The Exact Science of Cost Per Lead and Cost Per Lease
Multifamily PMCs often manage to a measurement of the cost per lead or the cost per lease. The average spend varies widely and is reportedly on the rise. Whether you manage one or both of these metrics, if you’re not comfortable with what you see, you need to take action.
Cost per Lead refers to the average cost of each of the leads you create. It is calculated by taking your marketing spend and dividing it by the number of leads you generate. Many PMCs look at this number by their different advertising sources. It’s widely reported that this number is on the rise due to expensive ILSs and it varies greatly by PMC. Each PMC has a number it can tolerate and still meet management’s important NOI numbers and this often dictates marketing spend.
Cost per lease takes the same spend but divides it across the number of leases signed. This number, like cost per lead is also rising and PMCs often like to look at both numbers to get a sense of what’s happening with their marketing spend.
The fact is, if you’re not happy with your marketing spend, you really only have 2 options:
- Improve your conversion numbers across the lead funnel, so you need less leads to achieve the same outcome
- Improve your conversion on website leads because these “free” (sometimes called “earned” vs. paid) leads can be a replacement for higher cost leads from other lead sources, allowing you to turn down your marketing spend.
Improvement of conversion numbers can only happen in a few ways. Your contacts convert to tours at a higher rate. And your tours turn into signed leases at a higher rate.
Often, conversion rates suffer when the leads that are moving through the funnel are not properly qualified. This has become particularly challenging in recent times because today’s multifamily rental prospects are more digitally savvy and accustomed to buying online than ever before.
Their buying behavior has changed. They crave information to learn on their own and explore the options before they decide to tour or speak with a person. This has led to multifamily treating rental prospects like they are tour ready when they’re actually just following their modern shopping approach. We have a bad habit of calling these folks “Looky Loos” but many of them are real buyers, just on their own timeline. So as a first step in considering how to improve conversions, you should take a look at how you’ve been managing your leads and be honest about whether you’re doing the right thing for your prospects
The previous paragraph about buyer behavior holds true on website leads too. Your website is is your PMC’s greatest marketing weapon because it is a low-cost asset compared to the leads you generate from leads sources. The ability to generate more leads from your website can help improve your need to spend money with advertisers and will lower your cost per lead and cost per lease if you get really good at website conversion.
But getting your website to convert better for you is a maturing science. Consumers are now used to the kind of digital engagement they get from other consumer brands. In short, they want and expect engaging and interesting content that is relevant to them. Consumers live in a world where much of what they see is personalized to them, reducing their need to search. And they’re used to interactive online experiences that go beyond static pages to engage them in more interesting ways. Plus, they expect a unified, consistent experience from the brands they choose to buy from that goes across all their favorite channels.
A first step to improving website conversion is to evaluate your website and be objective about how engaging it is. In reality, if you’re not seeing great time on page, repeat visions, or tours from website leads then those are all signals that your site needs to be more engaging.
PERQ was invented to solve for both conversion metrics and website performance. A next-generation technology for multifamily, PERQ engages prospects from your website and lead sources and nurtures those leads with interactive website experiences, cross-channel natural language chatbots, and SMS and email personalized nurture outreach, all powered by an AI decision engine that gives every renter exactly what they need along the renters’ journey until they are ready to tour or request to speak with a person. PMCs using PERQ enjoy more leads and leases from their website, higher conversions form their lead sources, cost savings on their marketing and operational spend, and consistent consumer experiences that delight prospective renters.