Just thinking about writing this post has me anxious. The Pros & Cons of Internet Lead Generation are only the beginning. Deciding when to start, the current real estate market, what type of internet leads, how much to spend, where to spend it, and what skills you have to sharpen in order to turn it profitable all need to be looked at together.
There is just so much to discuss on this topic that it feels overwhelming. I’m going to try to take my own advice and just take it one subject at a time, so here we go…
Why Is Internet Lead Generation So Popular?
The first thing I really remember about my first day as a licensed real estate agent was being assigned a desk by the Manager/Broker and then he wished me luck and I was on my own. I thought “What in the world do I do now?” After all, everything I was taught in Real Estate School was about laws and agency and legal descriptions, etc. I learned nothing about what the heck I was supposed to do to make money!
In 1999, there was no such thing as Internet Lead Generation, BUT if there was, I would have almost certainly spent the few dollars I had saved on the first internet lead company that called me and most likely would have been broke in about 2 months and out of business shortly after that. For that reason, I am so grateful that Internet Leads weren’t around back then.
The reason I tell you this story is to answer the question above… Why is Internet Lead Generation so popular? Well, just listen to the pitch of the Internet Lead Generation Salesperson from just about any internet lead gen company. Some of these guys can just make it seem so easy, inexpensive and risk free.
They pounce on the following truths about the majority of lead generators…
- We are bad at capturing referral leads by using systematic strategies to get “top of mind“
- We are bad at capturing “hand waver” leads
- We generally have negative mindsets, especially when it comes to lead generation time
- We have limited beliefs and think prospecting activities like “sphere” calls just upsets people and they don’t work
- We LOVE ❤️ to throw money at problems ❤️
- They teach us that it’s as simple as “Buy the lead, make the sale”
- They convince us that it’s a safe investment… After all, “Just one sale will probably pay for your whole campaign and if you get enough leads you’re sure to get at least one sale. Right?” (Come on, we’ve all heard that one more than once)
I can’t speak for conventions in all lead generation industries, but I can speak for the real estate industry. If you go to a convention in real estate, you will see about 80% of the vendors in the exhibit hall selling leads.
Everywhere you look is someone telling you how rich you’re going to become when you buy their product and it’s not really an expense, it’s an investment because you are obviously going to make the money you spend back.
They even parrot your limiting beliefs about things like making your phone calls. I once stood by quietly raging when I heard a salesman for an internet lead company tell a group of my agents “We all know making phone calls doesn’t work! It just annoys people and is actually counterproductive to your goal of getting business from them because no one is going to give business to people who are annoying them!” To my amazement, I saw my agents…. my students… the people I spent the majority of my day preparing for people like that…. SHAKING THEIR HEADS IN AGREEMENT! I was angry enough to want to give up on all of them and let them just spend until they were broke and out of the business, but I didn’t do that. I realized quickly enough they were only reacting to the promises of wealth AND to someone validating their limited beliefs and negative mindsets. It’s a dangerous combination that causes many credit cards to see the light of day.
The thing is this… There is money to be made in internet lead generation and I do believe at some point in your career you will absolutely need to get involved. I just don’t want you to jump in without doing all of your homework and research first.
When Should I Consider Internet Lead Generation?
Do you remember the difference I discussed in a previous post about the differences between marketing and prospecting? (Click here if you missed it) Here’s a real quick review…. Marketing is great for people who are established and making money because it saves the lead generator time, capturing leads passively by spending money.
Prospecting is great for people who are not making a lot of money because it focuses on one-on-one actions which require time instead of money. It also shows a faster return on investment.
Internet Lead Generation is MARKETING.
Check out where you are in the Money vs Time post (Click here if you missed it) and act accordingly. In other words, if you have plenty of time and little money, then I would NOT be focusing on Internet Lead Generation at this time. (More on that later) If you have a good amount of money but are challenged to find the time to market or prospect to get more leads then it’s a good time to leverage your money and start to consider something like Internet Lead Generation.
If you decide you are ready to leverage some of your revenue to increase your amount of leads it’s going to make sense to at least consider Internet Lead Generation as your next move. However, before you decide to dedicate money AND time to this option, continue to explore and plan.
How Much Time and Money Can I Sacrifice?
Here’s the problem with Internet Lead Generation that the salesman is very unlikely to mention. Internet Lead Generation costs both a LOT of Money and a LOT of Time. If you overdo it, you can bankrupt yourself of both of your top priorities (Time and Money, “click here” for more on Time vs Money)
If you’re wondering how much you’re going to have to spend on Internet Lead Generation, read on. It’s not a simple question. You can spend literally as little or as much as you want. The amount you spend will vary depending on the type of lead, the quality of lead, the amount of leads, and what tools may or not be included with the lead.
For example, a product like SmartZip® uses an algorithm to help make your farming for new listings more effective. It gives you a whole suite of tools to capture and nurture leads from your farm and because it includes direct mail postcards, market data, a CRM, drip campaigns and more, it is substantially more expensive than something like Zillow®.
You’re going to have to decide if the quality of the lead and included tools makes sense for the amount of money you’re going to spend. Generally speaking, the higher quality of lead and tools used to help you incubate and convert the lead will cost more money but can save you time and that can make the more expensive option the better value.
Just for an example, let’s use Zillow® and SmartZip® again.
(By the way, I am merely using these 2 companies as examples. I do not work for or receive money from either of them. I am not saying they work great or terrible, I’m just using them as an example to illustrate my point)
The Zillow® lead most likely will cost substantially less than the SmartZip® lead, so it may seem like the better value on the surface. However, when you start to factor in the time it takes to incubate and convert those leads into prospects you will see the quality of the SmartZip® lead coupled with the tools that automatically help you incubate and convert leads saves you a lot of time over Zillow® and if you’re more concerned with saving time than money, SmartZip® may become the better value.
What Type of Lead Generation Should I Start With?
This leads to the next question. What type of Lead Generation should I start with? The two we discussed above couldn’t be much more different. Zillow® focuses mostly on buyers and having to use a very high touch approach to the incubation and conversion of the lead. In other words, you will have to call, text, email, message on social media, and whatever else you can think of to get them to talk to you and ultimately work with you. SmartZip® focuses more on listing leads than buyer leads and uses a soft touch approach to incubate and convert the lead because it’s powered by the statistics and data as well as interactive emails in their back end CRM system. However, both are considered “internet lead generation”.
The differences between the each types of Internet Leads is HUGE. It includes everything from
- Search Engine Optimization – This can be very expensive and difficult at this stage of the game.
- Google “Pay Per Click” Campaigns – Lower quality leads with a relatively high cost, BUT you can amass a large amount of these leads. If you have a good incubation and conversion system (to learn more, “click here”) this could be a good method for the long term.
- Social Media Apps such as Facebook, Instagram, LinkedIn – You will have to determine if you’re going to focus on people you already know (Part of your “Top of Mind” efforts) or if you’re going to pay for “Haven’t Met” leads
- Content Marketing – Blogging and Videos with lead capture elements built in
- Email marketing – offering a “Call to Action” to get leads to give you their info
- Lead Generation Platforms – such as Zillow, Realtor.com, Veterans United, etc… there are 3 types:
- Option 1 – Sites that charge a fixed rate per month based on things like zip code.
- Option 2 – Sites that charge a set rate on a lead-by-lead basis
- Option 3 – Sites with “scrubbed” leads that don’t charge until you close the sale. You will pay them a large referral (usually around 35%) at the time of the closing
- Your IDX website – Allow buyers to search for homes in return for them registering on your site.
- CRMs – such as kvCORE and Real Geeks are built with tons of tools to help you capture leads.
As you can see, the options are almost limitless. Did I mention them all? Not even close, but this is a pretty comprehensive list of the different types of internet lead generation available.
How do you choose which one to use? You need to do your research.
- How much does it really cost? See if there are any hidden costs
- What type of leads do they focus on? Buyer? Seller? First Timers?, etc
- What is the quality of the lead?
- How long do you have to incubate the lead until they are ready to talk to you?
- What’s the learning curve? Some of these tools look cool but are very difficult to set up and use
- How many leads will you capture per month?
- Are you locked into a contract? If so, why?
- Do you know anyone else who has used this product? How did they do?
- Does it play to your strengths?
- Will it cost you more time or money?
- What’s the money-back policy?
BUT…. Even before you try to get the answers to the questions above, you need to consider a couple of other things.
Mindset Matters!
I’ve said this over and over again on this website. It starts and ends with mindset! (Click here to visit Mindset Corner) If you don’t have a positive mindset or if you’re filled with limited beliefs, get over to Mindset Corner and FIX IT before you spend one penny or one second on Internet Lead Generation. Seriously, if your mindset isn’t positive and focused then Internet Lead Generation is NOT for you.
Next, take that deep look at yourself and figure out what your strengths and weaknesses are because your focus on leads is about to make a huge shift.
Switching from Lead Generation to Lead Conversion
Here is where so many people go wrong. They assume when they buying leads that the purchased lead is just going to automatically start to work with them and turn into a sale. Unfortunately, it doesn’t work like that. You need to convert the lead and that is a whole lot of work and time… especially when that lead was generated on the internet. (To learn all about what you need to do to convert leads, “click here”).
Here’s the thing…. Lead Conversion requires a good amount of discipline and a system to give you the consistency needed to convert those leads into sales. After all, what good is having a collection of leads when none of them are worked properly and turned into sales.
Lead Generating Can Be Either a Career or a Hobby
I have a good friend in real estate who is a legend in the industry. One day he approached me and asked me to help him get his database organized. We opened his database and I asked him to go to his contact types page so I could get an idea of how he was categorizing the people in there. The first thing that jumped off the monitor at me was the group called “Leads.” He had over 12,000 people in that group! I said “Holy <bleep> You have 12,000 people in your “lead” category????
He misunderstood my outburst, and with a very proud smile, he said “Yes, that’s over 20 years of hard work and lead generating”. I shook my head and explained that I was not saying that to give him props. I said what I said because the very idea of collecting over 12,000 leads and NOT getting them converted to some other place in his database made me sad.
Leads are not meant to spent the next 20 years in a category in your database called “leads!” They are meant to be converted to either a “yes” or a “no”. When you don’t get an answer, you wasted all the time and money spent to capture that lead in the first place.
He spent years working his lead generation systems and selling a LOT of houses, but he never took lead conversion seriously enough to work those 12,000 leads and they sat there for years! We did some quick math and discovered that if he got just 1% of those leads to say “yes”, that would have been an extra 120 sales! At his average commission at the time ($7500), that would have added (are you ready for this?) $900,000 to his GCI (Gross Commission Income) That is enough to completely change his life.
Even though he enjoyed a very successful real estate career, his lead conversion lacked and it cost him almost a million dollars in GCI by not focusing more on converting the leads he captured. (Again, you can learn a LOT more about this by “clicking here” and getting the basics of lead conversion)
This is the big problem with people who buy leads. Unfortunately, the common thought is that by simply buying the lead, the conversion will happen on its own. Even worse, there are plenty of people who think the purpose of buying leads is to focus on the leads that are ready to act right now and to ignore all the rest. (and by ignore, I mean they put them on a drip campaign and hope to be the first person EVER to convert a lead by sending drip emails… OK, maybe not the first ever but I’m willing to bet one of the first 10 sales converted by a drip email)
What I’m trying to tell you is this… Getting the lead is just the beginning AND it’s not even the hard part.
Your real job is to convert the lead! So what are your strengths and weaknesses? If you are really disciplined and don’t mind hearing the word “no” a LOT (“click here for more on “The Power of No“) then you may want to focus more on capturing a lot of leads for less money and working them over the course of time with disciple and a good system.
If you’re not into more phone calls and systematic communication, you may want to focus more on the products that offer the incubation and follow-up for you. Of course, this does not mean that you won’t have to make any phone calls. It just means the products offered will help with this. If you’re opposed to phone calls and lead conversion then please don’t spend money on internet lead generation! Focus on your referral leads and you’ll be happier and wealthier for it.
What Skills Do I Need to Be Successful At Internet Lead Generation
- Lead Nurturing – Internet leads require consistent follow-up. Whether through email drip campaigns, personal calls, or text messaging, nurturing leads until they’re ready to buy is essential.
- CRM Management – You’ll need to keep track of where each lead is in your sales funnel. A good CRM system (like FollowUp Boss or Lion Desk) helps you stay organized and ensures no lead slips through the cracks.
- Sales Skills – Once you’ve captured a lead’s attention, your ability to build rapport, demonstrate your market expertise, and close the deal becomes crucial. Effective communication and negotiation skills are paramount.
- Patience and Persistence – Not all internet leads convert right away. Some will take months or even years before they’re ready to buy. Patience and a consistent follow-up process are key to long-term success.
- Digital Marketing Knowledge – To optimize your internet lead generation, you need to understand digital marketing principles. This includes how to interpret analytics, test different ad strategies, and tweak your approach based on data.
How Does the Current Real Estate Market Affect My Decision?
Even the real estate market has to be considered before you pull the trigger. At the time that I write this post, the market is saturated with buyers and has a shortage of listings. If you have a listing, you’re almost certain to sell it as long as it’s even close to reasonably priced. Conversely, if you have a buyer, you are probably going to be in bidding wars with several other buyers and it will be a lot harder to make the sale once you convert that lead. It’s adding a whole extra step, making an already time consuming and difficult process even more difficult, so in these times, you’re better off focusing on a product that specializes on listing leads.
I know that seems kind of obvious, but you’d be amazed at how many people are losing thousands of dollars a year because they are not considering the current real estate market before spending their internet lead generation budget.
I understand that we covered a LOT of material in this post. It’s important to me that you consider all of these things you just in too deep to be able to climb back out.
Be careful, remember your Red Light/Green Light Spending techniques (“click here” for a reminder on Red Light/Green Light Spending) and work the leads you get. I don’t know what Internet Leads you are going to choose, but I do know they will cost you more time and money than you think, so work them until you get a “yes” or a “no”.
Finally, if you have any internet lead tips or failures that you’d like to share, please feel free to put them in the comment section below.
