ROI For 2.0/Social Media Marketing? So Many Questions So Few Answers

by Jeff Brown

Real Estate Investments Broker

Author website

Joe over at Selsius published a piece the other day — Show Me the ROI: Is Web 2.0 a Load of Hooey or Who’s Making Hay? in which he links to some pretty interesting posts on the same subject. So much of this is what has made me crazy since I first turned onto the onramp of the 2.0 freeway.

ROI? What’s return, if it’s not measured in money, yenom, cash, closing statements, origination fees, bank deposits, or fill in the damn blank? This is silly at it’s best, and embarrassing at its worst. I don’t mean anything Joe said, just the idea. In fact I thought Joe’s observation was right on the money — pun intended.

He noted some folks have decided it might be time to ask the question, “How big is yours?”

This goes back (Please Lord, protect me.) to what I’ve always wondered about the whole SEO thing. It fits into this topic as if it was custom tailored. What’s the ROI on 2.0/SMM? What’s the ROI on all those leads yer gettin’ from your website and/or blog? I’ve simply stopped turning to the experts out there, ‘cuz I’m tired of being ignored when I ask them to please let me know what their clients’ conversion rates are.

I finally ran into an upfront, plain talkin’ expert, whose name I will keep to myself.

When I emailed them privately, asking about leads per day for RE clients, and their subsequent conversion rates, the answer was a breath of fresh air, invigorating by its naked truthfulness.

Here’s my email to this expert.

‘Blog/SEO/Lead generation expert’,

I’ve been tryin, in vain, to find out what the batting average is for real estate bloggers who’ve been successful in generating a reliably consistent number of daily/weekly/monthly leads.

I’ve heard of, and keep reading about blogs bringing in 10 a day 20 a day, even 30+ daily. What I’m not hearing is how many closed escrows are resulting from all those leads.

Whenever I ask this question, especially to those who are experts, (in reality, not just in their minds) I become invisible.

You’re one of the actual blog experts out there — your resume speaks for itself.

If a blog is generating 10 leads daily, (300 monthly — 3600 yearly) how many closed escrows does your experience tell you they should be experiencing?

Thanks for any light you can shed on this, as I’ve reached the point where the ‘wall of silence’ is beginning to speak for itself. 🙂

The reply — it’s verbatim — all emphasis is mine.

I know of nobody that is generating leads at such a clip.
I keep no formal record of lead generation for my clients – but I do speak with them regularly, and get email updates on successes.
So – in order to speak from experience, I can only give you my own – which has nothing to do with real estate.
We, the (company name) generate 3-7 very quality leads a day.
My guess on the real estate side of things that our most successful are generating this number a week.
But the more likely number for the rest of them is that a month.
That said, I know that they quality of the leads is phenomenal – and that’s what makes all the difference.
A lead generated through blogging is a relationship and the conversion rate of these leads is much much greater than some name/email/number generated from an IDX form.
I have no idea what the lead to escrow rate is, and I think that it would be impossible to truly determine given how different every agent and area is.
Their conversion rate is going to be the same whether the lead was generated from blogging or as a personal referral. If they can service and close, then the number should be solid… if not, then they need to look at another career.
We are just about to network all of our current clients so that their backends are a forum for discussions of this type.
I would be happy to address it and get back to you as soon as I do – by then I should have less of a guess and more of a range.

What do you think?

I’ll tell you exactly what I think. I think this expert is telling it the way it is.

For all those claiming their clients are the beneficiaries of 10-30 leads daily, I have a question. It’s not that I don’t believe what you claim. On the contrary, I take your word for it. These are very knowledgeable, and experienced people with massive expertise. I can’t believe they’d just make up these numbers willy nilly. I don’t believe that.

Let’s take the bottom of that range, 10 leads a day. That’s 300 leads monthly. Let’s say the agent only converts (read: closed escrows) a really crummy percentage of them, say 3.1%. Let’s also say their average sales price is $300,000 and they’re making 3% commission per transaction.

I already did the math — that agent is making just over $1,000,000 a year. And they’re doing it while converting just 3.1% of the leads their blog/site is generating.

In baseball, nearsighted, dyslexic kids prone to vertigo and the fear of spherical objects have a better batting average than .031 for Heaven’s sake. Mixing metaphors, a blind squirrel will go out 100 times and find acorns four of those times — a superior conversion rate. 🙂

Of course, this doesn’t begin to factor in the time wasted while dealing with the 96.9% of the leads that were less than worthless. And sure, I’ll agree with those who’ll say some of those ‘worthless’ leads will become closed escrows — maybe — some day. Maybe not. And how ’bout the lenders those agents are using. Are they about ready to fire the agent who sends them borrowers to pre-qualify who couldn’t finance a couch at Goodwill?

I know first hand of a team in Idaho, whose website spits out leads like a baseball dugout spits out seeds. A friend of mine got his son a job there as an agent. In six months the poor guy didn’t close an escrow. And the first day he was given over 80 — count ’em — 80 ‘leads’. He’s now working for another company, selling new homes for a developer. This kid is a college graduate with a degree in business, not some high school dropout who thought real estate was gonna be easy pickin’. Yet only two of the eight members of this team to my first hand knowledge are making six figures — barely.

Aren’t we getting pretty loose with the way we’re throwing around the concept of what a ‘lead’ is these days?

Show of hands — how many of those generating all those daily leads are making seven figures a year?

How many are making half that? OK, how many are paying the bills via the leads they’re generating through blogging?

And there’s the rub.

I personally know of a few bloggers making some real coin. Real = $100,000+. I believe the experts and consultants who say their clients are generating so many leads daily. So how is it we’re not seeing these agents making real bucks? You can’t bring up a few and say it’s the rule, ‘cuz everyone knows by now the Emperor has no clothes.

So help me here. What’s the answer? We’re all working in different markets with different pros and cons, bigger/smaller, and for better/worse brokerages. What works for a Teresa Boardman may or may not work for you and I.

Finally, while many are claiming great success which is mostly a figment of their imagination, my good buddy Joe, who works for one of the mega brokerages here in San Diego, just keeps pluggin’ along makin’ his $4-700,000 a year. How? By sitting’ at home in his boxers and tank top every morning cold calling home owners while wiring himself for sound drinking impossible amounts of coffee.

He knows a lead when he sees one — and he’s surely batting better than 3.1% — which, by the way, the fantasy agent I created for my example isn’t doing, ‘cuz nobody’s doing it.

Go back to the expert who replied to my email enquiry. If that expert’s agents are getting ‘quality’ leads at the rate of 3-7 monthly, or as they said, the most successful are getting that many weekly, what are their answers to all these questions? I have a pretty good idea.

Forget the most successful of this expert’s clients. Let’s work with the 80-90%. If they average 7 leads a month, high quality leads, and convert 28.6% of them (2 for 7), a totally believable number, what happens?

Again, I’ve done the math. They earned $216,000 in commissions. They didn’t waste their time trying in vain to find the 3 out of 100 leads that were worth more than a used Snickers Bar either.

I’ve gone through all this ‘cuz I’m expecting to get the answers to these questions at Unchained.

Think about it seriously for a minute. If you’re getting 300 leads a month, and having to spend all the time it must take to cull through 290 of ’em to find the 10 worth your time, how much time do you have left to close all those supposed escrows?

OR — Why would you continue doing the same thing, once you realized most leads weren’t leads at all?

OR — If all those leads are decent to solid, maybe that agent should seriously consider another career path.

I don’t know about you, but I can’t wait to have the missing pieces of this puzzle explained to me. When Unchained comes to town this May, I’ll be in the front row — I’ll be the BawldGuy.