Have you tried paying for online leads and given up in dismay due to the time and effort required? This high-stakes game is not for the weak of heart, and it’s certainly not for the weak of pocketbook. If you’re going to play successfully, the first step is to know what works.
I recently chatted with Jack Miller of T3 Experts about the basics of online lead generation. He also shared a number of the guidelines they use to help their clients select the best online lead generation strategies for them.
Fewer conversions over longer periods of time
Before you ever spend a dime on Facebook ads, Google ads, or leads from companies such as RTZ, BoomTown, Market Leader, Tiger Leads, Zurple or any other company, you must understand that the lead conversion strategy, the time required and the rates of conversion are much different from other types of lead sources.
Unlike face-to-face conversion strategies such as door knocking, calling on expired listings or even holding an open house, about 1-2 percent of Internet leads convert into closed transactions. With time, effort and money, you may be able to increase that number to 3-4 percent.
Moreover, if you’re not in the program for the long haul, don’t waste your money. Many Internet leads require a 12- to 18-month incubation period before they convert. A primary reason agents fail is that they lack the tools and systems necessary to incubate these leads that long.
To properly follow up and incubate your leads, you will obtain the best results if you contact them six to 10 times during the first 10 days after they contact you.
Metrics to consider
Miller says that there are two key metrics that he looks at to determine where the best opportunities are for their clients. The first is availability. Many of the best lead generation programs, especially those are based upon agents purchasing ZIP codes, are already taken. Begin by determining exactly what options are available for your market area.
The second factor is the cost per lead. Miller observes that the best leads are often not the cheapest. It may be smarter to pay $50 per lead as opposed to $8-$10 per lead if the conversion rates are higher.
Types of leads programs
According to Miller, here are the most common types of Internet lead programs.
1. Enhanced listings
The lowest level of online lead generation is enhancing your listings on various sites. The primary issue with this approach is that it is passive.
2. ZIP codes
Many of the big lead generation companies have programs that allow you to purchase a specific ZIP code. The advantage here is that you should start seeing leads within the first week. If you don’t, there’s a problem either with the company supplying the leads or your lead conversion strategy.
3. Pay-per-click (PPC)
If you advertise on Google or Facebook, you can use what is known as “pay-per-click.” This means you are charged the rate that you bid for each person who clicks on your ad. PPC programs can produce immediate results, but they can also be quite expensive.
Miller likens this to a high-stakes card game: “If you can’t go big, go home.” It may take $1,000 or more per month for this approach to pay off, depending upon the competition in your area.
4. The brutal truth about Facebook ads
Facebook’s ad platform allows you to be very specific in how you target your ads. You can target by age, location, income, marital status and much more. Miller says the brutal truth about Facebook is that people visiting Facebook are not there to buy a home, but to be distracted or entertained. Yes, they may click on a pop-up ad that tells them what their house is worth. Nevertheless, they’re not on the hunt like they are when they visit a search engine. This difference has a powerful effect on conversion rates.
5. The landing page on your own website
While the old-fashioned approach of having consumers enter their contact information to determine what their house is worth once worked well, today’s consumers respond poorly to this approach. Miller cited the following numbers:
If you have a good lead capture system, about 20 out of 100 visitors will fill out your contact form. Of these, 1-4 percent may be prepared to buy now. In other words, if your conversion rate is 1 percent from your form, it would take 500 visitors to have 100 of them complete the form. This would result in one closed transaction.
The statistic that matters most: closed transactions
As the example above illustrates, the most important statistic to consider in any paid lead generation program is the cost per closed transaction. To get an accurate reading, Miller recommends the following:
- First, you need a minimum of 200 leads to make any type of assessment. One thousand leads would be better.
- Second, plan on running your evaluation for a minimum of six months. Allow a minimum of three months to evaluate your lead generation and another three months to evaluate your lead incubation and conversion.
- Third, plan on experimenting with multiple platforms to see what works best for you and your business. This could include some of the big lead generation companies, RTZ and Facebook. You may also want to consider some of the smaller seller-focused lead generation companies, such as Bold Leads and Prime Seller Leads. The advantage of using these companies is that they have tested landing pages that increase conversion rates.
For a list of 11 “must-ask questions” for any lead generation vendor you may consider hiring, visit the T3 Experts site.
So here’s the bottom line: Always ask those “must-ask” questions. Be strategic. Look at what generates the best lead conversion rates and how much it costs to generate one closed transaction. After making that determination, focus on what has the best results with the least cost per closed transaction.
Bernice Ross, CEO of RealEstateCoach.com, is a national speaker, author and trainer with over 1,000 published articles and two best-selling real estate books. Discover why leading Realtor associations and companies have chosen Bernice’s new and experienced real estate sales training for their agents at www.RealEstateCoach.com/AgentTraining and www.RealEstateCoach.com/newagent.