Most agents aren’t spending what they need to or where they need to to get a high ROI on their marketing.
Are you frustrated because you feel your marketing efforts haven’t led to a measurable increase in your business? Do you feel like giving up and relying on traditional networking and other means of growth instead?
Before you decide to scrap your marketing altogether, you need to figure out what it takes to actually get a high ROI on your marketing, then go from there.
What is Marketing ROI?
Marketing ROI is how you evaluate the performance, impact, and profit of your marketing campaigns. ROI stands for return on investment. A high ROI means you are getting good results based on what you spend, while a low ROI means your results are unsatisfactory. By accurately calculating ROI, you can measure the degree to which your marketing dollars are contributing to revenue growth and profit.
Once you determine the ROI of each marketing campaign, you can better make a decision about whether to continue the current campaign, put more money into it, or tweak it to return better results. Accurately understanding ROI will also help you justify your marketing spend, distribute your marketing budgets, measure campaign success and establish baselines for future campaigns.
There are a variety of different ways to calculate your marketing ROI. The most straightforward method is to use the core formula of sales growth minus marketing cost divided by marketing cost. However, this formula assumes that all of your sales growth is due to your marketing efforts, which it likely is not. To get a better picture of the true ROI of your marketing campaigns, you can instead use the formula of sales growth minus organic sales growth minus marketing cost divided by the marketing cost.
What Mistakes Do Realtors Make That Hurt Their Marketing ROI?
If you feel like most (or all) of the marketing dollars you spend are a complete waste, you are not alone. Many real estate agents feel they have to wait far too long to see the results of their marketing campaigns, while others believe they never see any measurable results at all. Here are some common mistakes you may be making that are diminishing your ROI:
■ Spreading your marketing dollars too thin.
If you’re not spending enough on a marketing campaign, you may see that money go to complete waste. Some agents try to spread their money out among multiple marketing efforts, only to find it backfires by returning little to no ROI. If you are marketing online through a platform like Facebook or Instagram or using other online marketing networks, putting too little money into the campaign will cause the platform or network to distribute the budget so thinly that you may not be able to generate any leads.
■ Not giving a campaign enough time.
For most marketing campaigns to work, they need time. Some agents are afflicted with “shiny object syndrome,” jumping on each buzzy new marketing trend. Without commitment, consistency, and an adequate budget, none of these marketing campaigns — no matter how trendy — will be a success.
■ Not using a professional for assistance.
Unless real estate agents are experienced in marketing or have in-house marketing teams, they will be better off working with a professional marketing firm rather than try to do it themselves. Experienced marketers can help agents decide which campaigns are best for their needs, how much they should spend for each campaign, and determine what the ROI of each campaign is.
What Are the Benefits of Sustainable Marketing Systems?
Once they create a marketing campaign or system that consistently gives you a high ROI, real estate agents will experience a number of benefits. You will be able to put less into your marketing while still getting more in return. For example, once you’ve established a robust campaign, you may be able to put in just $1 to pull $5, $10, or even $20 out. You can also count on your marketing to actually deliver results and drive meaningful commission income into your business instead of wondering which trendy new idea you should try next or being frustrated because you keep pouring money into your marketing and not getting any measurable leads.
How Can a Real Estate Agent Increase Their Marketing ROI?
Creating a sustainable marketing system that consistently gives you good return on your investment doesn’t have to be difficult. You just need to address the mistakes we discussed earlier in this blog post.
If you think you may not be putting enough money into your campaigns, you need to start looking at your advertising costs as a business would. Figure out your cost per acquisition, or how much you are willing to spend to acquire a new client. From there, you can determine what your maximum cost per lead is, then reverse engineer your budget from there. Most experts recommend you start with at least $1,000 or $1500 per month, then go up from there as you get a better picture of your ROI.
If you’re not giving your campaigns enough time before moving on to the next big thing, remind yourself that all good things take time. Consistency, repetition, and engagement are the name of the game when it comes to marketing, and jumping from one trend to the next will not get you there. Give each campaign at least a few months and plenty of budget before you make the decision to try something else. Some marketing efforts, like creating a database, can take years to effectively build, but the ROI is well worth the investment of time and resources.
Trying to do all the marketing yourself? You’re taking time away from what you need to be doing — building your business and buying and selling real estate — and you likely aren’t keeping up with industry changes or other aspects of marketing that are hampering your efforts. Reach out to a team that has experts in real estate marketing like those at Luxury Presence. Not only can they take the work off your shoulders, but they can also put your money into campaigns that will deliver the highest ROI.