Byron Lazine extended the first of (we hope) many invitations to BAMx members to a live Q&A Zoom in the BAMx Facebook group. And the response did not disappoint.
The answer can be summed up in four steps, which Byron breaks down below.
- Get clarity on your conversion rate.
- Pay attention to—and track—important details.
- Identify the underperformers.
- Hold your lead sources accountable.
Know your conversion rate
Every agent should know how much they’re spending per listing appointment or buyer consultation with a particular lead source—not just how much they’re paying per lead.
Know exactly what your conversion rate is—what you’re spending per appointment, how much you’re converting on those appointments. And then it just becomes a math problem.
In Shawn’s case, two of the sources are combined: Google pay-per-click (PPC) ads and Facebook ads. Together, they’re generating leads that result in one appointment per week. So, he’s paying roughly $200 Canadian per appointment.
I’d pay $200 per listing appointment all day long… So, if that’s the true number—$200 an appointment—then you should continue to up the spend until that number goes up or until you can’t handle the listing appointments. The listing appointments right now—I mean $200, $300, $400, $500, depending on the price point—you want to spend all of that all day long and do it as many times as you possibly can over and over and over again…
Pay attention to—and track—important details
If you go back and do a thorough calculation of your conversion rate and find you’re actually spending $1,000 per appointment, and you’re converting those appointments at a 30% rate, that’s a whole different math equation.
It also matters whether your appointments are for land or for ready-to-move-in homes,
We’re looking for ready-to-move-in single-family homes that solve the inventory problem in your market. Those are the listing appointments you want to be going on. You want to be converting at a 75% rate…certainly above 60%. And at least 50/50 on winning these appointments. But if you can get anything under $500…on your spend on Google or Facebook, for SF homes, I’d do that as often as I possibly can.
Identify the underperformers
Once you calculate your conversion rate for each lead source, you can cut out or reduce spending on the underperformers.
Byron’s team ended up cutting out Google Pay-per-Click (PPC) ads because the conversion rate was less than 1%. Most of the leads were two years out. As it happened, his team already had way too many leads for the number of agents, and it made no sense to keep spending money on leads that were so far out.
He reduced spending on Realtor.com for the same reason. His team was spending around $40,000 a month on Realtor.com leads for a conversion rate that didn’t justify that expense.
Both Google and Realtor.com were underdelivering. And when you see that with your own lead generation sources, it’s time for a conversation with the people managing it—or for a reallocation of the money being spent (and possibly both).
Hold your lead sources accountable
In Shawn’s case, to make an informed decision on how much to spend each month on Google and Facebook ads, he needed more information from his lead generation company:
- How much money per month are they putting toward each lead source—Google PPC and Facebook ads?
- How many viable leads—those that lead to appointments—are they seeing from each source per month (if the appointments can be traced back to their original lead source)?
- If one of those lead sources is underdelivering, is there another source this lead company can suggest as an alternative? Or does it make more sense to reallocate funds to the more cost-effective source and cut off the underperformer?
Hold those sources accountable to ensure you’re getting the best return on your investment.
And don’t forget to track your conversion rate for each lead source over time to get a picture of each one’s cost effectiveness throughout the year—and whether its profitability is declining, increasing, or holding steady.
Sign up for BAMx now to watch the full recording of the All Things Q&A Livestream.
