The True Value of a Qualified Lead in Multifamily Marketing
For commercial real estate marketing professionals, adapting to the rapid shift toward digital methods is both challenging and essential. Traditional property marketing techniques, honed over decades, are familiar to many. Yet, the evolution of the commercial real estate market trends points unmistakably toward the burgeoning significance of online platforms and digital outreach.
Navigating this digital realm can often feel like venturing into uncharted territory. While old marketing methods are quickly embraced due to years of experience, commercial real estate digital marketing strategies often face skepticism. These modern strategies’ tangible benefits and efficiencies, such as lower implementation costs, are frequently overshadowed by doubts and resistance. This evolving scenario poses a unique problem for multifamily marketing managers attempting to position themselves at the forefront of real estate marketing strategy innovation.
So, how can one effectively convey the value of a lead, especially a qualified apartment lead, within this digital framework? The challenge might seem daunting, but understanding and leveraging the potential of digital tools is crucial for marketers determined to stay ahead in the game.
The Quantitative: Doing the Math
When navigating the intricacies of multifamily marketing, one of the foremost concerns that real estate agents and marketers face is justifying the costs to their executive team. While these teams frequently zoom in on ROI as the primary measure of success, a holistic view of marketing efforts suggests this isn’t the only metric that matters.
Why? Understanding the ROI in the world of real estate marketing requires a deep dive into the needs and behaviors of the target audience. Further complicating matters, there are numerous ways to calculate marketing ROI, each offering unique insights tailored to different real estate marketing ideas.
For those deeply entrenched in commercial real estate marketing, the prevalent method to gauge ROI is the “cost per lead.” But here’s where many face a problem: Does this metric encompass all leads, or does it specifically address qualified leads? If you’re using a real estate website to generate leads, search engines can often bring a mix of visitors, not all of whom are part of your target market. When examining the broad spectrum of all leads, the cost-per-unqualified lead will invariably seem more economical.
However, a closer look reveals the nuances. Many of these leads, especially those seeking properties like office space or virtual tours of property listings, might not align with what’s being offered, making them a less-than-ideal fit or not ready to purchase.
This initial cost, often deceivingly attractive, fails to factor in the lead’s position in the buyer’s journey, whether they’re just becoming aware or on the brink of making a decision. Consequently, this metric overlooks essential expenses, such as the costs of nurturing these leads through tailored marketing strategies or the eventual sales pitch.
Cost Per Lead
However, the standard “cost-per-lead” is likely a sufficient metric for companies playing the lead generation game. That formula is simple enough. You take the marketing spend and then divide it by the number of leads.
Marketing Spend / Total New Leads = Cost Per Lead (CPL)
But depending on your end goals, this may not be the number your executive team wants. They may be more interested in your cost per marketing qualified lead (MQL) — or a lead ready to go to sales. This number is not too complicated, either.
Divide the marketing tactic spend by the number of MQLs you got through that method. That’s your MQL cost. Not tracking MQLs? You will not be able to backtrack your MQLs, but we have some tips on setting up your lead qualification for the future.
Marketing Tactic Spend / Total New MQLs = Cost Per MQL
This metric will likely garner better interest than a standard cost per lead, but executives will likely want more. This is where “return on spend” comes in, which shows the actual value of your efforts by relaying how those efforts impacted your bottom line. In other words, it’s the amount you earn in the business compared to your spend. This number is much harder to get; however, it can be a significant selling point in convincing your boss of the value of your 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 are a subscription-based service, you will want to know the average monthly spend of a customer. If you offer a one-time product or service, you must consider typical upsells, which can increase your averages. There’s no simple formula, but once you go through this process with your sales data, you should be able to come up with a reasonable average.
The next step is to look at conversion rates of qualified leads — namely, how many marketing-qualified leads become sales-qualified leads and the average close rate of a sales-qualified lead. Got that number? You are going to use it to calculate the MQL value.
The MQL value is vital because it benchmarks 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 number can help commercial real estate marketers justify 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. Much like a standard ROI 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 result from the campaign. If you run a single campaign at a time, you could modify this calculation to reflect any natural 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 run multiple campaigns simultaneously, you can calculate individual returns on each campaign by taking a more roundabout approach. This involves looking at customers acquired from the campaign and multiplying the average sales and margin. Then, you subtract your campaign budget. This gives a more accurate number as to the contributory effect of each 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 are 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, having numbers is not enough — you also need a narrative. This is where “qualitative” value comes in.
A great return on spend will undoubtedly do well to impress your C-suite with your marketing efforts. But what if you told them you also could 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 solid digital marketing campaign.
Digital Marketing Is Iterative
Another positive qualitative value? Certain parts of a digital marketing strategy are iterative. Commercial real estate marketers may need to develop new content or web pages for campaigns, but much of the groundwork is already done. And most of it will not need to be done again. Or at least not soon.
Buyer personas and the associated buyer’s journey may need adjustments over time. However, none of that will compare to the initial costs of developing these items. This means that over time, your ROI 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.
Qualified Leads for Commercial Real Estate Marketers
The biggest qualitative value that inbound offers is qualified leads. Traditional marketing methods gather unqualified leads sent to sales — or worse, cold-calling. On the other hand, 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. In turn, you shorten the time and resources the sales team spends qualifying leads. This means commercial real estate marketers’ qualified leads from the inbound process cost less than the qualified leads you get through another method.
The Bottom Line of Lead Value
So, what does this mean for commercial real estate marketers?
Pulling it all together, a digital marketing program like multifamily inbound marketing allows you to ascribe worth to the apartment leads you gather easily. Multifamily inbound marketing also enables 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 methods.
In coupling calculations like return on spend, you can prove your leads’ quantitative and qualitative value. 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 thing to prove it to your executive team.