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More Meaningless Marketing

August 21, 2008

When I read this headline this morning, I immediately thought of that Britney Spears song, “Oops! I did it again!” Once again, another real estate company is reporting some “numbers” designed to get people - consumers, agents, Martians - to gasp. Seems like their website has generated some few millions of “leads” to their agents. You know, buyers who go on their website and ask for more information. It’s another orchestrated PR campaign to get the public to say, “Wow! That’s a lot! It must mean they are really good!”

Too bad, then, that it’s just another example of totally meaningless marketing. What’s worse: Generation X and Y know it.

I never understand why real estate company marketing departments feel compelled to release numbers - usually just because they are big. Are more leads better? Possibly - but if anyone knows, it would be Matthew Ferrara & Company. We have helped more than agents (a big number!) worldwide adopt and implement some of the most advanced leads management software in the last four years. We have literally delivered more than training webinars (do you want to know how many? It’s big!) in that time to the agents, brokers, relocation directors and managers of these companies. We’ve seen the reports and we’ve seen them way agents treat (and sometimes mistreat) leads. In the end, we continue to say what we’ve already said:

Most companies should brag about the number of leads they generate. That is, unless they really convert a good solid percentage of them.

Oh, we get it: Releasing your lead generation numbers is very wink-wink nod-nod. Some marketers love to do this kind of marketing, called “associational” relevancy. They combine two concepts - a large number and a seemingly important criteria of success - and then turn it into a sign of “prowess” in an industry. For example, Ford sells more cars than anyone in America (or they did for some years). But does anyone really want a Ford car? Not at all, if you look at their loyalty repurchase rate, say, compared to Honda, Toyota or Mercedes. So the “volume of a criteria” is frequently a shallow factor of competitive performance.

The same is true for the number of “leads” a company generates. It’s a totally meaningless sign of performance of a website’s ability to help you achieve the only thing that matters in real estate: Selling the home.

Why do they do it? Two reasons: First, it’s supposedly a way to “recruit” agents. A company must be more attractive to agents if it generates more leads - business opportunities - than its competitors, don’t you think? No, we don’t. Who cares if a company generates a lot of inquiries that a) their agents are ill-trained to respond to and b) their agents are unable to convert because they are poor-quality. It’s like competing on the number of listings a company has: Another meaningless number, because any fool can take a listing if they don’t feel like fighting the seller on setting an appropriate price and not marketing in the newspaper. Sorry, folks: Neither number is meaningful.

If I’m an agent, I want to know the quality of the business opportunities generated by my brokerage firm. In other words, my time is valuable; I only get paid if I can apply my skill to real business opportunities. If my broker generates a lot of un-targeted, ill-qualified, busy-making leads that take up my time, then is he really helping me? Not at all. What agents really want to know is the quality of the leads generated, which is wholly indicated by the percentage of leads that are converted into transactions within a sensible time period.

Of course, the conversion ratio will be significantly affected by the ability of that company’s agents to convert them. But there’s a direct correlation between the conversion rate and the skill level of the company’s agents and managers. So a company that converts a higher percentage of leads can very accurately be said to a) be generating more quality leads, b) the training effectiveness of the company and c) the management coaching and accountabiity performance. In other words, converted leads are a sign of a healthy, productive organization. Lots of low quality or generated-but-abandoned leads isn’t so good; but that’s why they only market the “number” of leads generated.

Ironically, agents understand all of this. Especially Generation X and Y agents. They aren’t so willing to accept “any” marketing message. When they decide which brokerage to affiliate with, they are looking for real results - of a company’s marketing, training and management - not just how much busy work it creates. But brokerages aren’t ready or willing to compete on these criteria; for now, they’re still in a “we’ve got more of everything” mode of recruiting agents.

The second reason companies spout these meaningless metrics is that they somehow believe the public will be excited by them. Once again, they are sorely misguided. Today’s sellers are more tech savvy than ever. And they understand the difference between fluff and results. Sellers don’t care how many leads you generate: They care how many buyer inquiries you can turn into buying events - for their house. In fact, super-savvy sellers are likely to have an opposite reaction to the higher number of leads. For example:

You mean you have to generate that many leads in order to sell the number of houses you sell each year? That sounds awfully inefficient!

Generation X and Y sellers will put you in a no-win situation. If you “promote” that you generated 5 million leads from your website, then could easily say, “That’s all?” especially when they see the number of daily visitors to Amazon or Google. Conversely, they could justifiably say, “If it takes that many leads to create your deals, then you must be pretty poor at marketing because even goofy websites like YouTube generate more business opportunities than that!”

Eventually, the real estate industry will learn that meaningless numbers create meaningless value statements in the marketplace. The endless war between “which company has more” leads, websites, listings, etc., continue to distract companies (but not the consumers) from their real mission: to create the “most” meaningful events, which are sold homes. Some companies say they can do both. We’re not so sure. If they did, they’d be better off releasing their competitive metrics, not these silly stats. Tell the public what percentage of inquiries you turn into deals, what number of listings you sell at above 98% list-to-sell ratio, and how many you sell below the average days on market of the competitors.

Those are performance numbers worth marketing. And that’s the only thing consumers find meaningful.

M

Written by Matthew Ferrara · Filed Under Featured, Management, Marketing, N.A.R., Next Generation, REALTORS, Real Estate Technology, Sales 

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