REAL ESTATE B-SCHOOL HIGHLIGHT: Are You Holding Every Marketing Expense Accountable?


Marketing ROI report. As a B-School graduate, you’ve heard me talk about this many times. You will forever hold all of your expenses accountable to producing a Return on Investment, and that’s where the term ROI comes from.

You have to take a deep versus wide approach to your marketing. So remember the four marketing pillars:

  1. Buyer Internet Leads
  2. Yard Marketing
  3. Farming, and I consider Farming expired, FSBO, and geographic.
  4. Raving fans – and that’s helping your agents and you get referrals from past clients and your sphere.
Those are four marketing pillars that you can go and easily do 200 transactions if not 400 on just those pillars.

And of course it takes time. So if you’re 2 years in the business - when I was 2 years in the business I didn’t have many raving fans. And the referrals weren’t coming in. But now we’re probably at 35-40% of our business is from that source.

How to Measure ROI

There are a few ways to measure ROI. And I do it in a more complicated way than I used to. But the simplest is to look at your YTD Gross Commission from a specific marketing source divided by that source’s YTD total expense. It’s definitely not perfect, because you’re spending money. So I started a new farming piece. And I’m at the point where I can afford to start a farming piece. So it’s a 10K home area that’s super high price point. And we’re doing a newspaper to this geographic farm.

So for me to measure the ROI now - as we’re just getting it out there and getting the increase and we’re not getting properties yet - it’s not as meaningful because there’s a lag. Even the money we spend on our expired mailers, the expired mailers that go out now, the checks aren’t going to be cashed until 2-3-4-6 months from now. But it’s the only measure we really have.

Every deal must be sourced. So this starts with your info sheets. In the Dropbox, in the listing packet folder and the buyer packet folder, you have buyer and seller info sheets. On each of those sheets, you have a spot to put the lead source. You must have a common lead source methodology.

Let me show you. In the Business Blueprint, you have this sources of business document here. And we updated this a little bit. We added a couple of lead sources. But it has a numbering system for every lead source code. And I recommend if you don’t have a better way to do this that you just adopt this way of doing it. Our buyer internet leads are all 100 series. Our yard marketing is 200 series. The radio, expired, FSBOs, Raving Fan Club, those are our team efforts. And then you have agent efforts to get their SOI or referral business. We’ve got farming, so I just added that other farm. It’s now 702. And then referrals to the company.

So this gives you a very easy way to track all of your business. You must have a lead source document. You have a copy of mine so you can use that as a guide.

Prioritizing Your Leads

Okay, I’m going to go through the marketing ROI tracker. Most of you hopefully have seen this. But I don’t want to assume that you know how to use it. So I’m going to spend just a little bit of time here going through this again.

Each of these columns represents something that you’re spending on for marketing. The cost structure here, this is just the way that I kept track of what I included there or what I didn’t include there.

This number is just lower now. We didn’t have an ISA associated with this, so this expense is actually, and we do less than 1500 pay per click, so I haven’t updated this specifically lately. But that’s just a description of what your costs are. And then this is just the actual number.

When I have a blue cell, that’s where you’re expected to change that number. For the most part. So that’s where you can go in and put your cost for whatever lead source you put up here. When you put the number of months, so you’ll run this report monthly.

I have a way that I do it now for my consulting clients. We have access to this business tracker. Really cool tool, and it does it automatically. But for the purposes of this, you’ll do this monthly.

Now, if you did this for June, you’d be at 6 months. And it would take your $3500/month expense, and it would multiply it by 6 to calculate the total investment that you had there. This just hasn’t been updated since February.

So you’ll put in the number of leads. This doesn’t do a whole lot except track your conversion rate. And you’ll track the number of leads for the entire time period. So for your BoomTown platform, you’ll put in whatever leads you got between January 1, 2014 and June 30, 2014 if you’re doing a 6-month period. You’ll do the closed units, the number of homes you closed on this lead source, the total volume, and the total gross commission. And it will calculate the average price.

Then you’ll do the same for pending. So units or sides that haven’t closed yet, the total volume and the total gross commission. The spreadsheet then adds, so you see these are in black. The spreadsheet adds the closed and the pending, and it’s these numbers that are used to calculate your return.

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