How to Get the Most Bang for Your Advertising Buck

WHAT’S IN THIS INSTALLMENT?

1. WHY YOU MUST SOLVE THE LEAD CAPTURE PROBLEM FIRST
2. HOW YOU CAN KNOW EXACTLY HOW MUCH EVERY LEAD COSTS
3. HOW YOU CAN KNOW WHICH ADS ARE WORKING AND WHICH AREN’T
4. THE BEST-KEPT SECRET ABOUT FINDING NEW LISTING LEADS
5. HOW YOU CAN BE CERTAIN YOU’LL NEVER VIOLATE THE “DO NOT CALL” REGULATIONS

Imagine what it would be like to be the top listing agent in your market. What if you got to the office and did nothing but talk to sellers and negotiate sales? What if you actually listed two or three homes every week, without fail? I know it sounds like a lot of listings, but think of the freedom you’d have! And if only half of those listings were to sell, you would close over 50 transactions this year!

When I finally realized how nice it was to be a listing agent, I was on vacation with my family to the Outer Banks of North Carolina. While on vacation, I did absolutely no work, but I did take a handful of calls from my office during the week. And while I was playing, I had two of my listings sell. How cool is that?! There’s nothing like the feeling of your business running itself, making you money, while you’re lying on the beach in the sun, listening to the waves crash in and catching up on your reading.

Well, if you do what I did, it’s not that hard. Most agents I know could do it — if they would do, step-by-step, exactly what I did. There’s nothing I did that can’t reasonably be duplicated by any intelligent agent with the motivation to learn something new and the willingness to work hard. Nothing. So let’s pick up where we left off in the last installment.

WHY YOU MUST SOLVE THE LEAD CAPTURE PROBLEM FIRST

Allow me to tell you a story. Once upon a time there was a huge river, stocked full of home-buyer and home-seller fish. All along the banks of that river were REALTORS® with their fishing poles. Everyone was catching all he wanted, and life was good.

Then one day, way upstream, a big commercial fishing company set up operations, with its computerized fish finders, its power nets, and the latest in fishing technology. The company began to pull many of the home-buyer and home-seller fish out of the water before they could make it downstream to the unsuspecting agents.

And it wasn’t long before the fishing began to get tough — so tough, in fact, that many REALTORS® just threw in the towel and quit the business. Others worked longer hours and did what they could to survive, while a third group simply gave up on the whole thing and bought fish from the big commercial fishing operations.

But what if an agent were able to get the same technology that the large commercial fishing operations were using? What if he were to go way, way upstream and begin to catch large quantities of home-buyer and home-seller fish? Not only would life be good again: it would be GREAT! What a huge advantage that agent would have!

Well, believe it or not, this story is actually true. The big commercial fishing operations are the lead vendors, such as HouseValues, HomeGain, and ServiceMagic, and every day the “fishing” gets tougher because new lead vendors open their doors. If you don’t believe me, just check your email inbox. Not a day goes by that I don’t receive some new version of the same old thing — somebody using my listings to advertise on the Internet, catch my customers, and then attempt to sell them back to me.

But there’s another part of the story that’s also true. It’s possible for an agent to use the same kind of technology that the lead vendors use to capture leads — commercial lead capture technology on a single-agent level. And for those agents who use it, the technology produces amazing results.

SOME REAL LIFE EXAMPLES OF USING LEAD CAPTURE

In Greensboro, North Carolina, we have an agent partner named Kay Hunkins. She’s a veteran agent who was one of the first in her market to begin to try to tap the Internet. Well, she was getting literally thousands of hits to her websites every month and had her sites listed in lots of online relocation directories. And she was getting between 10 and 15 leads from the Internet every month.

When she installed a lead capture gateway on one of her existing websites, however — she did nothing else differently — she was immediately so busy that she actually found herself ignoring most of her prospects and following up only on the choicest leads. She began taking listings left and right, and she put a deal in escrow the same week she started with us. Without upping her advertising a dime, she began to capture over 20 leads every day. All of her leads were people who had been coming to use her site anyway, but now she was able to identify them!

Or there’s John Miller, an agent in Austin, Texas. When he began using lead capture technology on his website, John was struggling with only a handful of leads every month. Now, using the lead capture gateway technology, he captures between 300 and 400 leads every month. His business will never be the same! Now he’s so busy that he’s having to recruit agents and build his own real estate team!

So did these agents suddenly get smarter? Did they begin working harder? Did they work longer hours? Did they just get lucky? No. No. No. No. They just got better fishing equipment. Now, instead of having to be dependent on “commercial fishing operations” to sell them leads, they make more leads than they can possibly use, and all for next to nothing.

And I could go on and on with story after amazing story. There are many talented agents out there, just waiting for the tools to succeed and someone to point them in the right direction. They are the reason for their own success — we just happened to be fortunate enough to help them assemble the right tools and then point them in the right direction.

The simple fact is that you have to solve the lead problem before you can attack the other challenges in this business. Having more business than you can handle allows you to work without pressure. It allows you to turn away those “problem” customers. It gives you the ability to multiply yourself by building a team, if you so choose. And most importantly, it gives you freedom. No longer are you at the mercy of lead vendors, RELO companies, or even your broker. You have the freedom, finally, to take some time off and enjoy life again. A good lead count will solve virtually every other problem you can have.

KNOWING HOW MUCH EACH LEAD COSTS AND WHERE IT CAME FROM

Lee Iacocca, when he was head of Chrysler Corporation, made an amazing statement. When asked about advertising, he said he was convinced that half of the millions of dollars that Chrysler spent each year on advertising was wasted. Half! But then he added that, if he could only figure out which half was being wasted, he could save the company a lot of money.

As REALTORS®, we typically spend 20% of our GCI, or gross commission income, on advertising. Magazines, newspapers, business cards, fliers, direct mail, websites, radio and television spots, billboards, and every promotional gimmick that comes down the pike: we sink money into all of these in a frantic attempt to generate enough customers to keep our businesses rolling. And the sad thing is that we know deep down in our hearts that much of what we spend our hard-earned commission dollars on is utterly wasted. Just like Lee Iacocca, if we could only figure out which half was wasted, we could save a lot of money.

Well, I have good news. By using lead capture gateway technology, it’s possible to know which ads are pulling and which are not. It’s possible to know exactly where each customer came from and how much each lead cost. Let me give you an example from my own real estate practice. Currently I split my Internet advertising between two sources: Google and Yahoo (formerly Overture). My cost with Google is slightly lower per visitor, but my CR (capture rate) is slightly lower as well. With Yahoo, my per-visitor cost is higher, but the actual CR is also slightly higher.

I’m able to monitor each of those advertising expenses in real time. No more waiting until the end of the month to see how the magazine did. No more wondering if an ad is working. I have the answers in real time. And here’s how I know. I assign each ad its own unique URL (web address), and the server log tracks how many visitors and leads have come in for each URL. I then take this information and make a quick calculation to determine exactly how effective each campaign was. No guesswork! This is a business.

Let’s say that, in a week, you had 110 visitors who came from your ad in Google. Of those, you had 32 leads. Your Google ad cost was $124. During the same week, you had 98 visitors from your ad in Yahoo, resulting in 30 leads. Your Yahoo bill was $125. Then let’s say that your yard signs sent you another 20 visitors, and, of those, 10 registered. Total cost for sign leads: ZERO! Here’s how it all breaks out:

Google: CR of 29.09%, with a lead cost of $3.88 ($124/32)
Yahoo: CR of 30.61%, with a lead cost of $4.17 ($125/30)
Yard Signs: CR of 50.00%, with a lead cost of ZERO! ($0/10)
Totals: CR 31.50%, with an overall lead cost of $3.46 ($249/72)

This is a “typical” example. What would 72 leads every week do for your business? They would probably force you to start recruiting! Or you would log in and put your ad campaigns on hold for a while. Either way, your business would be forever changed.

But then what if a particular source of advertising was costing you $125 per lead? (When I quit doing direct mail, that’s what it was costing me.) What if sitting an open house cost you half a day (on the weekend) plus $100 in promotional stuff, and you picked up 5 leads? If your time is worth $100 per hour (and it should be), your ad cost was $500. You captured 5 leads. Your cost per lead is $100. Or what about spending a day passing out fliers? Do the math. Or spending hours a day cold- calling? (Forget the risk of violating the Do-Not-Call laws and the potential $11,000 fine!) What do those leads cost you?

What if you could generate hundreds of your own leads for only a few dollars each, and then stop when you had enough business? This is how mega-agent teams have begun to spring up around the country. One agent figures out how to produce more leads than he can handle, and, before you know it, he has a dominant team taking a huge slice of the local business. Well, that mega-agent could easily be you, if you want it to be. First you get the leads, then you get the listings. Before you know it, you’re “forced” to build your own agent team, and in a year you have a dozen agents working for you.

THE BEST-KEPT SECRET ABOUT FINDING NEW LISTING LEADS

Most agents know what to do when a customer fills out a CMA request on his website (or calls to ask for one). The problem is that those are few and far between. Another concern is that most sellers who ask you for a home valuation also ask several other agents at the same time. Some other frequently mentioned sources of seller leads are FSBO (for sale by owner) sellers and expired listings.

As with the CMA requests, the problem with both FSBOs and expireds is the fact that you’ll be competing for those listings with the hungriest and most aggressive agents in your market. And while both are good sources for listings, those properties tend to be tougher to sell, either because the seller is unrealistic or because the property has been stigmatized by having been on the market since before you began.

I like getting my seller leads from a place where nobody else is looking: from buyer leads! What?! You read it right — from buyer leads! Let me explain. According to the National Association of REALTORS®, first-time homebuyers account for 40% of all real estate purchases. This number has held constant for years and shows no indication of changing. One thing is for certain: none of these first-time homebuyers are listing leads.

Another 23% of homebuyers are looking for investments, while 13% are purchasing vacation homes. Of the investment properties, some are bought to “flip,” while others are bought to hold. The same is true of vacation home sales: many are bought to hold, while many others are step-up purchases, resulting in potential listings as well. The best numbers from the NAR reflect the fact that 52% of all buyers are also selling — some in the same markets as their new purchases and some in other markets — so more than half of the buyer leads that you get will also be sellers. Here’s the little-known secret that will give you the first, and hopefully only, shot at those sellers:

Buyer leads almost always find a replacement home before thinking of selling.

As professionals we understand that this is not the proper way to handle the situation, but the human psyche is hard-wired with a security need. We don’t quit our job until we line up another. We don’t sell our car until we find the new one. The same is true with real estate. The key to generating an unending supply of fresh listing leads is to generate lots of buyer leads and then find the half who are selling too. In most of those cases, you have the opportunity to list a home without anyone else’s knowing it’s going to be on the market. What a huge advantage!

So over half of the buyers will either have a home for you to list or — better yet — have a listing lead you can refer back to their original market, giving you a referral with no work whatsoever! No picked-over expireds. No FSBOs that know it all. Just an endless supply of new seller leads with no competition. This is the key to becoming the dominant listing agent in your market.

HOW YOU CAN BE CERTAIN YOU WILL NEVER VIOLATE THE “DO NOT CALL” REGULATIONS?

In March of 2005, the FCC imposed a $770,000 fine on a Phoenix, Arizona, mortgage company for violating the Federal Do-Not-Call Law. The FCC alleged that Dynasty Mortgage made 70 calls to 50 homes in Arizona and California between March 2, 2004, and January 20, 2005. A fine of $11,000 per incident was imposed on 70 separate counts, and the company was given only 30 days to pay the fine.

Curtis White, Dynasty’s president, said that his company had extensive systems in place to try to ensure that any do-not-call numbers were not called. However, some calls may have been made mistakenly because of a “flaw in the system,” and the company is now working to fix the problem.

If this situation doesn’t make you think twice about cold calling, nothing will! I can remember many the day of cold calling when I would make more than 70 calls! It would be easy to violate the DNC laws accidentally by calling homes that “showed” to be “okay” on the latest list (which may have been out of date at the time of your calls). And $11,000 is a huge marketing cost to incur accidentally.

So how can you be certain that this kind of disaster never happens to you? By making only prospecting calls to inbound leads! With lead capture gateway technology, every lead is permission-based. By this, I mean that the lead has first contacted you and given you his phone number and, with it, implied consent to market to him. The law is very clear on the fact that, in such instances, there’s a three-month window of exemption from the date of inquiry. And your innocence is very easy to prove if you have a time-and-date stamped inquiry on file for each lead. Inbound Internet leads are the safest of all leads to call — period.

So how safe is your marketing? Do you have efficient lead capture on your website? If you don’t, the first step to becoming a dominant real estate agent is having too many customers. You really have to start there. Everything else is second to that. Today, the lead vendors are spending lots of money tapping the Internet, and if you’re going to compete with them, you’re going to have to have technology that places you on the same level with them. Otherwise, you’ll find yourself depending on lead vendors for much of your business. Call us today at (800) 708-7705 extension 7200, and we can help you find the technology you need.

SO WHAT’S NEXT?

In the next installment, we’ll be discussing the actual listing presentation that I used to list 114 homes in a single year — all at 8% or more! What’s the key to building your credibility as a listing agent? How can you go up against the top agents in your market and come out with the listing? How can you be totally confident walking into every single listing presentation? How can you make your presentation different from every other agent’s in your market? All these questions will be answered in the next installment, so you won’t want to miss it. In the meantime, work on getting your technology and your advertising in place. There’s never going to be a better time to start than right now.

Finally, let me renew my commitment to you. If you invest your time in reading this seminar and then — more importantly — in applying what I show you, your real estate life will never be the same again. This is my sincere promise. It’s my greatest honor to be able to play a small part in your success. Thanks again for registering and, more importantly, reading.

In the meantime, if you’d like to know more about my company or me, call us toll free at (800) 708-7705 extension 7200, or feel free to visit our website, http://FavoriteAgent.com.

Matt Jones
President/CEO
REALTOR®, BROKER, ePRO®
FavoriteAgent.com