Anatomy of a Deal: Marketing ROI for REI Lead Generation
11 Jul 2019
Experienced real estate investors know that the process of turning prospects into leads, and those leads into deals is a sales funnel that gets increasingly narrow as contacts pass through the sales process. Because the bottom of the sales funnel is so narrow, it's best to make the top as wide as possible. Translation: It takes a lot of prospects to get a few deals.
Here at Datazapp, we work with over 5,000 real estate investors and wholesalers out in the field right now. Trust us when we say, getting a list of 20 homeowners in your area simply will not cut it anymore, if it ever did. It will not result in the coveted deal you are seeking.
Highly specific targeting isn't the holy grail either. If you have a list of distressed homeowners, you can be sure that at least 5 other REI's are reaching out to those same contacts. In other words, it doesn't matter how sharp the darts are, the more you throw the more likely you are to hit the bullseye.
The Sales Funnel
We examined the lead acquisition of thousands of REI's and data of home sales nationwide. Let's take a look at the average REI's sales funnel.
At just 3 cents each, Datazapp provides property & homeowner records, each with a phone number. This means that for $125, you can get over 4,000 prospects to put in your sales funnel.
Suppose you use a ringless voicemail service to blast your pitch to all 4,000 prospects. According to BiggerPockets discussion forums, the average call back percentage is between 1 to 2%. This means you may get 40 to 80 calls back from prospects interested to learn more about your offer.
These 40 to 80 prospects are no longer cold, but have expressed interest in your offer and are now leads. Not every lead will become a deal however, but will have to pass through an even smaller funnel
If all goes well, you may be able to nurture a small portion of your leads through the funnel while most of your leads will drop off throughout the following weeks and months of discussion, vetting, and offers.
You may close on a deal, or just as likely, you may not. Even more likely, closing on a deal may take some time and persistence beyond your initial offer. If you do get a deal, the profit will be well worth your initial investment. Let's take a look at the cost breakdown of your marketing investment and the return.
Investment vs. Return
Based on nationwide investment home sales, the average profit the real estate investor pockets from a successful home purchase and resale is about $15k. Below is a hypothetical breakdown of your marketing costs.
Pro Tip:If you're looking to squeeze more out of your current data investment, consider using the Email Append service to target your prospects through digital channels such as email marketing and Facebook custom audiences. Facebook's custom audience will keep your display or text ads in front of home owners & prospects and can get viral attention!