How Much Are You Paying for Leads?

 

How Much Are You Paying for Leads?

In A Nutshell:


Smart realtors can dramatically cut lead expenses and increase returns by combining new lead generation with targeted remarketing. This approach, backed by data analysis and market focus, builds a growing, cost-effective lead system for sustained success and higher profits.

 
 

Insights From Barry Jenkins

Ylopo Realtor in residence Barry Jenkins spends about $8,000 monthly on a mix of Google and Facebook leads, plus remarketing to those prospects.

This calculated approach allows him to generate new leads at $15-20 each, while re-engaging existing database contacts for just $2-3 per lead.

Through balancing fresh lead acquisition with cost-effective remarketing, Barry achieves an impressive 400% ROI on his monthly lead generation investment.

Applying Theory to Practice in Lead Generation

Understanding concepts like paid search, social media advertising, and remarketing is valuable, but success depends on effectively implementing these strategies.

Barry's approach demonstrates a deep grasp of both lead generation theory and application.

He recognizes the importance of multichannel outreach, using both Google and Facebook to connect with potential clients where they spend time online.

He also understands lead nurturing and the buyer's journey - remarketing to older leads keeps his brand and listings prominent as prospects move closer to purchasing.

However, theory alone doesn't generate income.

Barry's success comes from translating these concepts into a practical, profitable lead generation system.

Through continuous refinement of his ad targeting, messaging, and remarketing tactics, he lowers costs while improving lead quality and conversion rates.

"Where the magic really happens is those leads that have been sitting in your database for years."

Through effective remarketing, Barry maximizes each lead's full lifetime value, rather than focusing solely on initial conversion.

Advanced Lead Generation Strategies for Experienced Realtors

Realtors who understand lead generation basics can level up by focusing on advanced strategies and emerging trends.

A crucial area to watch is the ongoing development of social media advertising platforms like Facebook.

Barry observes, "The Facebook algorithm is making sure the right house is in front of the right person at the right time."

Staying current with the latest ad targeting options, audience insights tools, and dynamic ad formats allows realtors to fully leverage Facebook's powerful marketing capabilities.

Another sophisticated tactic to consider is multi-touch attribution and analytics.

Instead of measuring only last-click conversions, smart realtors track the full customer journey across multiple touchpoints and channels.

Understanding which combination of ads, emails, website visits, and other interactions ultimately leads to a sale enables optimized marketing mix and more effective budget allocation.

Tools like Google Analytics, Facebook Attribution, and third-party platforms such as Bizible or Ruler Analytics can help connect the dots and drive data-informed decisions.

Niche Specialization and Targeting in Real Estate Lead Gen

While Barry's example uses a relatively broad approach to lead generation, targeting homeowners generally, experienced realtors may find success by focusing on specific submarkets or buyer personas.

For instance, a realtor specializing in luxury homes might concentrate their lead gen efforts on high-net-worth individuals, using targeted ad placements, custom audience lists, and partnerships with complementary luxury brands.

They might also invest more heavily in branding and content marketing to establish themselves as the go-to expert in their niche.

Another potential niche is first-time homebuyers.

These buyers often need more education and guidance throughout the process, but they can also become a valuable source of referrals and repeat business.

To reach this audience, realtors might create content explaining the buying process, partner with local lenders and financial advisors, and use ad targeting options focused on life events like marriage or starting a family.

The essence of niche marketing is deeply understanding your target audience's needs, preferences, and behaviors.

When you customize your lead gen strategies to the specific submarket you serve, you can create a more efficient and effective funnel that delivers higher-quality leads at a lower acquisition cost.

Scaling Your Lead Generation Efforts

As your lead generation efforts gain traction and your database grows, it's crucial to plan for scaling your operations.

"You can hire people, you can add agents, because as the remarketing opportunities continue to increase in your database, your cost per opportunity, which is like closings, right? Your cost per closings consistently goes down."

Scaling isn't just about growing your team.

It also involves using technology and automation to manage increasing lead volumes and customer interactions.

Tools like chatbots, email autoresponders, and lead scoring algorithms can help qualify and nurture leads more efficiently, freeing up your human resources for high-value activities like closing deals and relationship building.

Another critical aspect of scaling is establishing clear processes and systems.

From lead intake and assignment to follow-up and conversion, every funnel step should be mapped out and optimized for maximum efficiency.

Documenting your processes and using project management tools to keep everyone aligned ensures no leads slip through the cracks and every team member works towards common goals.

Of course, scaling requires a solid financial foundation.

As your lead gen costs and team size grow, it's essential to clearly understand your unit economics and profitability.

Tracking important metrics like cost per lead, cost per acquisition, and lifetime value enables informed decisions about resource allocation and service pricing.

Exploring alternative revenue streams, such as referral fees or partnerships with complementary service providers, can help diversify income and reduce reliance on any single lead source.

The Future of Real Estate Lead Generation

As technology advances and consumer behaviors change, real estate lead generation will undoubtedly evolve in coming years.

One trend likely to continue is the move towards more personalized, data-driven marketing.

With the rise of machine learning and AI-powered tools, realtors will deliver even more targeted and relevant messages to potential clients, based on individual preferences and behavior patterns.

Another area to watch is the growing importance of video and interactive content.

As virtual tours and 3D walkthroughs become commonplace, realtors who create engaging, immersive experiences for their leads will have a distinct advantage.

This may require investing in new skills and technologies, such as drone photography or VR development, but the potential payoff in lead engagement and conversion could be significant.

It's also worth monitoring emerging platforms and channels that could disrupt the traditional lead gen landscape.

From voice search and smart home devices to augmented reality and blockchain, numerous factors could alter the game unexpectedly.

Realtors who stay curious, experiment with new tactics, and adapt willingly can stay ahead of the curve and thrive in a dynamic market.

Important Takeaways and Actionable Insights

For experienced realtors aiming to optimize their lead generation efforts and drive long-term growth, several important takeaways emerge from Barry's example and broader industry trends:

  1. Prioritize quality over quantity. While tempting to pursue every lead, investing in fewer high-quality leads more likely to convert can ultimately prove more profitable and sustainable.

  2. Maximize lifetime value through remarketing. Maintaining visibility with past leads and nurturing them over time can transform a single interaction into a long-term revenue stream.

  3. Use data and analytics to optimize your funnel. Tracking important metrics and using tools like multi-touch attribution helps identify the most effective touchpoints and channels for your specific audience, allowing strategy adjustments accordingly.

  4. Consider niche specialization to stand out in a crowded market. Focusing on a specific submarket or buyer persona can create a more targeted and efficient lead gen machine that delivers better results at lower cost.

  5. Plan for scalability and diversification. As your lead gen efforts expand, ensure you have the team, technology, and financial foundation to handle increased volume and complexity. Also, explore new revenue streams and partnerships to mitigate risk and expand your reach.

Experienced realtors who implement these best practices and stay attuned to the latest trends and technologies can elevate their lead generation efforts and build a thriving, sustainable business for years to come.

As Barry's example illustrates, with the right strategy and execution, achieving impressive ROI and long-term growth is possible, even in a highly competitive market.

The key lies in continuous learning, experimenting, and adapting to the evolving needs of your clients and the broader industry landscape.

 

  • As mentioned earlier, understanding average lead costs is crucial for businesses optimizing marketing budgets in competitive digital marketing.

    Building on the information above, let's explore current trends, pricing strategies, and industry-specific breakdowns of lead costs as of early 2024.

    Current Trends in Lead Pricing: A Deeper Dive

    While average lead generation service prices vary based on factors like industry, lead quality, and acquisition methods, recent data indicates businesses invest an average of $198 per lead.

    This figure, however, only scratches the surface.

    Pay-Per-Lead services can range from $20 to $60 per lead, depending on data quality provided.

    Moreover, individual lead costs can span from $5 to $500, with higher-priced leads generally offering better conversion rates.

    Factors Influencing Lead Pricing: Beyond Basic Considerations

    In addition to previously mentioned factors like industry, lead quality, target market precision, and marketing strategy, several other elements impact lead pricing:

    1. Competition: In highly competitive industries, lead costs may increase as businesses vie for the same target audience.

    2. Geographic Location: Lead costs can vary significantly based on target market location, with some regions having higher costs due to factors like population density and economic conditions.

    3. Seasonality: Some industries experience seasonal demand fluctuations, affecting lead prices during peak periods.

    Pricing Strategies for Leads: Fresh Perspectives

    While previously discussed pricing strategies (percentage of revenue, flat rate, and tiered pricing) are effective, businesses can consider additional approaches:

    1. Value-Based Pricing: Set lead prices based on perceived business value, considering factors like lifetime customer value and brand loyalty.

    2. Dynamic Pricing: Use data analytics and machine learning to adjust lead prices in real-time based on market demand, competition, and other relevant factors.

    3. Bundled Pricing: Offer leads as part of package deals, bundling them with other products or services to provide added customer value.

    Calculating Your Actual Cost Per Lead: A Step-by-Step Guide

    Want to know if your lead generation efforts are paying off? You need to calculate your actual cost per lead (CPL).

    This metric shows you exactly how much you're spending to get each potential customer.

    It's the best way to measure your marketing campaign ROI and make smart, data-driven decisions.

    Here's how to calculate your CPL:

    • Step 1: Define your lead criteria. What counts as a lead for your business? Is it a form submission, phone call, or newsletter sign-up?

    • Step 2: Identify your lead generation channels. List all the marketing channels you use to attract leads - paid search, social media, email, affiliate programs, you name it.

    • Step 3: Calculate your total lead generation spend. Add up everything you've invested in each channel over a specific time period, like a month or quarter. Don't forget agency fees, creative costs, and other related expenses.

    • Step 4: Tally your total number of leads. Count all the qualified leads you generated during that same period across all your channels.

    • Step 5: Divide your total spend by your total leads. That's your actual cost per lead.

    For example, if you spent $10,000 on lead generation in a month and got 500 leads, your CPL would be $20 ($10,000 / 500 = $20).

    Remember, CPL can vary a lot between channels.

    A targeted Facebook campaign might cost more per lead than a broad blog post.

    Calculate CPL for each channel separately to find your most cost-effective lead sources and allocate your budget wisely.

    You can also use CPL to benchmark against industry averages or your own past performance.

    If your CPL is higher than expected, you might need to fine-tune your targeting, messaging, or landing pages.

    If it's lower than average, you could have an opportunity to scale up and grab more market share.

    Keep a close eye on your CPL to ensure you're getting a good return on your lead generation investments.

    Understanding your true costs and optimizing based on data will help you make the most of every marketing dollar and drive sustainable business growth.

    Tips for Managing Lead Costs: Expanding Your Toolkit

    To build on earlier tips, here are additional strategies for effectively managing and optimizing lead costs:

    1. Develop a Lead Scoring System: Implement a system assigning values to leads based on conversion likelihood, allowing prioritization of high-value leads and efficient resource allocation.

    2. Foster Long-Term Relationships: Build strong, lasting relationships with lead providers to negotiate better rates and ensure consistent high-quality lead supply.

    3. Continuously Test and Refine: Regularly test and refine lead generation strategies, using data-driven insights to identify improvement areas and optimize your approach over time.

    Putting it All Together

    Through a deep comprehension of lead pricing intricacies, exploring diverse pricing strategies, and employing various optimization techniques, businesses can effectively navigate the complex lead generation landscape.

    With a comprehensive approach considering industry-specific factors, market conditions, and unique business needs, you can successfully manage lead costs and drive sustainable growth in coming years.

  • BARRY:

    "I pay around $8,000 a month for leads and that's a combination of Google and Facebook leads and then also in that $8,000 I'm also including remarketing to all of those leads.

    So that when the leads are generated they continue to see ads, specifically dynamic remarketing.

    That's one of our larger expenses on a digital marketing side because we want homeowners seeing more new houses for sale automatically in their social media channels.

    This has proven to be a huge benefit because instead of just buying a lead and trying to convert it in 30 days, we have leads that are seven years old that are still using our website and we have an opportunity to reach back out to them.

    So the ROI with that combination of new leads plus digital marketing for around eight grand a month, it's typically around 400%.

    So a new lead is going to cost me typically around $15 to $20.

    I can get an old lead to come back to my website for around $2 or $3.

    And so having new leads is great because there's urgency there, right?

    They just registered, hopefully you'll get one that wants to buy soon.

    But where the magic really happens is those leads that have been sitting in your database for years and remarketing is keeping them on your website, keeping them searching for around $2 to $3 a lead.

    That scales exponentially because every month your database continues to grow.

    The Facebook algorithm is making sure the right house is in front of the right person at the right time.

    And so it just creates this synergy in your business that you can then create a lot of systems around.

    You can hire people, you can add agents, because as the remarketing opportunities continue to increase in your database, your cost per opportunity, which is like closings, right?

    Your cost per closings consistently goes down because now, yeah, I'm getting new leads for $15, but I'm getting old leads back to my website for three.

    You average that out.

    And now instead of a cost per lead of being 15, it's now $9, right?

    Because I'm dividing 18 divided by two.

    So the math really makes sense with remarketing being included."

 

Barry Jenkins

Realtor, Speaker, Coach, Trainer, Author, and Head Realtor in Residence at Ylopo