Here’s How Much You Should
Actually Spend in Marketing to Get
an ROI
AUGUST 31, 2021
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.
Most agents aren’t spending what they
need to or where they need to to get a high
ROI on their marketing.
Database Marketing Strategies
The Importance of Your Website as a Realtor
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.
The Wrong Messaging
Build and Market to Your Database
As a realtor, your database is your best friend. This is your list of past, current, and prospective clients as well as referral sources who can help grow your business. A basic rule of thumb is that an effective database consists of around 1000 names and contact information. Once you’ve built a solid database, you can market to your contacts through regular email newsletters, texts, or personal invitations to events or open houses. The marketing you do to your database should follow the same guidelines as your social media marketing: keep content informational and helpful rather than salesy. This keeps your contacts engaged with your brand and ensures they will continue to pay attention to what you have to say even when they are not actively looking to buy or sell real estate.
Harness the Power of Social Proof
The theory of social proof states that people are likely to conform and copy the actions of those in their peer group or those they view as experts or who are trustworthy. When it comes to real estate marketing, you can take advantage of social proof by featuring testimonials on your site and social media, soliciting online reviews from those you’ve done business with, and by establishing yourself as an authority on the local real estate market with helpful, informative content. When you harness the power of social proof, you essentially have others selling for you and no longer have to hustle or chase leads.
Database Marketing Strategies
The Right Messaging
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.
Now that you understand that talking yourself and your accomplishments up on your site is the wrong messaging, let’s take a look at the content that works. Here are some tips on creating messaging that resonates with your target audience:
Content that is helpful. What are the issues your ideal client is dealing with? Are they attempting to buy and sell homes at the same time and need assistance with financing a down payment? Are they struggling to find a home they are interested in due to low inventory? Are they trying to decide if they should relocate or buy a second home now that they are empty-nesters? Identify the pain points in your target market, then address those points through blog posts that you then share on social media and in newsletters that go out to your database.
Content that establishes you as an expert. Those looking for help buying or selling property want to work with the best. To show that you are an expert in your local community and industry, develop content that revolves around neighborhood events, local real estate news, and other industry issues.
Content from experts and past clients. When you use the power of social proof to develop your website content, you let others do the selling for you. Social proof is the phenomenon where others copy the actions of people they see as peers or as trusted individuals. If they see your past clients talking about your high level of customer service in a video testimonial or read reviews from experts in the industry who have worked with you, they will be more likely to choose you as their realtor.
Content that stays ahead of the game. Your ideal client wants to know what’s going on in the industry as soon as possible. They also don’t want to read the same old content on your site that they’ve read on all your competitors’ sites. To address these needs, stay on the cutting edge of the industry and share information your visitors can’t get anywhere else.
Components of an Effective Lead
Generation System
How the Right Messaging Increases Conversions
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.
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.
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