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Do you pay for leads?

lead generation

If you answered "No" let me ask you this. Do you really believe that? Do you understand how lead generation works?

The answer to the question should always be "yes". Here's why.

Leads ALWAYS cost us something. Leads cost:

Money
Time
Effort
Or any combination of the above

Most successful REALTORS®, or anyone in business for that matter, uses a combination of the three.

If you are spending your time and effort on blogging, social networking, building relationships or whatever you do that doesn’t cost you money you still have a cost related to that time and effort. It may be a little more difficult to know what the exact cost is but it’s still a cost.

On the other hand, money spent on advertising, referral fees, websites etc…is easy to keep track of because we can see it coming out of our bank account. BUT…it doesn’t mean it’s any more real than putting in time and effort.

The point is that ALL leads have a cost associated to them. If we are to run a successful business we have to make sure that the cost is less than the return. ROI (return on investment) needs to be a positive number after we factor in time, money and effort (investment).

So it’s my opinion that the folks that state “I never pay for leads” are the folks that are not generating any leads and are depending on someone else to carry this expense. That someone else is their Broker or team leader (lead provider).

If your lead provider is carrying the expense of getting you leads then you best be prepared to work them so they get a return on their investment or………….you become the expense. You are a liability. It’s not complicated.

What say you?

Bryant Tutas
Broker/Owner
Tutas Towne Realty, Inc
Licensed Florida Real Estate Broker
http://CentralFloridaShortSales.com

http://ShortSaleSuperStars.com

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Posted by Bryant Tutas Broker/REALTOR(R) Tutas Towne Realty, Inc on 09/30/2009 02:47 PM

Comments (31)

Running a Business in a Down Economy in the Training Channel

lead generation, opinion

Originally posted at: BrokerBryant.com: Do you pay for leads?

Post is included in group: Realtors®
Post is included in group: Real Estate Rookie

31 Comments on Do you pay for leads?

SEP

Reserved Parking For "The Lovely Wife"...TLW...ROAR!

Hun...

Are you trying to cause trouble or does it just come naturally to you? :)

Should we place bets on this? I could use the cash to buy myself something nice :)

P.S. Would you have preferred my dissertation on how we spend our entire lives selling to someone for our own gain? :)

TLW...ROAR!

Good points...we do not buy leads from lead generation sources...but we do put our blood, sweat, and tears into the leads we generate from blogs, website, social media, etc...

Bryant,

That was a trick question! I guess it might be better stated saying "I don't buy leads." Either way you could argue about the semantics but it's easy enough to get what is implied.

In case anyone wants to play devils advocate I can state it more clearly by saying I have more confindence and a better return on my lead generation efforts than a company selling me the fruits of theirs.

Really I'm not paying for leads, I'm paying for the means that generate them. Leads are the end result of the efforts I put my time and money into.

Successful agents understand exactly this! I make a conscious choice about the kind of leads I pursue as well as pay for (with ANY of those commodities) and refer out anything that doesn't fit my parameters! I have no interest in running a "team" and having to be responsible for the lead generation that keeps the whole group putting food on the table.

I know agents who sell WAY more than I do a year but take home no more than I. And did I mention that they are tired and irritated from trying to "manage" leads, clients and employees?

We all have to understand what works best for each of us individually. This is not a criticism, just an acknowledgment of what I choose to invest my energies in relative to the return!

I'll be honest and say I do - sort of. I just signed up for a trial version of RedX - has anyone else used it? So far, I can't say I'm overly impressed with the information, as I'm spending just as much time looking up phone numbers and deed records to get information. I'm wondering what experience others have had with that type of service (I'm working expired listings)....

Thanks for the post!

BB - I'm going to second Brian's (#3) response and say that while I don't "buy" leads, I most certainly "pay" for the efforts to generate the leads I do get. Does that make sense? :)

BB: You're right, we pay for every lead we get in some form or another, it's just not as obvious as if we bought them from a lead generation service. Like they say, there's no such thing as a free lunch...or lead!

TIM: Are you reseraching your expireds at your town hall or from your MLS? We print out all the expireds we want to solicit from the MLS every day, then look those properties up in the tax records (again, in our MLS) and send them some form of direct mail. We rarely call them, as the tax records indicate whether or not they are on the Do Not Call list, and of course 99.99% of them are. It only takes me an hour or so a day to do this, a little more at the end of the month when most of the expireds seem to occur. We've converted many expireds this way, and it's all through the MLS, something we're already paying (through the nose) for. We looked at RedX on the recommendation of a colleague and found it to be poor quality leads and not worth the $60/month they charge for their expireds service. This is just our experience and opinion, so if what you're doing now works for you, by all means, continue to march!

I think when the answer is No - they meant with "money". But you're right. We always pay with a combination of thereof. I pay with ALOT of TIME with my leads.

I pay with time and money and it's well worth it.

Yes, I harp on this ALL the time...Time=Money

One way or the other we are paying, either with our time or money.

I do a little of both.

And Bryant - the lead provider or Broker providing the leads with little return has to re-think....

Great post Bryant, I definately pay for lead generation but have a budget and stick to it. I don't use the snake oil that some try to sell. My rule of thumb is that if I spend $1.00 on lead generation or for a lead, then I must get at least $10.00 in return or I won't do it, period.

No homegain, no househunt, none of the pay per lead deals for me, but I do know what it costs to lead generate.

Good point! Money isn't the only currency and often when you think you haven't paid for something because you haven't actually made a cash expenditure, you sure have paid for it in other ways!

well put aloha

BB - This must be one of your more mellow days. You can't get a controversy going on this one. Okay, let me play Devil's Advocate since everyone is agreeing with you. I don't live my life any differently than I did before going into real estate. I still see the same people and do the same things. Almost all my leads are generated from former clients and people I come in contact with from my normal day-to-day living or through doing Open Houses at the request of my clients. I have more leads than I can manage and refer out leads to other agents in my office. I don't see how I am "paying" for leads with either time or money.

Good points. And in the last couple of years, I've spent more of my time on my internet marketing than I did on all my marketing efforts in several of the previous years combined.

OCT

BB Can I get that hot lead that is in your post!

Never thought of it that way. I tell salesmen all the time, "I don't pay for leads," but you're right, I certainly do. Blogging takes time, my website costs money and takes time.

Bryant, so right. And, I've stated that I don't pay for leads in the past. The way I should phrase that is that I don't pay up-front fees for third party lead aggregators. I will pay referrals, I will pay for ads, blog etc to generate my personal business.

Broker Bryant - I do not pay for lead! Why? I'm saving money!

I think many agents stopped paying for lead generation via certain systems becuse they failed to produce quailty leads -as the economy constricted, many simply could not afford this as a cost of doing business. Too many lead aggregators fail to deliver what they promise, which means very little ROI for the newbies. If there are some better quality ones I for one would love to know what they are. Time and effort in lead generation from other venues is ALWAYS a good investment.

BB- We all pay in one shape or form its just that some do not consider some ways as a lead generating cost. Lead generating is so multifaceted. Going to a networking luncheon is a fun diversion in a day yet subconsiously we may be doing so to generate leads. So yes we 'pay' for lunch and by doing so are paying to generate leads. Yet many think that the only way we pay for leads is by joining a lead generating company or paying a referral to someone who hands us a lead. Everything we do in this business is done to generate goodwill AND leads. Everything.

Silly Me...

I thought, just like money, leads grew on trees :)

Gotta Go. I have to break the news to our Grand Children that spaghetti doesn't grow on trees either :)

TLW...ROAR!

I say point well taken BB. You should post this in the Economics of Real Estate group. Most people don't think about "opportunity costs," which include things like time.

Everyone who spends money to advertise real estate is paying for leads. You have to calculate how much you spent to get that phone call and then follow up so it was money well spent.

Bryant, I generate my own leads from my center of influence and open houses and blogging. And while I never think of myself as paying a lead generating company, but I see your point. I just think I'm more efficient than they are.

I'm with Patricia. You're mincing words IMHO. Lead GENERATION involves discrete costs, yes. But, to me, "paying for leads" clearly implies an activity that includes lots of baggage, such as

a) "leads" implies that the info you're getting is unqualified junk for the most part.

b) the method of collection is out of your control - you're either paying for emails or lists, etc. or whatever and if the spigot gets turned off you're back to nothing.

c) the activity of 'paying for leads' does nothing else to enhance your business, brand etc. as opposed to the activities Patricia makes mention of. No collateral benefits.

To me these two concepts are distinguishable.

OCT

From the desk of David Dee,

BB, right on mark. Generating leads is not only in the form of paying but also in the time and effort. Those who don't do any of these are just 'employees' and working on the job. By the way, be careful of that whip from TLW. Looks intimidating. I'll just sneak out of here quietly....Take care.

BB,

Of course you're right. When aren't you right? Well, I guess that would be when TLW says you're wrong. :)

YES, it's important that your lead-generating expense is less than what the leads generate. I do think it's a momentum thing, though, and in the beginning of any effort, be it blogging for leads or buying for leads, the expense is going to exceed the lead generating revenue.....if it stays that way, though, that is bad. Bad bad bad.

Have a great weekend!

Hey guys. Sorry it took me so long to get back here. Having the grand children living next door is really keeping TLW and I busy. But LOVING every minute of it.

My son started work with me this week and it has given me time to really sit down and start analyzing my business. Some of the stuff I discovered did NOT make me happy. Think...agents...free leads and wasted.

This post was written more out of frustration than anything else.

As always I really appreciate you stopping by and taking the time to read and comment.

Have a GREAT weekend!!!

OCT

I never looked at it this way but yes I am paying. Several years ago I did pay $$$, now I pay mostly with time and it does cost!

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