The Importance of Metrics: Lead Generation Systems

6.1 Balancing Lead Generation Options: Discovering What Suits You

To determine the most effective lead generation strate❓gies, a structured scientific approach should be followed, including:

1. Focus: Identify a specific marketing or prospecting aspect❓ needing improvement or an activity you want to implement. Tracking lead sources is crucial for determining each method’s effectiveness.
2. Modeling: Begin with proven methods used by others to solve similar problems in similar markets.
3. Systems: Develop a detailed plan including a budget, clear message, target audience, how to integrate it into the overall lead generation strategy, and define expected outcomes.
4. Accountability: Consistently apply the marketing or prospecting method for 3-6 months, tracking and analyzing lead sources accurately. Don’t discard a program that doesn’t yield immediate results; results may take several months. Simultaneously, don’t become attached to a program that yields rapid results.
5. Conclusion: Compare program costs to net results to determine the cost per lead. Tracking sources and evaluating costs versus benefits over time will help accurately assess the method’s advantages.

Example:

• Focus: Improving the quality of leads coming from online advertising.
• Modeling: Studying successful❓ advertising strategies in the real estate market.
• Systems: Allocating a specific budget, creating targeted ads, and defining key performance indicators (KPIs) such as click-through rate (CTR) and cost of acquisition (CAC).
• Accountability: Tracking ad performance for 3 months and analyzing data to identify the most effective ads and channels.
• Conclusion: Determining whether online advertising is an effective lead generation method based on cost per lead and conversion potential.

6.2 The Numbers Game: Safety in Numbers

1. While conversion rate❓s are important, the number of leads to be generated is more important. High conversion rates can reduce the number of leads required to achieve the same income, but low conversion rates can be effective if a large number of leads are generated.
2. Lead generation is a numbers game. Quality is important, but quantity determines success.
3. Systematic marketing is more important than creative marketing. Consistency and frequency of communication are key.
4. A lead generation plan should be more ambitious than income goals, having a surplus of leads to cope with market fluctuations and conversion rate changes.

Example:

• Agent A focuses on lead quality and invests time in each lead. Has a high conversion rate (20%), but generates few leads (10 monthly).
• Agent B focuses on lead quantity using broad marketing strategies. Has a low conversion rate (5%), but generates many leads (100 monthly).

Agent B will close more deals due to the large number of generated leads, even though Agent A has a higher conversion rate.

6.3 The Impact of the Economic Model

The economic model helps determine the number of appointments needed to achieve goals. Then, conversion rates can be used to calculate the number of leads needed to get those appointments.

Basic Relationship:

• Leads → Appointments → Sales

Leads are the fuel of the economic engine.

Lead Generation Equation:

L = (S / CR_S) / CR_L

Where:

• L: Number of leads to be generated.
• S: Number of sales required to achieve the goal.
• CR_S: Appointment-to-Sale Conversion Rate.
• CR_L: Lead-to-Appointment Conversion Rate.

Example:

If the goal is to close 10 deals (S = 10), the appointment-to-sale conversion rate is 25% (CR_S = 0.25), and the lead-to-appointment conversion rate is 10% (CR_L = 0.10), then the number of leads to be generated is:

L = (10 / 0.25) / 0.10 = 400

This means 400 leads must be generated to achieve the goal of closing 10 deals.

6.4 Lead Generation Ratios

Lead generation ratios should be tracked and analyzed to understand the strengths and weaknesses in the strategy, including:

• Response Rate: The percentage of people who respond to the marketing campaign.
• Qualification Rate: The percentage of leads that are qualified as sales qualified leads (SQLs).
• Opportunity Conversion Rate: The percentage of qualified leads who turn into real opportunities.
• Close Rate: The percentage of opportunities that turn into completed deals.

Example:

If 1000 emails were sent, and 50 people responded (Response Rate = 5%), 20 of those were qualified (Qualification Rate = 40%), appointments were set with 5 of them (Opportunity Conversion Rate = 25%), and 2 deals were closed (Close Rate = 40%), these ratios can be used to improve the strategy. For example, if the response rate is low, the email subject line or message may need improvement.

6.5 Local Market and Team Variables

Local market and team variables affect lead generation efforts significantly. These variables should be considered and the strategy adjusted accordingly, including:

• Economic conditions.
• Competition level.
• Demographics.
• Team capabilities.

Example:

If operating in a highly competitive market, the marketing budget may need to be increased, or innovative lead generation strategies focused on. If the team is small, lead generation strategies requiring less effort should be focused on.

6.6 Calculating the Cost of a Lead Generation Program

Calculating the cost of a lead generation program is necessary to assess the return on investment (ROI), including:

• Advertising costs.
• Marketing costs.
• Software and tools costs.
• Labor costs.

ROI Calculation:

ROI = ((Revenue - Costs) / Costs) * 100

Example:

If $10,000 is invested in a lead generation program and revenue of $50,000 is generated, the ROI is:

ROI = (($50,000 - $10,000) / $10,000) * 100 = 400%

This means that $4 return was generated for every $1 invested.