A few key numbers in your business reveal the secrets to scaling

There’s a saying in business: That which gets measured gets done. 

But key performance indicators (KPIs) don’t just ensure that the right tasks get completed. They also tell you which marketing channels are working — and which aren’t.

Don’t let your eyes glaze over when you hear “KPIs.” They are literally the key to doubling your revenue, without doubling your expenses.

Campaign metrics to track

For every marketing campaign you run, you want to track your overall cost per lead, cost per deal, and channel ROI. 

On the highest level, that starts with channels like direct mail, cold calling, PPC ads, TV ads, etc. But within each channel, you also want to track sub-campaigns for the type of seller (more on that shortly). 

Why does it matter? Because if you only earn $1.50 for every dollar you spend on PPC ads, but earn $5 for every $1 spent on direct mail, you know to double down on direct mail and cut back on PPC. 

In fact, low-quality leads actually drain your resources. You and your team waste time on leads that won’t end up closing, rather than putting it toward higher quality leads likely to close. That’s why you must learn to screen leads faster, setting clear criteria for qualified leads to avoid wasting time on unmotivated sellers.

Cost per lead matters less than cost per deal, and cost per deal matters less than overall ROI. It doesn’t matter if you spend $1,000 per lead from one channel versus $100 per lead on another, if you earn more profit on the more expensive leads. 

By doubling down on the most effective marketing channels, you can often double or triple your profits while actually reducing your expenses. 

How to track marketing ROI

For any given marketing channel, REsimpli helps you track both cost and revenue generated. 

For example, you might spend $5,000 on direct mail one month, and have it generate $25,000 in revenue. Tracking ROI helps you know which marketing channels are profitable and which are draining resources.

But don’t stop at just tracking the marketing channel. Drill down to the lead type, to track profitability there. Sub-classify your marketing campaigns by types of leads such as probate, tax delinquent, foreclosures, and absentee owners versus owner-occupied.

Imagine your cold calling campaign yields an ROI of 3X: $3 in revenue for every $1 spent. But when you drill down further, you discover that you earn $5 for every dollar spent generating absentee owner leads, but only $1 for every dollar spent on owner-occupied property leads. After all your overhead costs, you’re actually losing money on those owner-occupied leads. 

The same goes for other types of leads. Maybe you earn 2X on probate leads but 4X on tax delinquent leads, or vice versa. 

But you wouldn’t know if you don’t segment your marketing campaigns and track these KPIs. 

REsimpli tracks which leads came from which lists, and when you close deals, it automatically attributes the revenue to the appropriate lead and marketing channel. 

Professionalize Your Real Estate Business

Professional athletes don’t duct tape together their shoes. So why are you trying to duct tape together your real estate business?

If you want to earn profits like a professional real estate investor, use the tools your pro competitors are using. That starts with marketing and accounting tools like REsimpli. 

Don’t take our word for it. Try it out for yourself with a 30-day free trial. 

We look forward to hearing your feedback and successes after your first month running with the big dogs. 

What’s a good ROI?

As a general rule of thumb, I think every market dollar should generate at least $3. 

Earning 3-5X on your marketing spend is a good to great range for ROI. If you earn more than 5X your marketing spend, you’re crushing it. 

If you aren’t earning 3X on your marketing dollars, you’re wasting your time and money. You’re probably either breaking even or losing money after accounting for payroll, overhead, and other expenses. 

Check your processes before shutting down a marketing channel 

Before you suspend a marketing campaign, take a close look at your own processes. The problem could be you and your team, not the marketing channel. 

Listen to recordings of your team’s interactions with prospects and leads. Are they following your scripts? Are they empathetic or callous? Do they convey a genuine desire to help solve the owner’s problem? 

Also track the talk time on the phone for each team member. 

Make sure that no deal falls through the cracks, without either being put on a drip campaign or labelled a dead lead. Often leads require four, five, six follow-ups before they actually pick up the phone to call you back. 

REsimpli’s CRM makes it easy to put leads on a drip campaign to automate the follow-up, so no lead ever falls through the cracks. 

Deal fallout can kill a marketing channel’s productivity. Which raises another KPI to track: lead closure rates. 

How to track lead closure rates & deal fallout

What percentage of your leads make it to the closing table? 

How about the percentage for each specific marketing channel? Each specific lead type? 

If you can’t answer those questions, you’re probably leaving thousands of dollars on the table every month from deal fallout. 

I’ve found that 30-50% of contracts never close, due to problems like title issues or sellers backing out. And that number gets much, much higher for investors who don’t relentlessly follow up with all leads. 

Use REsimpli’s transaction management system to track contract-to-close progress and reduce fallout rates. By raising the percentage of leads that actually close, you’ll supercharge your revenue without paying for more leads. 

Experiment to boost your marketing ROI

At any given moment, you should be running a split test in your marketing. 

Do handwritten or corporate letters yield a higher ROI? Handwritten letters cost more, but they might come with a higher ROI and lower cost per closed deal. 

Experiment with different postcard designs and colors. You might be surprised what generates more leads and deals.  

Test out different marketing copy for those campaigns. What language drives more leads? What language drives more closed deals? 

Split test different landing pages for your PPC campaigns. For that matter, split test ad campaigns on Google versus Bing or Facebook. Use different UTM codes to track performance. 

Split test different voicemails for your cold calls or ringless voicemail campaigns. And so it goes.

How to use REsimpli to track KPIs

We built REsimpli specifically to help real estate investors solve these problems. 

The CRM has pre-built websites and landing pages, which you can duplicate and edit to run split tests. You can also add UTM tracking codes to know which PPC ads campaigns drove leads to which pages. 

REsimpli also lets you create separate tracking phone numbers for different campaigns. After all, you’ll need to use a different phone number for different mailers you send out, so you know which ones are driving which leads. 

In my experience, investors doing 25 or more deals each month usually track 50-150 different phone numbers to analyze their data properly. Don’t let that intimidate you — just start with a couple numbers to track which mailing lists or campaigns generated which leads. 

You can also link your bank account to auto-sync expenses and revenue. Our bookkeeping integration can help you replace Quickbooks, to automatically track and categorize your transactions. 

When you mark a deal as sold, it automatically tracks the revenue. And you can also tag leads or transactions manually. 

The Marketing Analytics tab helps you track conversion rates for different marketing campaigns. At a glance, you can tell which marketing dollars are making you rich — and which are costing you precious resources. 

As a final thought, our Skip Tracing tool can help you contact leads or prospects that seemed lost. These often prove higher-quality leads, since you typically have less competition from other investors. 

Another KPI for flippers: hold time

The longer a flip project takes, the less the profit you earn from it. 

Every day that goes by, you pay holding costs. Interest, electricity, gas, water, property taxes. 

Start measuring your hold time in days as a KPI. Aim to turn around flips in 180 days or less — preferably much less. 

Break the project down into these key phases:

• Time to start rehab 
• Average rehab duration
• Time listed before sale
• Contract-to-close timeframe

Start rehab projects the same day you close if possible, or the next day. Work with a renovation crew that stays on schedule and on budget. Hire a real estate agent who knows every marketing trick in the book and gets your listings to fly off the shelf. 

If you pay a project manager to oversee your house flips, consider restructuring their compensation so that they earn a higher amount for flips that sell faster. Their incentives should align with yours, to maximize the profits on each flip. 

Tying it together

Would you rather own a business that does 30 deals a year for $1 million in revenue and $100,000 in profit, or a business that does 15 deals a year for $500,000 in revenue and $200,000 in profit? 

Optimize for net profit, not gross revenue. Optimize for the most profitable deals, so you can do fewer of them and earn more money from each. 

That starts with understanding your numbers. Which marketing channels deliver the highest ROI? 

Which types of deals yield the highest net profit for the least work? 

Which lead sources produce the highest quality leads? 

Check your cost per deal, profit per deal, and marketing ROI every month. Better yet, run the numbers every week. REsimpli makes it easy to automatically track these KPIs and check them at a glance. Try a 30-day free trial of REsimpli right now to start automating your books. 

That said, you do need to give marketing channels a chance to work. It often takes a few mailings for prospects to pick up the phone and call you. Give each channel at least three to six months before canning it. After that period, double down on what’s working — and cut back on what’s not.