Let’s look at your answers from the short quiz you just completed and examine how they are influencing your business and how much money you “should” be making from your leads each month.
You mentioned you have been a Realtor for . Frankly, it doesn’t matter how long you’ve been a Realtor. You could be in the business for many years and still be very poor at marketing and getting good clients. What matters is what kind of lead generation systems you have in place that will allow you to make the money you want to make and it matters how motivated you are to take your business to the next level.
Having experience is helpful toward evaluating what marketing approaches are working for you, but since you are not generating enough leads and then converting those leads into clients, the bottom line is that it is unlikely that you will make more than the that you made last year.
In fact, you mentioned this year you would like to make than you did last year which means you NEED to improve upon or change what you have been doing up until now. Otherwise you will keep getting the same results and never make the amount of money you know is possible and that you want to make.
The Simple Average Lead Income Formula
So let’s take a look at a simple formula we utilize for our clients toward increasing your income through lead conversion. You answered that the average home value in your area is . You also stated that you generate new leads every month and that of those leads become clients.
The current amount of leads you are getting right now is pretty good, but if you do a better job of converting those leads into clients, you can make even more money without having to spend more on advertising.
Here’s a quick example using this formula (input your exact numbers to calculate your total).
Step 1 - # of Leads X % Become Clients = Average Converted Clients/Month
EX - 25 Total Leads X 60 % Client Conversion = 15 Avg. Converted Clients/Month
Step 2 – Avg. Converted Clients/Month X Average Commission ÷ # of Leads = Income/Lead
EX – 15 Avg. Converted Clients/Month X $6000 Avg. Commission ÷ 12 = $3600/Lead
Why Is This Formula So Important?
First, you have to know your numbers because they will always reveal what is going on, what needs to be improved, and give you a clear roadmap toward what it will take in order to hit your income goals. Your numbers also show you what can be improved and what is wrong with your current marketing approach.
Here’s a question I always ask my clients that I will ask you right now.
What’s better? 15 leads per month and a 25% conversion rate or generating 10 leads per month with a 50% conversion ratio. Did you get your calculator out? Yep, the higher conversion percentage is the better route and demonstrates something very important that most realtors miss…
Which is that they almost always focus on their “average transaction commission” to come up with their goals and numbers rather than focusing on their “average lead income.”
Here’s what happens when you focus on the average lead income.
First, it makes your primary focus first on the lead which is what matters most. Before there was ever a sale, there was a lead that either did or did not turn into a client/sale. I teach my clients that it’s the “lead” and the “conversion” of that lead that matters MOST. So if you increase your lead amount and become better at converting those leads into clients, your business will grow very fast and you will make a ton more money.
Second, you need to have the mindset that you make money off of every lead you generate. This is important because it will motivate you to build systems to generate leads that turn into clients. Again, the entire point of leads is for them to eventually turn into clients and sales. It’s the lead and then converting it that changes everything thus the above example.
In the above example, you would be making $3600/lead which is very beneficial to know because you are in the lead generating business. Then if you also keep numbers of your marketing budget you will be able to see how much you spent per lead. For example, if it took you $400 to generate that lead but you made $3600 from it, then you know that lead source and system is working very well and now you can turn it up to make even more.
Right now, your business is generating leads BUT you could be generating even more “quality” leads and do a MUCH better job at converting those leads into clients. This will be necessary to be able to make your marketing budget work for you more efficiently and to take your business to an even higher level with just a few tweaks and new focal points.
You mentioned that is your largest lead generation source.
Do you know exactly what percentage of your overall business comes from that source and what your conversion % is for each category? I’m asking you to look at this because when I help my clients dissect their numbers, their top lead source from an “income/lead” standpoint is almost always something other than what they assumed.
Because although the number of leads they are generating may be lower in that category, their actual conversion rate is much higher and they are making more money from those other sources even though they think a different marketing source is what is driving their business. In other words, they are generating less leads but end up turning more of those leads into clients which is providing them a better return on that marketing approach. Again, you must know your numbers so you can see where it’s best to put your time, money, end efforts.
As you can imagine, none of these results happen by accident. You need a strategic and effective marketing plan so you can get the results you want and exceed your goals. You mentioned that your current strategy for marketing to convert leads to clients is and that you are spending right now.
It’s likely your marketing budget is being allocated to the wrong places and ineffective approaches AND then you are not efficiently converting a higher percentage of those leads into clients. You’ve got to become an expert at increasing your conversion rate WHICH is the little known secret to making a quantum leap in your business that no one ever tells you.
And then once you figure out how to better generate leads and convert them into clients, you’re going to be able to and have the business and lifestyle you've always imagined.
You've Got Room To Improve
In closing, you are generating leads pretty well, but you have room to increase the amount of leads you are getting not to mention then converting those leads into clients at a higher rate. These are the real reasons you are not making more money, working so hard, and making it harder than it has to be.
The good news is that your business can get even BETTER and you can make much more money IF you learn how to generate “ideal” leads in a way that best matches your personality and how to efficiently convert them into your ideal client and raving fan.
Let’s take this a step further to illustrate my point.
In the above formula, I didn’t even discuss generating “quality” leads which is very important in this equation too. Imagine having a way to generate the exact kind of lead you want, have a proven and effective way to convert over 60% of those leads into clients, and have a predictable way of doing this so you know exactly what activities and budget will be needed to generate the leads you want to make the income you want.
That's EXACTLY What We Do!
We specialize in helping Realtors create a business that attracts their ideal client and converts those leads into “dream” clients. Our system is much different than what almost everyone else is doing and it makes all the difference. Since you are not where you want to be and your marketing strategy is the reason why, it’s easy to assess that you have a lead conversion problem that needs to be fixed immediately.
Imagine what your real estate business would look like if you knew how to generate and convert the exact kinds of leads you really wanted on demand without even having to spend more money (likely less).
If you would like to learn more about how we can help you improve your lead conversion strategy and system, then click the “Learn More” button below to find out three ways we will help you right now for free.