Why it’s time to stop measuring the effectiveness of advertising in leads?

effectiveness of advertising in leads

Many marketing agencies, in assessing the effectiveness of their work, operate on the number of leads led to the customer – potential customers who somehow reacted to advertising communication. But at the same time, not all industry players consider the number of leads as the main metric. In this article, we will talk about why it’s time to stop measuring the effectiveness of advertising in the lead.

What is the problem?

On the example of the real estate market, I want to show why the price of a lid does not play a special role in sales.

The problem is that marketing agencies measure efficiency at the price of a lead, but it’s ridiculous. This is how to measure the revenue from the traffic in the store. People can go a lot, but they leave and do not buy anything. Likewise with the leads. You can use small tricks to ensure a high conversion, from which there will be no sense.

It is fashionable to swap leads, because it’s easier to overtake them and then blame the sales department for not being able to convert leads into deals. And yes, this is an eternal conflict between marketers and salespeople.

What to do? It is necessary to look not at the cost of the lead, but on the value of the transaction. And here it is surprising that no one brags about such indicators. It’s like a taboo. Although tracking them is not much more difficult than the indicators of the lead.

How to measure the value of a transaction and determine that it is good

effectiveness of advertising in leads
Image Source: Google Image

On average in the market, the lead in real estate costs from 200 to 2000 dollars. And such a spread is normal. Because the cost of a lead can be completely different, even in one category of the object. One micro district is in demand, the other is not. There is already a difference. From each advertising resource there will be a different conversion of traffic to leads. If you win in the conversion and the cost of the lead is lower, you will most likely lose on sale.

How much should the transaction in the real estate cost? There is a main reference point – regarding real estate agencies – they work for 2-5% of the deal, and in the advertising channel, the client is interested in keeping within these figures. That is, with two million dollars, the real estate agency takes 100,000 dollars – 5%, which means that the sale from the Internet should be invested in these figures.

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Lead funnels of one developer for the quarter

Let’s compare for example two advertising channels launched simultaneously. The advertising campaign period is 1 quarter. To reduce the error, we analyze the period two months after the stoppage of the campaign, when most of the transactions have already been completed. We see that at a similar cost per application – about 950 dollars, the conversion to sales is three times different. If we analyzed the channels not on sales, but only at the price of the lead, we would not have seen the problem. We see sales – we draw conclusions.

Why a large number of leads is not always good?

If a day comes 50 low-quality applications, then for their processing you need five managers. If 10 quality applications come, you need 1 manager. And in fact the result will be the same. It’s a bad situation when you have caught a lot of leads, and salespeople do not have time to process them – and just reject it.

We must look at the cost of the transaction from each channel, or in general see the picture. For example, for a month you have 1000 hits and 100 transactions. And it may be that at an extremely high cost of leads you have an excellent conversion in sales. Better than real estate agencies.

Do you need cross-cutting analytics to determine the value of a transaction?

End-To-End analytics is needed to track the result by channel. But to assess the current situation without splitting channels, usually CRM data is sufficient. See the general figures …

  • Number of applications;
  • Amount of deals.

Only need to evaluate the previous periods, because the transaction cycle in real estate lasts an average of two months. For example, now, in December, it is necessary to look not November and October, but August.

We at the agency try to work from the sales plan. If it was adjusted upwards, then we are laying down an advertising budget. It is better to look at the plan on a quarterly basis, because with the adjustment, the result will be achieved only in a month.

Also, at the beginning of the cooperation, we agree with the client that the lead is a person who called and found something about the apartment: he asked about windows, for example, or about the deadline. This is a lead, because you can work with a person.

Sum up

At the beginning of cooperation immediately agree on what to consider a leader. Ideally, the correctness of the evaluation of the lead is determined by a specialist who is not interested in the transaction, for example, by the call center operator.

Pay attention not only to the cost of the lead, but also to the cost and number of transactions.

Carefully study the cost and quality of processing applications. A bloated sales department can significantly affect the performance indicators.

Gabriel Montgomery

Gabriel Montgomery

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