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.

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Real Estate is the Best Industry for Direct Mail Marketing

Over the last few decades, here at Discover we’ve made huge efforts at getting custom publications in the mailboxes of various industry prospects. We’ve tried the full gamut of small businesses marketing to a geographic farm. What we’ve found is that real estate is the best industry for direct mail, and yet, we still run into agents who don’t get results. Here we’ve come to understand a few basic principles about direct mail; when and how it becomes effective. These are our nuggets of wisdom.

(1) You are still building a community presence

Real estate is such a great industry for direct mail because you only need a few good leads to cover the cost of several mailings. This isn’t true for other industries, whose services are yielding much lower revenue per lead. But to get even those few leads, your mail needs to reinforce an image that is already familiar. Of course, your mail assists with the familiarization process, but having a few yard signs in the neighborhood and a booth at the fireworks will make you mail much more effective. That doesn’t mean that if you’re a new agent you shouldn’t use direct mail (we think you should), but you must realize that it probably won’t send leads your way for a long time.

We’ve found that agents who have been working in the community for 5 or more years, have 5% or greater market share in their farm. And those who participate in community events regularly get the best results in the fastest amount of time.

(2) You aren’t sending the right kind of mail

Ah, postcards. Even here at Discover we’ve dabbled with them. We learned early on that postcards can be a great tool for showcasing a recent sold or a hot listing, but they should not be used as the backbone of a direct mail strategy. Today’s consumers are highly distrustful of almost anything promotional, and it’s really tough to cram anything but self-promotion on a postcard. You’re go-to direct mail piece should speak to the homeowners in your community about what interests and concerns them. It should show, not tell, how you are an expert, member and leader in the community.

This realization was the genesis of our custom publication, which is designed to position agents as caring, contributing members of the neighborhood who are also successful real estate agents. Sending relevant, engaging content to your prospects is more effective over the long haul than promotional postcards or fliers.

(3) You aren’t properly prospecting or supplementing your direct mail with other forms of marketing

We’ve heard of agents who love the idea of direct mail so much that they rely too heavily on it, and it gets them nothing. A seasoned real estate agent knows that you’ve got to heavily prospect as part of your overall strategy. This includes regular phone calls, emails and even door knocks. If you’re calling on people you’ve been mailing too, you can use that as an opening line so the call doesn’t feel as cold.

Direct mail is also one of the least threatening forms of marketing because it is so easy. You send it. With your websites, social media, videos and emails, you’re taught to follow rules, cross-connect multiple channels and then analyze all of the metrics. We get it. But nonetheless, the fact is that even if you are a fantastic networker, direct mailer and community leader, if your prospects can’t find you online they’ll be turned off. To get the most out of direct mail you should:

• Lead prospects to a beautiful, functional and well-integrated website. It should tie to all your social media and other online profiles and sites (like your broker landing page and Zillow profile), showcase listings, link to tools your prospects can use to value their home and search local listings, and feature regular updates and blog posts
• Have a presence with frequent posts on Facebook, Instagram, Twitter, etc.
• Build and maintain a clean email list of past clients and future prospects. You should email them at least twice a month with interesting content that is non-promotional, including videos

We know it takes a lot of inertia to do all of this, but we have found that agents who take advantage of multiple marketing channels get more calls from the direct mail they send out.

(4) You aren’t mailing consistently 

Just like with prospecting and email marketing, consistency is key. We’ve found that mailing a good, core piece at least every other month will pay off within 6-8 months (for an agent with presence, market share, and a good supplementary marketing program).
But what’s interesting is that once the agent mailing hits this “break-even” point, the leads don’t come in at a steady pace, they tend to come in faster and faster. It’s as though the continual reinforcement starts to take hold and homeowners start to associate the agent with “successful real estate selling.” At that point it’s exciting because it’s a matter of housing turnover more than trust building, because that’s already been accomplished.

We hope you’ve found this information helpful. We’re always here to share our experience and insights, so let us know if you have any comments or questions.

Here it is, our top marketing memes of the month, chosen by the team at Discover Pubs.

Memes generate a good laugh, but they can also allow us to walk a day in each other’s shoes and experience the good and bad of our daily professions. As for marketing professionals, from the moment we sit down to our computers to the point that we think it’s time to leave, but can’t see the time through our strained eyes – we are creating and sending content through emails, social media, blogs and everything-in-between.

For the next few minutes give your eyes some relief, or hop into a set of your marketing friend’s shoes and enjoy our 21 favorite marketing memes of the month.

#1

Or do they?

#2

But, they want to grow their following?

#3

campaign + strategy = results

BOOM.

#4

It looks a little like this.

#5

And, this.

#6

Oh yeah, and this.

#7

The essence of email marketing, and when it finally comes along …

100? More like …

#8

consider us the online version of Oprah. And please, feel free to click through.

#9

And, it wasn’t even incentivized.

#10

After creating the pop-up form for lead information.

#11

What we’d like to happen after sending “please fill out the form below,”

#12

what actually happens.

#13 

When you get those leads, keep ’em clean, aka semi-annual CRM verification.

#14

So, when you send links to your leads – this happens.

#15

Only to be followed up by this.

#16

Then, this – because anything will go viral, right?

#17

We can dream (but, please refer to #1, #2, #3).

#18

Level 10 accuracy (aka: please share this post).

#19

But then, after tomorrow, it finally happens …

#20

time to celebrate.

#21

And, keep it classy.

A custom publication creates a lasting impression on your audience, make them remember you

When you’re publishing your custom publication with Discover Publications, we want you to make every page count. To that end, here are 5 ways to grab attention and get your readers to engage with your company.

1. An enticing lead article

Your front page story is your reader’s first impression. An engaging article gets your reader’s involved from the start is important and will peak their interest. An article about the local area and market is always relevant … it speaks to them directly, especially when they are sitting at home. Readers would like to know what’s happening in the market and if their home is rising in value.

2. Featured listings and homes sold and pending

Many of our clients like to use the giant 10” x 16” back page to show off their most prized listings. Use this space to your advantage by keeping your listings moderately-sized with a photo and a brief description. Always have a space where the reader can locate a number or website quickly to contact you if they find their dream home.

Having pending and sold listings shows that you can move homes, and move them quickly, thus creating confidence in your place as a market leader. Plus, the reader can see what home prices are going for in the area.

3. Call to action spaces. 

These spaces, strategically placed within the custom publication, are where you want to really sell yourself and make the phone ring. Use these spaces to search for possible sellers and leads. For example, the house that your reader owns is something your buyers are in need of and they may be looking to sell. Many use the spaces to promote a website with a message: a free home value or market analysis. You may also want to promote a charity event you are involved in, or an event you are sponsoring for the community. You can also use these areas to sell ad space to defer the cost of the paper.

4. Advertisers
   

Selling ad space in your custom publication to friends and acquaintances in the business is a great way to offset your costs. Our clients frequently team up with a staging company, financial company, title company, or insurance provider. We can create the ad if needed and bill the advertiser directly for you.

5. Testimonials

To further cement your place as a market leader in your area, having some testimonials from satisfied clients can show your human side, and highlight things you and your staff have done to create a positive outcome for your clients.

Use these helpful tips to make publishing your custom publication much easier and more successful.