(00:00):
Hi, Mitch Argon here with CalNeva Realty. I’m going to take you through a question I get asked a lot by my agents, which is how should I evaluate a new lead source? What would work well for me? What makes good financial sense? Let’s spend a few minutes talking about that.
(00:23):
Okay, so there’s four key questions that you’d want to ask yourself at minimum when you’re evaluating a new lead source. Let’s go through them. Number one, is it cost effective? Now, in order to know if a lead is cost effective, you’re going to need to do some marketing and some trial and spend some money because you not only need to know what the cost of a lead is, but you also need to know what your conversion percentage is. If your conversion percentage is very low and your cost is very high, you may find that that lead source is not productive for you. In other words, you’re spending too much money per sale than you should be. You’re going to need to spend some money, test the leads, see what kind of conversion rate you get over a period of time, probably four to six months, and then make a decision as to what is your cost per lead, what is your cost per sale, and is it cost effective?
(01:16):
Let’s talk about number two. Does this lead source align with your style? Now, not all leads are created equal, and not all agents conduct business equally. If you like to pick up the phone and hammer the phone, then you may want a source of leads that is more sales prospecting-based versus marketing-based. On the other hand, if you want to cast a net like a fisherman versus a hunter and have those leads come in to you for servicing and follow-up and processing, then you may want a lead source that’s very different. As an example, an online lead source would be better for casting a net. The leads are coming in, and you can service and follow up with those people. If you’re going to be going after more of an aggressive sales position leads, and you want to convert them on the phone with sales calls, then perhaps expired listings or for sale by owner listings or for sale by owner as potential clients would be the way to go.
(02:12):
Third question you want to ask yourself is, does this lead source align with my business objectives? It sounds pretty basic, but you really want to know, am I going after buyer leads or seller leads? Am I going after leads in a specific geography, like a ZIP code, or am I going after leads in the entire marketplace that I’m in? You want to make sure you’re asking these questions of whoever’s trying to help you or sell you the lead source because that’s ultimately going to determine whether these leads line up with you and how you work.
(02:39):
The last question is, is the lead source scalable? You’ve got to think about leads based on the actual cost of the lead, but you’ve also got to think about some lead sources require more time of yours than others. For example, an open house is going to require a lot of your time to develop leads versus an online lead source would require very little if you’re paying for those leads because they’re coming whether you’re actually working them or not at that moment. If you need to do an open house every Saturday and every Sunday to generate the leads, you may run into a physical constraint where you just can’t generate enough leads to keep you busy or to scale your business because you’ve got to spend all your time developing those leads at the open houses. On the contrary, an online lead source, for example, you can turn up the volume on your marketing expenses and what you’re paying and increase your lead flow without taking a proportionate amount of your time away from trying to generate those leads.
(03:42):
Okay, I hope going over these four questions will help you to look at a lead source and determine whether it’s a good fit for you, whether it’s a good fit financially, and whether it’s something that can help you to grow your business. Have a great day. Thanks for tuning in.
