"I know half of my advertising dollars are wasted...I just don't know which half."
This famous observation attributed to department store pioneer John Wanamaker could still apply to many of today's real estate agents. It's easy to become confused at the number of available options. Should you invest in websites, call capture systems, landing pages, postcards, car signs, newsletters or magazines?
To make the most of your marketing dollars, agents can use a simple spreadsheet tool to calculate their spending and return on marketing investment. A tracking tool can be very useful in determining where you're getting a return on your marketing dollars and where you're not - and improving those results throughout the year. It's also easy to use and requires a minimal investment of time each quarter and at year-end.
Typical marketing channels include any activity that brings you prospects, clients and sales - referrals, direct mail, open houses, Internet leads. The cost of items like yard signs, business cards, and thank you gifts should also be included.
To keep things simple, you might want to track only hard dollar costs. If you also want to include activities without hard costs that take hours of your time, you can estimate an hourly wage - $50 or $100 per hour, or whatever you feel your time is worth. Remember, the goal is not to measure dollars or hours precisely, but to help you make the most of the limited marketing resources at your disposal.
By the way, if you already know your hourly compensation as a real estate professional, congratulations. Considering the hours some agents put in, some of us may not really want to know this figure. There are a few examples on here to get you started, but you will want to adjust it to reflect marketing activities for your own practice.
To keep things manageable, you might simply track the number of:
- Sales Commissions ($)
It's helpful - and sometimes surprising - to see your marketing expenditures laid out in one place.
The return on some of these activities may be hard to calculate, which means they should be reviewed -can you tie any sales back to that bus bench ad? This doesn't mean hard-to-measure activities should be eliminated. If you're known for giving your buyers terrific thank-you gifts, that's not something you want to cut.
One of author and motivational guru Stephen Covey's success habits is "begin with the end in mind." So, imagine we have arrived at the end of 2007. Let's take a look at our totals. We know the total number of Prospects and Clients we've attracted through our marketing efforts. We know how many dollars we have in annual sales, and we know our annual marketing spend. If you already know these figures for your business, congratulations! You're already running your business more effectively than the majority of real estate professionals out there.
As everyone knows, the bottom line here is ROI, but that's not the end of the story. If you have followed your spending and results, quarter-by-quarter, you probably have a good idea where to optimize your marketing spending. No one has unlimited time and resources to spend on marketing, so knowing how to optimize these activities can provide a real competitive advantage.
Working the sales funnel
Why work the sales funnel - particularly the top of the funnel, where prospects may not be ready to buy or sell? Because most of your competitors don't. It's easier to focus further down, where core real estate transaction skills come into play. But if you step outside your comfort zone and master the top of the funnel, you will do better at the bottom - and at the bottom line. What you are really doing at the top of the funnel is creating opportunities to sell at the lower levels.
The NAR estimates 50 percent of consumer emails to real estate professionals are ignored. Ignoring prospects until they are ready to buy or sell can be a costly practice. In a tough market, you can't wait for selling opportunities to simply appear, or the market controls your earnings. No real estate professional wants his or her earnings to be dependent on changing market conditions.
Mastering top-of-the-funnel activities also means that you get better at developing qualified leads. In time, you begin to ask better questions, evaluate prospects better and move more quickly toward the sale. You will also be able to key in on high-return prospects and activities and not waste time on filling your funnel with low-return "suspects."
Lots of real estate pros get tripped up in these top layers and prefer to focus further down the funnel. After all, prospecting takes time and resources and it's disappointing when leads don't work out.
If you don't take the time to prospect and farm, you miss out on ownership potential. You will be dependent on someone else - brokers, referrals, third-party vendors - for your leads. Since the home selling process takes 9+ months and the buying process takes more than 16 months, you may have to consider a longer time horizon than you're using in current business practices.