Cost-Per-Lead: Is It as Important as You Think It Is?

Are you still stuck on the "cost-per-lead" metric when analyzing lead generation strategies? It's 2022, and agents should be thinking bigger, and considering about another metric that's actually more important for fueling your business: conversion rate.

Why Cost-Per-Lead is an Outdated Perspective

Cost-per-lead is important, but it should not be your be-all-end-all for shaping your lead conversion strategy. The lowest cost-per-lead doesn't mean you're getting high-quality opportunities that will actually convert into business.

In today's highly competitive, fast-paced market characterized by consumers spending more time online and being exposed to — and ignoring more — advertisements, real estate agents need to evolve beyond the norms of the past.

One of the biggest reasons why cost-per-lead is the wrong approach to viewing lead generation strategies is because this metric is not fixed. In reality, the cost of each of your leads is not guaranteed because of many external factors outside of your control.

5 Things Impacting Cost-Per-Lead Calculations

• Seasonal Trends
• Market Activity
• Location
• Competition
• Demand Levels

Based on these factors, your cost-per-lead changes at different times of the year and depending on your market. For example, your cost-per-lead will not remain consistent throughout the market's high seasons and slow periods. 

While these external factors — such as inventory levels, political events, and even natural disasters — remain outside of your control, it's still important to understand how they are expected to affect your business. This can help you create strategies to quickly pivot according to new situations, and prepare your clients for upcoming market shifts.

• Pro Tip: Stay on top of the latest market data and local trends impacting your market to develop custom strategies to improve your conversion rate and keep leads moving through your sales funnel.

Why Conversion Rate is More Important than Cost-Per-Lead

When shaping your lead conversion strategy, agents should consider a more holistic approach.

Rather than simply focusing on which option provides the most leads at the lowest cost, it's more advantageous for your business if you think about both lead quality and quantity.

Think about it — would you prefer more weak leads with a lower conversion rate, or fewer strong leads with a higher conversion rate? At the end of the day, strong leads with higher conversion rates will likely be more beneficial for your business. 

3 Tips to Improve Your Conversion Rate

• Pro Tip: Don't assume that colder leads further out from conversion are weak. In reality, the "trash" leads in your database may actually be your hidden goldmine!

Keep your colder leads on a diligent nurture and follow-up plan to help them inch closer toward conversion — and prevent them from choosing another agent when it's finally the right time to transact.

Here are a few tips that can help you improve your lead conversion rate:

#1. Focus on Quick Response Times

You don't want to leave your online leads waiting around for a response. One of the most effective ways to boost your conversion is to quickly follow up with your online leads.

#2. Sort and Qualify Your Leads

Segmenting your leads can make it easier for you to provide value-driven content specifically curated for their needs.

For example, you don't want to be sending out home buying tips to sellers — unless you know that they're also planning to buy a home after their upcoming sale. And, in that case, you might want to send out tips for buying a home after a sale.

When you sort and qualify your leads, you can tag them in your CRM to organize your future outreach.

#3. Leverage Bulk CRM Outreach

To stay relevant with everyone in your sphere, you should be leveraging automatic bulk outreaches to the different lead categories in your CRM.

Create custom messaging for each lead type — including hot, cold, and past clients — and schedule the email delivery.

This is a time-saving way to stay relevant with your leads and provide them with the insights they need to transact.

To view the original article, visit the BoomTown blog.