Lead Gen Platform vs Seller Prospecting: What Actually Gets More Listings?

Lead Gen Platform vs Seller Prospecting: What Actually Gets More Listings?

Broader, strategic, and useful for agents who are deciding where to spend budget.

Lead generation vs. prospecting. It’s an age-old question in the real estate industry. So which one is better? Well, from the data, it’s not a matter of better or worse but, like any decision, it’s a matter of preferred outcomes. The real answer is: do both. Like any successful business, they don’t choose one marketing avenue over the other. They invest heavily into everything. So some of the questions that you should ask yourself when considering lead gen vs. prospecting are as follows:

1. How much follow-up am I willing to do? 

Lead generation isn’t good vs. bad. Someone input their information into a form and reached out which should tell you that, in many cases, the intent is there. It’s just a matter of who they’re going to use and when. The agent who connects first and stays in touch wins the business. So if you’re willing to stay on top of your leads, lead generation is going to be awesome for you. That said, if you’d prefer to wait for higher quality leads, pay a little more per lead, and get a lot fewer leads, then outbound prospecting might be the method for you.

2. Am I willing to pay more for higher quality?

There are thousands of lead generation companies that promise low priced leads. We’ve seen them advertised as low as $10 per lead! That said, like anything in life, more often than not, you get what you pay for. What it really boils down to is: how much do I pay per closed transaction? Let’s break down the math.

Sure, let’s say you find a company that sells you $25 leads. Great. Given the quality, the conversion rate is probably not going to be very good. So let’s say you need 250 of them to get a sale. Your closing actually costed you $6,250. Now sure, hopefully you make money on that in your market. But what about the time you invested into calling 250 people? Let’s say you make $100/hour as a real estate agent. And let’s say you spent 10 minutes on each lead (very conservative). That means you spent 41 hours calling the leads to get to the lead that converted. Which is another $4,100 worth of your time you invested. So now those $25 leads actually cost you $10,350 to convert a sale. Getting steep. Let’s compare that to a higher quality lead.

Let’s say you hire a service like Ignite Connections. And let’s say each lead cost you $1,000 (not necessarily the actual case, just an example). But $1,000 lead compared to a $25 lead is a significant difference. But what if you only need 3 high quality leads to get a sale? At $1,000 apiece, that conversion only cost you $3,000 - over half as much as the low quality leads. And let’s say you only spend 10 minutes on each call. That’s only half an hour - at $100/hour of your time, you spent an additional $50 to convert that lead. So yeah, maybe you paid more per lead, but the real question is what is your CAC (Cost to Acquire a Client)? That’s the number you should be focusing on. 

Quality over quantity is the real question here.