There is a growing problem in the area of lead conversion, and the challenge is much harder to solve than we ever imagined. The issue is that agents simply don’t have enough bandwidth.
After managing pending contracts and active listings, going to appointments and putting out fires, we only have a few hours to invest in lead generation and follow-up — and it’s hard to accomplish that with the many distractions we face each day.
Lead game has changed
While we have less time in our schedule for follow-up, the industry is demanding that we respond to requests faster than ever before and in addition to that demand, we have significantly more competition trying to get our lead on the phone since most leads are going to multiple agents at one time.
You know how it works. You get an internet lead and you do your best to call them within a couple minutes but still don’t get them on the phone. You even make a few more attempts before declaring the lead not serious or dead.
You can increase your chance of reaching a lead by approximately 93 percent when you call them between six and eight times, make two to three email attempts and send a few text messages. But who has enough time to make that many attempts with all the other tasks that need to get done during the day? How many contacts can you manage if you have to call each one eight times and text and email them multiple times before you can get them to engage?
This is exactly why even the above-average real estate agent only makes 1.5 contact attempts to reach their leads. With so few attempts, you will likely reach less than 30 percent of your leads. And, that’s if you’re lucky.
This is a dream situation for the companies that are selling leads to real estate agents. They know you cannot get them all on the phone which opens up the opportunity for them to sell the same leads to other agents. They know the typical agent doesn’t have the bandwidth or manpower to call all the leads fast enough or to call them often enough.
This is a challenge that we must solve!
The math behind increasing ROI
Is it the quality of the leads? No. We have to stop blaming the quality of the leads and starting understanding that it is our poor conversion between new leads captured and new leads contacted. It isn’t as much a conversion problem as it is a contact problem. Agents are not making contact with all the leads they currently have. Once you crack the contact code, you will see a dramatic increase in ROI, and better yet, profits!
Look at the examples below of an agents’ business. If you are spending time or money on generating leads but only reach 30 percent of them, then your ROI is going to be terrible. Look at the comparison between a normal strategy versus a more aggressive approach that is fully automated.
Example 1: If you pay $40 for a lead and you buy 100 leads, your total cost of 100 leads is $4000. If you were to reach 30 percent of those leads then you are reaching 30 leads. If you were to convert 4 percent of those contacted, you would do 1.2 deals.
If your average commission is $6,000, then you would earn $7,200 in commission revenue. So you would spend $4000 and earn $7200 which is a net return of $3200.
That is an ROI of 80 percent.
Example 2: If you pay $40 for a lead and you buy 100 leads, then your total cost of 100 leads is $4,000. If you automate an aggressive contact strategy and increase your contacts from 30 percent to 45 percent, then that is a 50 percent increase in the number of contacts. If you were to reach 45 percent of those leads, then you are reaching 45 leads. If you were to convert 4 percent of those contacted, then you would do 1.8 deals.
If your average commission is $6,000, then you would earn $10,800 in commission revenue. So you would spend $4,000 and earn $10,800 which is a net return of $6,800.
That is an ROI of 170 percent.
Notice how the ROI significantly increases when applying a more aggressive contact strategy. To do this, the process must be automated because an agent doesn’t have enough time to make all these calls, send multiple texts and create and send so many emails.
It’s hard for some agents to make an investment in lead generation, but it might be an easy decision if they knew the ROI was great. This is where you start to look at lead generation as an investment instead of an expense.
3 ways increase your ROI on internet lead gen
As I mentioned above, the challenge most agents have is time. Here are three approaches you can take to increase your personal bandwidth and make more contacts on the leads you capture.
You can become more disciplined in adding lead follow up in your schedule a few times during the day. In order to reach more of your leads, you need to schedule time in the morning, afternoon and the evening to make attempts to reach your leads.
You also need to make sure you are attempting to reach them through multiple channels. Use phone, email and text to reach them — the more attempts you make, the higher the chance you will make contact. And the more contacts you make, the higher your ROI will be. Remember, you already paid for the lead, we just need to talk to them.
Leveraging technology correctly allows you to work around the clock, adding more productive hours to your day. Basically, you can get more done in the same or less time.
There are companies out there like Contact Junkie, where you can add these contacts into the system and kick off a multi-channel contact campaign that will increase your contact ratio beyond what you might be able physically do yourself.
Most agents are finding that technology is more sustainable than trying to find time in their schedule to do these tasks.
Hire more staff
You can increase contacts by making more attempts, and you can make more attempts by hiring staff who’ll take some of the weight off your shoulders. No matter who does it, the attempts need to increase if you are going to increase your ROI.
real estate agents across the country are talking about leads, conversion rates and ROI. The truth is, when an agent dedicates time to making more attempts, they make more connections, which amount to an increase in appointments, contracts written and deals closed.
No matter which strategy you choose, just remember: Choosing to do the same will get you the same, but choosing to do more will get you more.
Greg Harrelson is the owner of Century 21 The Harrelson Group in Myrtle Beach. Follow him on Twitter.