There’s hardly a better time to get your foot in the door with online marketing. It may seem like a puzzling and chaotic field to navigate, but there are systematic ways to clear the path and land more deals online. You just have to know what numbers to focus your attention on. That’s where things get tricky.
This episode teaches an important mental model any real estate agent can use to see how their business is growing and where it’s really going. Listen now!
Show highlights include:
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You're listening to the “REI Marketing Nerds” podcast, the leading resource for real estate investors who want to dominate their market online. Dan Barrett is the founder of AdWords Nerds, a high-tech digital agency, focusing exclusively on helping real estate investors like you get more leads and deals online, outsmart your competition, and live a freer, more awesome life. And, now, your host, Dan Barrett.
Dan: All right, how are you? And welcome to this week's episode of the REI Marketing Nerds podcast. As always, this is Daniel Barrett here from AdWords Nerds and REIMarketingNerds.com where you can go to get all the information about this podcast, all our past episodes, show notes and more. REIMarketingNerds.com. [01:00.9]
Now, this week I want to talk about something that's kind of an important mental model to understand and sometimes when I talk about mental models, people can say, This is a little abstract. This is not going to be one of those things. This is something that is going to directly apply to how you do your marketing, how you think about your marketing, how you think about your business, pretty much how you think about everything.
If I do my job well, we can even extrapolate this to just improve even your personal life and your social life, all sorts of stuff. It's a valuable mental model. That's what I'm trying to say. It might be sort of a stretch, but I want you to stick with me here and I'm going to see if I can make this connect for you.
Now, the reason I'm bringing this up is because I coach real estate investors pretty much every single day, either in my Search. Click. Convert. Bootcamp course where I teach Google Ads or in the REI Marketing Mastery Program where I teach SEO and pretty much everything, Facebook and Google and all sorts of stuff. [02:12.9]
So, I'm in there working with regular real estate investors every single day. These are not super technical wizards. These are not people who come in with a huge background in online marketing. These are investors who want to get more deals online and are looking for a systematic way of doing that, and so it's my job to kind of take them from zero and move them all the way to the point where they are getting leads in deals under contract online at a profit. That is the goal of pretty much everything that I teach.
One of the common issues that comes up, one of the most common things I get, one of the most common questions, one of the most common problems is that people want to know what a good number is. [03:08.1]
For example, let's take conversion rate because this is probably one of the most common things I get. Now, conversion rate, if you're not familiar, all that means is there's some percentage of people that land on your website and then become a lead. They either call you or they email you. However they do it, text you, whatever, they become a lead after landing on your website. There's some percentage of people that do that. Let's say, 10 percent of people that land on your website become a lead. That is your conversion rate, right? The rate at which people convert.
Okay, so again, let's take that number 10 percent. All right, it is very common for a student to come to me and say, Hey, Dan, 10 percent of people that land on my website are becoming leads. Is that a good conversion rate or a bad conversion rate? [04:15.2]
If you think about it, this is a completely rational question. You want to know how you stand as regards to other investors. If every other investor is getting a 100-percent conversion rate, 10 percent is terrible. If every other investor in the world is getting a one-percent conversion rate, then 10 percent is next level. So, where am I in the spectrum?
Now, while that is a completely rational, completely normal question to ask, it is actually a wildly misleading question. All right? It’s wildly misleading and to illustrate why, I'm actually going to answer it for you and then I'm going to get into why it is misleading. [05:05.3]
Here's the answer. Okay, you say, Hey, Dan, my conversion rate is 10 percent. Ten percent of the people who land on my website are becoming leads. I say, Great. That's actually really good because the industry average is around five percent. Hey, your number is twice the industry average. That's amazing, right? It's great.
And that's a real number, by the way. That's a real-world number. Ten percent, I would take pretty much all day, every day as a conversion rate. Okay, so that's a real-world number. You can take it to the bank. It's based on millions of dollars of ad spend, hundreds of investors, every single market around the globe pretty much. But here's the reason why it's misleading. The real reason it's misleading is that 10 percent could be good, but it could also be bad. Ten percent is good on average, but that average high it's a whole lot of variation. [06:07.7]
For example, 10 percent is great for the average Google Ads campaign for a real estate investor, but that's based off my specific approach. There are other approaches where the conversion rate is less, and so 10 percent even better. However, even within my campaigns, conversion rate varies very wildly depending on the type of keyword you are searching for. For example, a very low-volume, very specific exact-match keyword can have a conversion rate anywhere between 10 to 50 percent, so 10 percent could actually be low for that kind of keyword. [07:02.5]
What's more, conversion rates vary wildly by market. If you are in a very targeted market and you are the only investor there, your conversion rate should probably be higher than 10 percent. Similarly, there are some markets where getting a 10-percent conversion rate is just unheard of and you getting a 10-percent conversion rate is actually an indication to me that maybe something is wrong with your tracking.
Likewise, if you are getting a 10-percent conversion rate on a different networks, for example, Google Display Network, that indicates to me that your volume is not high enough because, in actuality, in a network like Google Display Network where the leads are so much cheaper, we should expect somewhere around a one-percent conversion rate because otherwise I'm leaving money on the table purely by volume. [08:09.6]
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Here is the kind of overarching mental model, the lesson we want to pull from this: it doesn't matter whether 10 percent is a, quote-unquote, “good” or “bad” number. It doesn't matter. It doesn't matter what any other investor does. You don't have their business. It doesn't matter what any other market does. You don't have their market. It doesn't matter what any other approach does. You don't have that approach. The average doesn't matter. [09:11.4]
The average doesn't matter. It is a fiction. It's like saying the average American family has 2.5 kids. There ain't no 0.5 kids anywhere. It is a statistical fiction useful for certain kinds of mental exercises, but a total failure in others. The average, though it tells you something, cannot tell you whether you should pause or unpause a keyword, or test or not bother with a landing page, or anything like that. It just can't tell you that.
What matters for you, for your marketing, for your performance, for your landing pages, for your keywords, for your campaigns, for everything in your business, the number that matters for you is your baseline, not is this conversion rate good or bad? [10:11.3]
The question is, is this conversion rate better or worse than my baseline? Is it trending up or trending down from my baseline? And your baseline can even get more and more granular. Instead of just talking about your campaign, we could talk about your specific zip code, your specific keyword, your specific match type, your specific bidding strategy. It's all about what your baseline is, mental model, bigger than just marketing.
The thing is all of us compare ourselves to everyone else. This is human nature. It is absolutely human nature. We are status-driven creatures, right? We are community creatures. We live in a society, right? We live in a society. Part of living in a society is looking around at all the other people in this society and trying to figure out where am I in the general status hierarchy of where I live, right? [11:19.2]
The whole cliché of keeping up with the Joneses is a cliché because it's true. It is a truism in the pool industry that selling the first pool in any given neighborhood is very difficult, but once you sell one, you can sell five, because the minute that someone decides to put a pool in their backyard and they break the ground, they dig it all up, they have the neighbors over there, they make a big deal about it, guess what? All of a sudden, three, four, five other people in that neighborhood are going to make the decision to put in a pool because they're not going to let that family be the only family in the neighborhood with a pool. It's a status thing. [12:02.3]
It's a status thing. You're the first family in the neighborhood to get the big-screen TV that goes all the way around your house and it's got plasma inside, and it's so realistic you could step into it and it's like the Holodeck. It’s going to be about two months before every other family on the block has one. It's just how it is. We're all status-driven.
So, part of the reason that we're so curious about how other investors are doing regardless of the fact that it doesn't change anything about how our business is doing is that we want to know how we stack up. But the thing is that comparisons tell you nothing. If I tell you that that investor has a 20 percent conversion rate, that's great.
That may seem to make him the same better than your 10 percent, but you don't know how many deals he actually closed. What if he’s losing money, hand over fist? You don't know. You don't know anything about the underlying reality of how that person's business works or how happy they are with it, or how consistent those results are. [13:03.5]
That's another trick that is very, very common in this industry, right? Well, I have a 50-percent close rate and I did blah, blah, blah, but they don't tell you what they did the year before or what they're going to do this year. It's just this little snapshot that makes them look really, really good, because we all want to look good.
We all, all of us, myself included, we all want to look good to everybody else, but that has never helped anybody actually make more money in their business. Never. Never. Comparisons to other people are poison. They are distractions. They are worse than useless. They create opportunity costs in our businesses that send us down the wrong path and can cost us years in wasted effort, and I mean that, and this is something I know from my personal life. I know it for my clients. Comparisons are poison. [14:02.2]
Now, what isn't poison, what is actually the core of all improvement, the core of all profitability, the core of all success, is relative improvement. Am I further along today than I was yesterday? Because it doesn't matter what the investor down the street does or the investor in the next market does, or the investor you saw on YouTube does. It doesn't matter. What matters is are you further along today than you were yesterday? Is your conversion rate going up? Great. Are you better than your own baseline? Great. Otherwise the question of whether this number is a good or bad number means nothing. Not only does it mean nothing; it's going to lead you down the wrong path and it is going to cost you time and money.
All right, so that is it for this week's episode of the REI Marketing Nerds podcast. As always, you can find more information at REIMarketingNerds.com. [15:01.5]
Listen, if you are not in our Facebook group, it is free. I’m in there every week. I go live. I post blog posts. I post trainings. There are amazing investors in there. It is one of the fastest growing groups on Facebook for real estate investors and I would love it if you would be a part of it. Again, you can just go on Facebook, type in “REI Marketing Nerds,” and you will find it. I cannot wait to see you there and I cannot wait to see you next week. This is Daniel Barrett signing off. Cheers.
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