I was wading through the adverts yesterday as I often do and I came across one of the many PropertyIndex.com adverts. The bold text stated: Unlimited listings just £10 cost-per-lead (CPL).
There was then an explanation of cost per lead as follows: You only pay for qualified leads. Unlike other portals, visitors to PropertyIndex.com can only submit an enquiry via the form appearing below an individual property listing. This ensures agents & developers know which property prospective clients are genuinely interested in.
This begged a few questions, but for the purposes of this post, namely, what actually constitutes a lead and is this a competitive price within the industry?
It reminded me of a post a while back from Mike at Zoomf when he examined a series of articles from Matt Jones at Realblogging which was an analysis of lead capture and costs per lead in the USA. Two significant points amongst the many interesting points raised by this insight was it takes around 24 leads to get to a closed transaction and the average cost per lead was in the region of $116.
So already we can see that we really need to determine a true value for a cost per lead and if I am an agent studying my online marketing (which I must surely be doing by now) this is where I should concentrate my effort. Indeed, surely my goal is to work out exactly how much I can afford to spend per lead and how much I am spending per lead.
Currently, many UK agents work on a crude analysis for cost per lead (i.e. spend divided by clicks/emails/tel calls) producing results from between £0.05 to £39.00, the latter being Rightmove. Whilst these stats are taken from a bona fide agent who spends across the board (or at least used to) such metrics raise more questions than they answer and really just show a cost per click or equivalent, which is only perhaps one of the x number of leads needed to reach a closed transaction!
Zoomf are right to point out that an agent needs to take into account, website spend, technology spend, ppc spend, portal spend on all portals, email spend and anything else spent online/offline to acquire a potential lead to determine a more accurate cost per lead.
What is called for I believe are some industry standard metrics that will allow agents to easily measure performance, budget and to determine a true cost per lead.
Given we first need to determine what constitutes a lead, I guess a clear definition for 'a lead' would be a good starting point. Another good benchmark would be to determine an average 'leads per closed transaction' figure for the UK property industry (it may be out there already?).
I may throw it in as a discussion point at the Estate Agency Expo next week when the portal panel convene for what we all hope will be a lively discussion.
The Owl is running a book and I have Dan at evens to knockout Rightmove in round 1.