An emphasis on solutions is valid, since we all have problems for which we need answers. And this is a big step up from the previous infatuation with merely employing technologies as if that in itself was a solution. Too often we believe (often with the help of technology vendors) that the technology is the solution, only to discover that we have been addressing the symptom and not the disease. To deliver the desired results you must first correctly define the correct end result.
The evolution of real estate websites provides a good example to illustrate this point.
Originally, the goal of implementing a website was just to have one – to be “on the web”. The Internet was new and few understood how to monetize its potential or how it would evolve. Broker websites replicated offline advertising. The problem being solved was merely advertising, promotion, and keeping up with the competition. But soon the emphasis shifted to lead generation, both directly and through third parties, and there it has mostly remained.
The resulting investment in websites and lead generation is tremendous, including website design, promotion, Adwords, SEO experts, reciprocal links, and the latest craze – blogs and social network links to drive up search page position. All of this investment of time and money is to generate more leads, good leads and bad leads. The result: almost every broker is frustrated with the value derived from Internet leads. (This gets into the issue of what should truly constitute a “lead”, but that is an issue for another day.)
Their disappointment results derives from concentrating on the wrong outcome. Is lead generation what you truly desire? Many brokers generate tons of leads but convert only 3% of them. You cannot take a lead to the bank. Revenue is the desired end result; everything else is a component in that process. Brokers – and the technology – have focused like a laser beam on generating leads, but barely at all on how to convert these expensive leads into revenue. Brokers should be focusing on “generating revenue from the leads I receive.”
Here is another way to demonstrate that attention is focused on the wrong issue. Let’s say your desire is to double the revenue from Internet leads. To do so you basically have two options:
1. Generate twice as many leads (and convert 3% of a larger number).
2. Double your lead conversion success rate on the leads you already generate.
By far the most effective option is to concentrate on lead conversion. Improving the efficiency of lead aggregation, assignment, agent accountability, and lead ROI analysis will typically cost less than 20% of the investment to double the leads generated. That is a factor of 500%. It is the old adage of making the most out of what you already have (or, not doing more of what doesn’t work). Yet brokers continue to spend more to generate more and more leads which will not close. They have not focused on the correct end result – revenue – and have assumed that the lead is the desired result, while the goal is a converted lead.
Looking back at our example of websites, should your goal be to generate more leads, 97% of which won’t convert into sales? Or will concentrating on converting more of the leads you currently generate into revenue be most efficient in reaching your goal? Some brokers have realized this and through active management of their leads see conversion rates of 15% to 20%. For most brokers to match that outcome would take a very expensive five-fold increase in leads generated. They have correctly defined the desired outcome, and have allowed the solution and technology flow from that conclusion.
Learn to ask the right questions, and never lose sight of the bottom line.
Identify goals that are end results.
Use this analysis process for all problems, technology based or not, and you will find yourself wasting a lot less time and money on “solutions” which don’t actually generate the ultimate result.
