As a real estate investor, you’re always looking for ways to improve your marketing and get more leads. But with so many different marketing channels and strategies to choose from, it can be tough to know where to focus your efforts. One of the biggest mistakes investors make is focusing too much on vanity metrics like cost per lead and click-through rate. While these metrics can be helpful in some cases, they don’t tell the whole story.
What really matters is your return on investment (ROI). In other words, how much money are you making from your marketing efforts? The problem is that real estate investing is a relatively low volume business, so you’re likely working with limited data. You might see certain ads or keywords that aren’t performing well and be tempted to pause them, which could result in missing out on profitable opportunities in the long run.
The good news is that there’s a way to calculate the potential ROI of your marketing, even if you don’t have a lot of data. It’s called Real ROI, and it can help you make smarter decisions about where to spend your marketing dollars.
Real ROI is a metric that takes into account the potential payoff of a low-volume keyword or ad. It helps you to make an informed guess about what the payoff may be for something that doesn’t have a lot of data behind it. It’s calculated using national averages for factors like conversion rates and cost per lead, combined with the cost per click you see in your market. You also factor in your average deal value and your closing rate.
This approach is critical because it allows you to project forward and understand what you can realistically make from your marketing. It helps to avoid prematurely pausing potentially profitable campaigns just because they’re not producing immediate results.
Remember, it’s better to have a campaign that generates a positive ROI over time than to constantly chase the lowest cost per lead. Sometimes, a higher cost per lead can actually result in a higher overall ROI.
Here’s a step-by-step breakdown of how to calculate real ROI:
Example: Let’s say you’re running an ad campaign targeting the keyword “sell my house fast” in a competitive market. Your cost per click is $12.25, your estimated cost per lead (based on a 7% conversion rate) is $175, your closing rate is 5% (conservatively low), and your average deal value is $17,000. Plugging these numbers into the spreadsheet, you still get an estimated cost per deal of $3,500 and an ROI of $13,500. Even though the cost per lead is high, you’re still making a profit of $13,500 per deal. This is valuable information that might lead you to continue running this campaign despite the seemingly high cost per lead.
Focusing on Real ROI instead of vanity metrics like cost per lead can have a significant impact on your real estate investing business. By using this metric to guide your marketing decisions, you can increase your profits and build a more sustainable business for the long term.
Remember:
By following these tips, you can take your real estate investing business to the next level.
You can also Listen to a Podcast Episode on this topic HERE.
P.S. If you’re interested in dialing in the marketing for your business, hit us up and we’ll put aside some time to walk you through how to do it.
Our calendar is here —-> https://adwordsnerds.com/strategy
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Stop Worrying About Cost Per Lead and Start Focusing on Real ROI As a real estate investor, you’re always looking for ways to improve your marketing and get more leads. But with so many different marketing channels and strategies to choose from, it can be tough to know where to focus your efforts. One of
