The True Value of A Qualified Lead for Real Estate Marketers

7 minute read

The True Value of A Qualified Lead for Real Estate Marketers

For marketers in the commercial real estate space, marketing in the digital world can be a trying experience. Whereas old marketing methods are embraced and justified easily due to years of experience, digital marketing endeavors have to be fought for, with the value of these method being questioned constantly despite their lower implementation costs and costs per lead. This creates a unique conundrum for marketing managers everywhere. How do you prove the value of a lead, or better yet, a qualified lead, to your organization? The answer isn’t simple, but it’s important for marketers looking to use digital to get ahead in the real estate space.

The Quantitative: Doing the Math

When justifying marketing costs to your executive team, most are going to be interested in only one thing: ROI. While this is not a bad attitude to have, using ROI as the sole means to calculate value is misleading. First reason? There’s any number of ways to calculate ROI.

In marketing, the most common method to calculating ROI is arguably cost-per-lead. Already, we have an issue: are we discussing all leads, or merely qualified leads? When speaking in terms of all leads, cost-per-unqualified-lead will always be cheaper. Why? Because these leads are typically not a good fit or not ready to buy. Furthermore this cost only takes in account the lead’s state when they enter you funnel, independent of whether they’re in the awareness stage or decision stage, thus not accounting for costs for lead nurturing, or for sales to sell.

For companies playing the lead generation game however, i.e. trying to generate as many leads as possible without regards to quality, then the standard “cost-per-lead” is likely a sufficient metric. That formula is simple enough. You take the Marketing Spend (you can do this as a total, or split across channels if you’re looking to get more granular), then divide by number of leads.

Marketing Spend / Total New Leads = Cost Per Lead (CPL)

Again, simple enough, but depending on your industry and end goals, this may not be the number that your executive team wants. They may be more interested in your cost per marketing qualified lead (MQL), or a lead that’s ready to go to sales. This number is not too complicated either. Simply divide the marketing tactic spend by the number of MQLs you got through that method. That’s your MQL cost. Not tracking MQLs? You won’t be able to back track your MQLs, but we do have some tips on how to set up your lead qualification for the future.  

Marketing Tactic Spend / Total New MQLs = Cost Per MQL

This metric is likely to garner better interest than a standard cost per lead, but chances are executives are still going to want more. This is where return on spend comes in. Return on spend shows the true value of your efforts by relaying how those efforts impacted the company’s bottom line. In layman’s terms: it’s the amount you earned the business compared to your spend. This number is much harder to get, however, it can be a major selling point in convincing your boss of the value of your digital marketing efforts.

First, you must know the lifetime value of your customers.

Calculating the lifetime value of your customer is simple enough, but your formula will vary based on the nature of your product or service. If you’re a subscription-based service, you’ll want to know the average monthly spend of a customer, and how long you typically retain customers. If you offer a one-time product or service, it’s important to think through any typical upsells or maintenance, as this can increase your averages. There’s no simple formula to give, but once you go through this process with your sales data, you should be able to come up with a reasonable average number.

The next step is to look at conversion rates of qualified leads—namely, how many marketing qualified leads become sales qualified leads, and then the average close rate of a sales qualified lead. Got that number? You’re going to use it to calculate MQL value.

The MQL value is a vital number because it gives a benchmark for how much an MQL should be worth. It’s also key in calculating return on spend. With this number, and your cost per MQL, you can calculate the return on any marketing spend—email campaign, social media ad, etc. It’s as simple as dividing the MQL value by the cost per MQL

MQL Value / Cost Per MQL = Return on Spend

This is definitely a number that can help justify your marketing endeavors. However, it’s not the only one you should look at. A better snapshot number could be return on campaign, which looks at your endeavors as whole. Much like a standard return on investment number, return on campaign operates on similar calculations, but while looking at the components of your marketing campaign over the set time it ran.

Traditional ROI computations look like this:

(Sales Growth – Marketing Cost) / Marketing Cost = Return on Investment

However, with campaigns in mind, there are often different or additional costs involved, and not all sales may be resultant of the campaign. If you’re running a singular campaign at a time, you could merely modify this calculation to reflect any natural existing growth you see on average.

(Sales Growth – Marketing Cost) / Marketing Cost – Avg. Organic Growth = Return on Campaign

This gives you a more standard return that executives are used to interacting with. However, if you’re running multiple campaigns at a time (far more common), you can calculate individual return on each campaign by taking a more round about approach. This involves looking at customers acquired from the campaign in question and multiplying the average sale and average margin on that sale, then subtracting your campaign budget. This gives a more accurate number as to the contributory effect of each single campaign.

(# Campaign Customers * Avg. Sale Amt. * Avg. Margin) – Campaign Budget = Return on Campaign

These numbers may not be simple to master, or even remember, however, they’re a great way of proving marketing’s worth to your executive team.

The Qualitative: Remembering the Immeasurable

People like numbers because they’re easily digestible. A number tells a simple story. But a number can also be manipulated. And a number doesn’t always tell the FULL story. Often times, it’s not enough to just have numbers—you also need a narrative. This is where “qualitative” value comes in.

A great return on spend will certainly do well to impress your C-suite on your marketing efforts. But what if you told them you also were able to decrease your sales cycle by a few months. That would garner strong attention as well. This is just one example of qualitative value when discussing your marketing endeavors, and the unexpected benefits of running a strong digital marketing campaign.

Another positive qualitative outcomes when discussing lead value? Certain parts of a digital marketing strategy are iterative. You may need to develop new content or webpages for campaigns, but a lot of the groundwork—that initial research you do when kicking-off an inbound marketing campaign—is already done. And most of it won’t need to be done again. Or at least not done again soon. Things like buyer personas and the associated buyer’s journey may need adjustments over time, but none of that will compare to the initial costs of developing these items. This means that in reality, over time your return on marketing investment will likely decrease, as the costs of these components can technically be spread across each campaign. It’s hard to calculate this as a number, but it certainly goes into ascribing value to the lead process.

If your business hasn’t really done inbound marketing to date, the biggest qualitative value that inbound can offer is qualified leads. Whereas more traditional marketing methods gather unqualified leads that are then sent to sales, or worse, cold-calling, inbound marketing puts a process in place that qualifies leads naturally through offers and nurture campaigns. This systematically improves the marketing process, allowing leads to qualify themselves as you push out more content and campaigns, and in turn, shortening the time and resources the sales team spends qualifying leads. This means your qualified leads from the inbound process cost less than the qualified leads you might get implementing another method, because there’s less required to qualify them.

The Bottom Line of Lead Value

So what does this means for marketers in commercial real estate?

Pulling it all together, a digital marketing program like inbound marketing not only allows you to easily ascribe worth to the leads you gather, but also allows you to prove that the costs and returns associated with those leads are of greater value to your business than leads garnered from more traditional marketing methods. In coupling calculations like return on spend and assessments like an improved, streamline sales cycle, you’re able to prove both the quantitative and qualitative value of your leads. As we noted previously, inbound marketing offers improved cost-per-lead values and lower implementation costs. But it’s one thing to know it, and another to prove it to your executive team yourself.

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