Understanding the Importance of Qualified Leads in Multifamily Marketing
For commercial real estate marketers, marketing in the digital world can be a trying experience. Whereas old marketing methods are embraced easily due to years of experience, digital marketing endeavors have to be fought for, with the value of these methods being questioned constantly despite lower implementation costs. This creates a unique conundrum for multifamily marketing managers everywhere.
How do you prove the value of a lead — or better yet, a qualified apartment lead — to your organization? The answer is not simple, but it is important for marketers looking to use digital to get ahead.
The Quantitative: Doing the Math
When justifying multifamily marketing costs to your executive team, most will be interested in only one thing: ROI. While this is not a bad attitude, using ROI as the sole means to calculate value is misleading. First reason? There are several ways to calculate marketing ROI.
For commercial real estate marketers, the most common method of 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 apartments leads are typically not a good fit or not ready to buy. Furthermore, this cost only considers the lead’s state when they enter your funnel, independent of whether they are in the awareness or decision stage. Thus, it does not account for lead nurturing costs or sales to sell.
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. 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 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 is likely to garner better interest than a standard cost per lead, but executives are likely to want more. This is where “return on spend” comes in, which shows the true value of your efforts by relaying how those efforts impacted your bottom line. In other words, 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 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, it’s important to consider any typical upsells, as this 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 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 at a time, 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. Oftentimes, it’s not enough to 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 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 strong 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 a lot 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 are 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 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 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.