How Real Estate Agents should measure Marketing ROI: the Right Way and the Well Intentioned Way

As Agents work to pivot and re-group, we’re seeing an influx of new agents and a resurgence of effort from existing agents. With so many realtors in the game, carefully selected marketing has become a key differentiator of the best agents. And when it comes to marketing, there have never been so many choices… so knowing what works for you in your market has never been so important.

So let’s talk marketing ROI, and why we should be a little more careful in how we analyze it.

ROI is just “return on investment.” In the real estate business, this usually refers to the amount gross profit off of marketing-generated leads (less marketing expenses) as a percentage of marketing dollars spent in the same time period. That’s:

But beware!

Oftentimes it is this very equation that causes an agent to abort good efforts in the name of “business sense.” Why? Two reasons: first, a marketing effort by itself might not work. Your marketing plan should be a concert of several different channels playing in harmony with each other, delivering a consistent, top-notch message; and second, marketing programs often need a year or more to truly build traction, especially for agents with less than 5% market share. The standard marketing ROI equation ignores these truths.

So, we’d like to offer a slightly modified ROI equation with the big caveat of be prepared to wait. For this equation, we let the marketing do its magic, then we calculate.

First, let’s define the pieces of the puzzle:

• Average customer commission. This is how much commission you earned in total last year divided by the number of sides you completed.
• Lead conversion rate. This is the percentage of leads that become customers. Do you track this? If not, take an educated guess.
• Marketing cost. This is the total cost of the marketing program you are honing into. This can be actual or anticipated and must span a specific time period. Include a percentage of staff time dedicated to helping with this type of marketing.
• Leads generated. How many leads did you receive from the marketing program you are honing into? This must be measured over the same time period as your marketing costs.

Next, you’ll want to determine your Time to Break-Even. Because so much of your marketing is intended to communicate what you’re already doing, the more active you are now, the quicker you will get results from new marketing efforts. So if this is a new plan, or one you are considering but have not yet tried, put a deadline on the break-even and discipline yourself to wait until that date before you decide to measure marketing ROI and being running calculations.

In general, your Time to Break-Even should be set based on what the industry declares, and then adjusted based your market share. It is simple to figure out your market-share:

If you’re unfamiliar with housing turnover, it is simply a measure of how often people in your target market move. If 100 homes sell in your neighborhood of 1000, your turnover rate is 10%, and there are 100 listing prospects in your area per year. Here is a great article from Joe Manusa on housing turnover.

A good baseline on any new channel, especially direct mail, is 1 year (if you are hitting your farm with quality mail at least once per month). If you have greater than 20% market share, you might expect results a little sooner, and if you have less than 5% market share, you might be waiting 2 or more years. You should also adjust your time to break-even according to the turnover in your area. If you’re marketing to 10,000 homes with a 5% turnover, you should expect to wait longer (paying more in marketing costs) than if you marketed to 5,000 homes with a 10% turnover.

Now that you have established your Time to Break-Even, here are two ways to look at your marketing efforts. The first is a way to see what the performance of efforts should look like after they have already broken even. The second is a way to “spit out” how many leads you need to generate from the marketing channel for it to pay for itself, so you can gauge how realistic the new method is. If you only need a few leads a year to make it break-even, you might adjust your Time to Break even.

Measure Marketing ROI after Break-even:

Number of Leads needed in 1 year to Break-Even:

We hope this helps as you forge ahead this year. Best of luck, and never hesitate to reach out to us here at Discover if you’d like feedback on any of your marketing decisions. Please click below to download a complimentary calculator.

Download Calculator

Momentum for real estate agents is crucial to success – but often hard to get mid-stream.

By now, you might be at a comfortable place in life. But if you’re anything like us at Discover Pubs, comfort feels weird. It feels unnatural, fraudulent… lazy. For those of us who demand success out of life, our most exciting years are our hungriest. Remember your early days selling real estate, or whatever you did to get your start? How insatiable, unstoppable… how motivated you were? That motivation fuels momentum for real estate agents just starting out, which made it possible for them to persist through obstacle after obstacle. Lest we ever get complacent, I think it’s important to continually refuel our momentum tanks.

There’s a great book – maybe you’ve read it – by Ivan Misner and Don Morgan called Masters of Success. It’s a compilation summing up the best advice from some of the best “achievers” of our era. It has a permanent home in my Success Book collection and it’s my inspiration for this article. While the book is mainly about persistence, there’s an underlying theme of each of these influential people getting – and keeping – the ball in motion. A lack of persistence will indeed bring a business owner to his knees, but momentum is what accelerates that persistence. Momentum makes it easier to push on; much like going up the mountain with the wind instead of against it. Let’s take a moment and look at what momentum is, and then how Tony Robbins and John Maxwell teach us to create it.

What is Momentum?

Merriam-Webster defines momentum as “strength or force gained by motion or by a series of events.” Momentum is different from motivation, positivity, focus, and persistence, though we often hear it used interchangeably with these terms. Have you ever heard these?

“Think of rejection as a step closer to your next sale, and you’ll keep momentum!” That’s a good thing to do, but constant rejection is unlikely to build momentum for real estate agents. This strategy is helping you maintain a positive attitude (which is essential in not losing momentum if you have it).

“I’m going to inspire some serious momentum for the real estate agents in my office today by challenging them to each make 100 calls!” Great! But that’s more like persistence.

“I really need more momentum, I’m so distracted.” You need focus, sir.

“That speaker really got the momentum going!” Hearing a speech, or reading this or anything like it, is not going to give you momentum. Action produces momentum. The better word is motivation.

Momentum for real estate agents, as Merriam-Webster writes, is indeed a force. You can’t just flip the switch and have it. Focus, a positive attitude, persistence, and seeking motivation are choices we make, and they all are critically important to a mind frame which will cultivate momentum. Those things can all be done in an instant; momentum, on the other hand, ensues over a period of time. But, the great thing about it is that it doesn’t build upon itself in a linear way. Once the wheels start to turn, they spin faster and faster. Gaining momentum is easy when we’re overly passionate about obtaining a result, because that passion ignites fires to focus, persist, stay positive, and be resourceful. Unfortunately, later in our business life we may need to be more intentional about building momentum – perhaps our passion to succeed isn’t burning as brightly as it was when we were young and hungry. So, then, how is momentum for real estate agents built when they find it is no longer happening naturally?

Let’s ask Tony Robbins!

In December of 2015, Tony Robbins shared his strategy for creating momentum with an audience at one of his conferences (watch the video HERE). Here’s what he says: “How do you make [energy] sustainable? Create the base… If you’ve got a base, you challenge and grow… Then you’ve got to celebrate and reward yourself… and that celebration enhances your base, because you feel better and stronger and you want to do even more… And then your base gets even stronger so you can take on an even bigger challenge in life. And sure enough you reward yourself and celebrate some more and it becomes how the rich get richer, how the happy get happier, how the healthy get healthier, and the poor get poorer, and the depressed get more depressed, and the unhealthy get more unhealthy. It’s momentum.”

Let’s look at this advice a little deeper. He is telling us to begin by creating a base, which I interpret as getting moving – taking action – to accomplish a goal. For those of us in Real Estate, that may mean suiting up and beginning a door knocking campaign to get 10 listing appointments, and out of that, 6 listings. Next, he says to challenge and grow beyond the base. In this example, that could mean to review what we’re saying to homeowners and how they’re responding, and tweaking our message. Or it could mean that we aren’t doing enough activity, that to get 10 appointments we’ve got to knock on a hundred more doors than we thought. This step means to review and recalibrate – or to hone by continual improvement. Finally, he says to celebrate and reward. Say we hit our goal of 6 new listings and we take our exhausted (and elated) team of agents out for happy hour. Celebrating our successes, Tony explains, is what sparks our feel-good reward response, which causes us to want more success. So, we go back and say, “we’re going to keep at this, and this time we’re going to get 8 listings!” That’s a return to the first step. And how will we go from 6 to 8 listings? By challenging the process and improving it (which is step 2), which will get results and give us another reason to celebrate (which is step 3!). What is this, friends? It’s momentum – a roadmap for cultivating a cycle of success that builds upon itself.

To recap Tony’s system for building momentum:

1. Build a base: as Nike would say, just do it, but do it with a goal to achieve.
2. Challenge and grow: improve your system. Do more, demand more, refine.
3. Celebrate and reward: when you hit your goal, bust out the bubbly (if that’s your thing).
4. Go back to step one, with a stronger base, and set a higher goal. Repeat.

What can John Maxwell teach us about momentum?

John Maxwell has written several books on management that helped me early in my career – he offers pragmatic, easy to apply wisdom reminiscent of a good father’s advice. In one of his books, How Successful People Lead, he writes about momentum. Where Tony Robbins teaches us to create momentum personally, here John Maxwell shows us how to build momentum for real estate agents (or any business) at the organizational level. Where does it start in a group? Is it similar to developing personal momentum, with a procedural base? No. It starts with people.

He says there are three types of people on your team:

• Momentum Makers: Producers who “make things happen”
• Momentum Takers: People who “go along for the ride”
• Momentum Breakers: People who cause problems and hurt morale

How true that is! He goes on to say that as leaders, we must focus most of our attention on enabling Momentum Makers to have the greatest possible impact. If you head up a team of agents, the “makers” would be your top producers, best inside salespeople, and even a rockstar marketing or administrative assistant. John then says that we ought to train the Momentum Makers to help lead the Momentum Takers, with the philosophy that they will be motivated by their Momentum Maker counterparts. Finally, he says to sit down with the Momentum Breakers and tell them where they’re falling short. Give them an opportunity to improve, and if they don’t, let them go. In our own experience here at Discover Pubs, and perhaps in yours as well, most of the time the “breakers” unfortunately do not rise to the challenge (at least not in the long run). We hear often to “fire fast,” but, like John, we believe that giving employees a chance to improve is the right thing to do. This is especially important if one of your Momentum Breakers was at one time productive. They have the right stuff, it just got lost in in a personal crisis or professional setback, so it’s worth it to ask them how you can help them get it back.

John Maxwell’s approach to building team momentum is to build solid relationships among team members upon a foundation of “positional rights,” or certain powers or autonomies you give to staff whom have demonstrated they can handle it. Building momentum for real estate agents you manage will then become easy; simply leverage the results of the productivity that comes from this kind of “earned” autonomy. When you celebrate a success, as Tony teaches, a properly knit team will thrive. “…You will gain momentum,” writes John, “and when you do, you’ll find your work comes to fruition more quickly.”

A final thought on momentum

In parting, it’s our hope that you find time to put some of these practices to work. It is all too easy to get complacent. But it doesn’t have to be that way. As John Maxwell preaches, if we’re fortunate enough to have a staff, we can transfer what was once our own personal momentum to an entire, unstoppable team in motion! But staff or not, the buck stops with you, and it’s important to remember that serious momentum for real estate agents doesn’t happen by accident. We can follow some simple steps to create it, long after the wildfire of our early business years. Go get ‘em!