What's a Click Worth?

Services for Real Estate Pros with Blue Corona

What would you pay to get a new qualified visitor to your website?  How much should you be willing to pay?

How much can you afford to pay? Do you really even know?

If you've never asked - and answered - these questions, there's a high probability that you're wasting precious marketing dollars or otherwise not maximizing your online marketing performance. That's the bad news. The good news is that it's not that difficult to determine the value of a new website visitor - all you need are some basic metrics.

To start with, you need to determine what you're willing to pay for a new sale. Think about the commission you make on a transaction less any direct expenses associated with the deal. Now, how much of that can you afford to give up in order to get the business? Referrals are huge in the real estate world, so you have to balance your immediate need to make money with the big picture.

For the purposes of this post, let's assume that you're willing to pay, on average, a $1,000 per sale.

The next number you need is your lead-to-sale conversion rate. What's your close rate on the leads you receive?  If (and this is a big if) you're willing to pay $1,000 for a sale and you determine that you convert 8% of leads into sales, you should be willing to pay $80 per lead. An 8% lead-to-sale close rate means that for every 12.5 leads you receive, you'll make a sale. At $80 per lead, that's $1,000 per sale!

Now we're starting to get somewhere.

The final number you need in order to determine what you should be willing to pay to drive a new visitor to your website is your website's visit-to-lead conversion rate. What percentage of your website visitors turn into leads? Typically, this is the hardest number for realtors to identify because most realtors are not accurately tracking their website(s).

For demonstration purposes, let's assume you are tracking it and your visit-to-lead conversion rate is 5%. If this were your business, would you pay $2.00 to drive a new visitor to your site? Of course you would! If you could get visitors to your site for $2.00 each, you'd be getting leads for $40 and sales for $500 - half of what you decided you'd be willing to pay!

Should you be willing to pay $8.00 per click? Not unless these visitors convert at a higher rate than your average website visitor. Why? Because at $8.00 per click, you're paying $160 per lead and $2,000 per sale - that's double your identified ceiling.

Why do you need these numbers?

Suppose you're trying to decide between PPC advertising and SEO services - which is a better investment? Some realtors like the control and immediacy of PPC advertising, but you have to be really careful about what you pay per click. Far too many realtors use ego instead of basic economics to determine what they pay per click. This is a recipe for disaster!

If you want to maximize your online marketing performance, you must know your numbers. Better data equals better results!

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