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Measuring Numbers: Implementing a Lead Generation System
1. Scientific Approach to lead generationโ:
- Focus on improving a specific aspect of the current strategy or testing a new activity, tracking lead sources accuratelyโ to determine effectiveness.
- Start with proven methodsโ used by others in similar markets.
- Develop a detailed plan including budget, marketing message, target audience, integration into the overall strategy, and key performance indicators (KPIs).
- Implement the method consistently for at least 3-6 months, tracking lead sources using a lead source spreadsheet. Do not discard a method prematurely, as many marketing strategies take time to show results, and don’t rely solely on methods that produce quick results.
- Every marketing piece should be trackable and comparable. Send different marketing messages in different channels (magazines, newspapers, etc.) to compare results, then rotate the different messages through the different channels to check for consistency.
- Compare program costs with net results to understand the cost per lead.
2. The Numbers Game:
- The number of leadsโ generated is paramount. High conversion rateโs allow for the same income with fewer leads. Low conversion rates can be equally effective if a high volume of leads is generated.
- Consistent marketing is more important than creative marketing. Consistency and frequency of contact have a stronger correlation with leads generated than the creativity of the message.
- A lead generation plan should be more ambitious than income goals. Markets shift, conversion rates decline, so plan to generate more leads than initially estimated.
3. Impact of Economic modelโ:
- The economic model helps determine the number of appointments needed to achieve goals. Then, use conversion rates to calculate the leads required to secure those appointments.
- Leads are needed to get appointments to get sales.
4. Lead Generation Ratios:
- Response Rate: the percentage of people who respond to a marketing campaign.
- Conversion Rate: the percentage of leads who become actual clients.
- Number of Leads Required = Number of Deals Required / Conversion Rate
- Required Marketing Budget = Number of Leads Required * Cost Per Lead
5. Local Variables and Their Impact:
- Local market conditions: competition, average property prices, supply and demand.
- Team performance: sales skills, follow-up ability, customer service quality.
6. Cost of a Lead Generation Program:
- Direct Costs: advertising costs, digital marketing, printed marketing materials.
- Indirect Costs: marketing teamโ salaries, software and tool costs, time spent on lead generation.
- CPL (Cost Per Lead) = Total Marketing Costs / Number of Leads Generated
Chapter Summary
The chapter focuses on the importance of quantitative measurement in lead generationโ, advocating for a scientific, data-driven approach.
Key Points:
- Scientific Approach to Lead Generation: A structured scientific method is presented, consisting of:
- Focus: Identifying a specific area of marketingโ or prospecting needing improvement.
- modelโing: Starting with proven methodsโ used by others in similar markets.
- Systems: Developing a plan, budget, message, target audience identity, and integrating the plan into the overall lead generation strategy, defining desired outcomes indicating success.
- Accountability: Consistently using the marketing or prospecting method for 3-6 months, accuratelyโ tracking lead sources.
- Conclusion: Comparing program costs with net results to determine the actual cost per lead.
- Importance of Numbers: Lead generation is a “huge numbers game,” where the quantity of leads significantly impacts results. Even with low conversion rates, effective results can be achieved with a large enough number of leads.
- Systematic vs. Creative Marketing: Systematic and consistent marketing is more important than creative marketing in lead generation. Continuous, repeated communication with potential clients has a greater impact than the creative marketing message itself.
- Ambitious Goals: Lead generation plans should be more ambitious than specific financial targets to provide a buffer against market fluctuationsโ or decreased conversion rates.
- Economic Impact: The economic model of the business affects the lead generation plan, helping determine the number of appointments needed to achieve goals, and using conversion rates to calculate the necessary numberโ of leads to obtain these appointments.
Conclusions:
- Successful lead generation relies on a scientific approach involving careful planning, systematic execution, and continuous tracking of results.
- The quantity of leads is a crucial factor in achieving success, even with low conversion rates.
- Consistency and frequency in communicating with leads are more important than creativity in the marketing message.
- Lead generation plans should be ambitious enough to exceed financial goals and provide a safety margin against unexpected challenges.
Implications:
- Success in lead generation requires adopting a system based on quantitative measurement and accurate tracking of results.
- Real estate professionals should focus on increasing the number of leads, in addition to improving conversion rates.
- Prioritize systematic and continuous marketing over irregular creative marketing.
- Lead generation plans should be ambitious and flexible enough to adapt to market changes and unexpected circumstances.
- Real estate practitioners must develop a deep understanding of their economic model and how it impacts the lead generation plan.
