Steve Olson
Before I got into real estate, I was an advertising executive with Clear Channel Radio. Essentially, my job was to go out and find companies that wanted to advertise on our radio station, KISS Fm.
My clients were pretty much bars, car dealerships, and talent agencies.
I remember one talent agency called in and bought a ton of ads. The campaign ran for two weeks and then the owner called me to cancel.
I asked why. She said she had MTV looking for younger talent for an upcoming show and she didn’t get the amount of phone calls she needed to set enough talent appointments.
Being new, I asked her why she thought that happened. She gave me her thoughts and I begged for another shot.
Ok…
I went to three people to re-write her script and then she told me something I will never forget.
Every time someone hires us to represent them, they have to pay a $3000 talent development fee. (I could be a little off on the exact numbers).
It takes her 4 meetings to sign a client.
It took 3 calls to get a meeting.
She said finally what I should have been able to ask her in the very beginning… “If you can get me phone calls at less than $80, I have a virtually unlimited ad budget to spend.”
So we bought a tracked 800 number and went to town. She became one of my highest paying clients.
In real estate, we get business from three sources:
- People we know and meet
- Paid Acquisition
- Referrals
That’s it…
If you are in planning mode right now, I would be building a dashboard that focused on these 5 metrics
- Cost per registration
- Cost per conversation
- Cost per appointment
- Cost per contract
- Cost per closing
If you knew this formula, then how much would you spend on growth?
Hopefully a ton..
Let’s breakdown the math..
If you are good at content your cost per lead could be as low as $1.70.
But let’s take the middle road.
Cost per registration is $4.75
It takes you 9 registrations to a phone call
9*$4.75=$42.75
It takes you 8 phone calls to an appointment
8*$42.75=$342.00
It takes you 3 appointments to a contract
$342*3=$1,026.00
When you look at it math wise, these numbers seem easy. When you look at it from a conversion % though, it seems low…
$1026 / $4.75 a lead = 216 Leads
1 deal out of 216 leads is .4% conversion
This is where everyone goes wrong. You don’t get paid on the % of conversion, you get paid on an ROI of money spent and money earned.
Stop romanticizing over your conversation rate. Follow the money trail.
Let’s say your average sales price is $685,000
And you earn a 2.5% commission.
$685,000*2.5%=$17,125.00
17,125/$1026=16.69 Return On Ad spend…
I would spend to the moon if I was getting north of an 8X ROI. This model is double that….
Growth is math. Stop overcomplicating why you are not earning what you want to earn in 2024 and 2025.
If you want to know exactly how to advertise, I am re-launching Real Estate Operator premium shortly which will walk you through how to get famous with local advertising.
More on that soon.
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