It’s All About The ROI

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If you want control over the growth of your income, you must have control over the scale of your leads and closings. To do this, you need to understand how the math involved is going to help you achieve your goals in relation to digital marketing.

 

3 Ways to Grow a Mortgage Business

  1. Customer Referrals

If you’re on our new Agent Legend system we can help you market to your past customers. However, using these customers to grow your business creates a law of diminishing returns in your database. There’s only so many people in the database, and the only way you can grow it is by funding more loans, which is the end goal.

Most companies in the mortgage business, once they mature to the point of being in the business for at least 3 to 5 years, solely rely on their past customers to grow their business, which is not scalable. This is very risky because if people don’t refer you, you have no way to “turn up the dial” to get more customers.

 

  1. Realtor Referrals

The second way you can grow your business is by referrals from realtors. Here at Connection Incorporated, we are helping you generate real estate leads as well as helping you build and maintain those relationships. Unlike customer referrals, this is absolutely a scalable system and you should be making the effort to bring more realtors in your inner business circle.

 

  1. Advertising

This is the most consistent and most reliable way to “turn up the dial” and scale your business to the level that you choose. Most people, when they look at digital advertising, feel like they’re throwing their money into a black hole and just cross their fingers – hoping these ads fund the deals they need on the back end.

The purpose of this post is to eliminate these “black hole” concerns on advertising and empower you with the tools that you need to track what we’re helping you to do. This way, at the end of the quarter, half a year, and year mark, you can look back and see what your return on investment (ROI) was. For example, you could see that if you put $1 into ads and a year later noticed you made $8 off that same ad, you can then decide to double down or reinvest.

This is why we’re here. At Connection Inc., we take money, invest it in successful advertising and create a return on investment for the business system – using that return to fuel growth. We want you to have our system in place so you can map out the growth of your income and then give us the scale that you want in regards to your advertising costs.

 

Success with Digital Marketing Comes From 3 Things

  1. Consistency

It’s very difficult to make advertising work in the long run if you are running a campaign and then stopping it. An example of this would be turning the ad on for 30 days and then shutting it off. This creates a rainbow effect of income and results.

We know the Facebook algorithm does not do well with starts and stops. It needs steady, consistent fuel so that it can do the math on how to get results. It figures out who is your perfect customer and your perfect audience. The more clicks, comments, likes, shares, and conversions you get, the more the system learns. Therefore, the longer you run your ads or campaigns on a consistent basis, the smarter the system gets.

Even if you are running on a small budget, such as $5 to $15 per day, by the time you are in that campaign for around 90 days, your pixel, which is tracking how many people are responding to your offer, has started to figure out and evolve to the point where it knows who on Facebook is more likely to convert on your offer.

Facebook wants to get you the best conversions. So, when you have a competitor that enters your marketplace, who is bidding to get your same clients, and they have an ad campaign that they are shutting off and re-starting, they are placed at the start line again every time this occurs.

If you steadily run your campaign, even on a low budget, you are the one that is going to get the traffic and your competitor is going to have to pay more in order to get their pixels to the same point as you. Also, the longer you run the campaign, the lower your cost per lead gets and the higher the quality of the lead is that comes through the system. But you need the consistency in order to do that.

Because we are dealing with Facebook ads, which are different than Google ads, consistency is also important for the growth of your business. On Facebook, we know these potential clients are interested in buying real estate or obtaining a mortgage because they are responding to your ad. But what we don’t know is if they are looking to buy something this week or nine months from now. There is no way to filter that out other than your autoresponder system.

Our advertising is never going to get to the point to convince someone to purchase a home if they’re not interested – they have to make the decision to buy the home themselves. So, what we have to do is look at our advertising from the mentality that we’re going to be the absolute best at the highest quality of advertising so that when the buyer is ready, they will come to us.

The longer you run your ad and the more consistent you are with your follow up, the larger you grow your database. So, just plug your leads in and the Agent LO system does the consistent follow-up for you. That way you are able to capitalize on every lead by converting someone who was interested 9 months ago but is only just now ready to buy a home.

 

  1. Tracking

Tracking gives you power over your mind. It’s a scary process when you’re investing in advertising without really knowing who is going to come through the funnel.

Statistically speaking, 40% of the people who go through Agent Legend are responding to us, which means 60% of the people never respond. So, when you’re investing in digital marketing and 60% of the people are not responding when you reach out to them, your brain is immediately going, “Hey, wait a minute! These people are no good” but we know it’s a numbers game. It’s all about whittling that down where we get a percentage of people who are interested. If you are not tracking those numbers your brain will automatically tell you that majority of people going through this are not responding so this probably isn’t working, and thus you’ll want to mess with the consistency. However, if you track the numbers over 30 days, 60 days, and 90 days, you can then calculate your ROI rather than how many leads you got, and you will see it as an investment.

 

  1. Discipline

Be disciplined and do not check your return on investment every day but instead use the spreadsheet monthly to see how many leads you generated, how many people you put in the pipeline and what you are forecasting from the system. Then quarterly, semi-annually, and annually you need to look up your ROI. The longer you track your ROI, the longer you are consistent with the system and the more profitable it becomes for you.

 

Planning Your Systems

This photo here is an example of what the Connection Inc. team uses to track the systems for our clients. What we start off with is tracking our total advertising spend and not pictured is all the different traffic sources we invest money in, such as Facebook, Google, Instagram, broken down individually. Then we track our deal flow back to our source, meaning the sheets not listed are funneled into our master sheet listed above.

The total advertising spend is a combination of all the different traffic sources we are investing in so we see how much we are spending, per week. Total management cost for us is our staffing costs for the managers we use to run the system internally, but for you, the total management cost would be our monthly fee broken down per week. Then you will look at the total leads per week in the system. Don’t be alarmed because this number can fluctuate weekly.

Out of the total ads spent and the total management cost, you then calculate out your total cost per lead (CPL) so you know how much you spent, how many leads came through, and what you’re spending per lead in the system. Then from there, you are able to track the follow-up metrics of what came through with the team. This gives you the total conversations, which means a lead that was generated.

So for you, we’re generating leads that are opting in from one of our campaign programs. Those of you that are running the Agent LO system, you can log into your dashboard and see how many responses you have received from all the messages that were sent out. Even if you aren’t using Agent Legend LO, just punch those numbers into this master sheet so you know what your conversion rate was from the leads you generated to the total conversations you had. Then you get a conversation percentage (how many leads turned into a conversation) and your cost per consultation.

When somebody calls in and talks to a representative of the company, we consider that a consultation and we associate a dollar cost per consultation that comes into the business. Now, of the consultations that you have or the sales presentation that you provide, you’re going to then take these people to the next level and figure out how many of them said they were interested and you can then take them through the pre-approval process.

You will then track how many conversations you had and how many pre-approvals you took over the phone.  Once you get the pre-approvals of the week and track it out for the month, you then have a conversion percentage. Figure out how many of the conversation turned into pre-approvals, which will give you a cost per pre-approval so you know what you’re bringing into the business and closing on.

From there, you are able to establish your conversion percentage on your total leads from your pre-approvals to funded loans. Then you can calculate that back to the total number of leads that you generated. Once this calculation is complete, you’re able to get your cost per closing in regards to how much you’ve spent on advertising and management to produce each closing. From there, you can take that number and look at how much you processed as far as gross or net profit in your business and calculate out your return on investment.

 

Planning Your Tracking

Below are the metrics that you are tracking:

  • Cost Per Lead (total leads)
  • Lead to Conversation
  • Conversation to Pre-Approval
  • Application to Closing
  • ROI

 

Planning Your Scale

When you look at scaling the amount of business you are getting and you track it for 60 to 90 days, you can then calculate your specific metrics for your business.:

  • $X Cost Per Lead (Total Leads)
  • 40% Lead To Conversation
  • 20% Conversation To Pre-Approval
  • 50% Application To Closing
  • X% ROI

 

How Much Profit Do You Make Per Deal?

An example:

  • $X Cost Per Lead (100 Total Leads)
  • 40% Lead to Conversation (40 calls)
  • 20% Conversation to Pre-Approval (8)
  • 50% Application to Closing (4 x $2500)
  • X% ROI ($10,000)

 

Once you have your total ROI percentage you can take that number and work it backwards. For example, we could say our goal is 4 deals a month at $2500 a month. So, at 300% ROI, you can invest $2500 to acquire every 100 leads and 4 deals. This means your maximum investment per lead is $25. Once we know what our customers are trying to achieve, we take that $25 per lead goal and work it backwards. So, if you are meeting your metrics and paying less than $25 per lead, you are making more than a 300% return on investment.

You only need to do this math once. Take the time, lay it out, and do the math on your specific situation for what you want your ROI to be, and then you will know your numbers. You will know the numbers you need to hit in terms of how many people you need to talk to, the number of pre-qualifications that you need, and the number of deals that you need to put into your pipeline every month.

 

How It Works

It costs $1500 to get kick started and you’re putting $1000 into advertising so you’re paying $2500 the first month. Every month after that you are paying $1000 for management and $1000 for advertising. The first two months you most likely won’t be getting any closings so you will be down in profit. After the 90-day mark, your pipeline will begin to build. Thereafter, your closing continues to go up and your investment stays the same.

 

  • Month 1: $2500 = 100 leads = 4 pipeline = 0 closing = -$2500 profit
  • Month 2: $2000 = 200 leads = 8 + 1 pipeline = 0 closing = -$4500 profit
  • Month 3: $2000 = 300 leads = 12 + 2 pipeline = 2 closing = -$1500 profit
  • Month 4: $2000 = 400 leads = 16 + 3 pipeline = 5 closing = $11,500 profit

 

Typically speaking, most small businesses try a marketing system for only 90 days and they stop. To be successful, you need to be consistent, track the numbers, and have the discipline to trust the system that it is going to work.

 

Contact Us

For more information on how to make the biggest return on your advertising investment, please view our YouTube video HERE or contact our Connection Incorporated Team at 1-855-432-3990.

A thriving Canadian entrepreneur. A loving father and husband. A blossoming philanthropist. The CEO of an innovative Digital Marketing Agency. Johnstone has mastered the art of digital marketing on numerous platforms (Facebook, Google, YouTube, Instagram - to name a few) which has given him the unique ability to assist hundreds of loan officers, realtors, lawyers, financial planners, and insurance agents with growing their businesses online. He continues to grow his skills and hone his craft and is ready to bring you up to speed on the latest and greatest in the digital marketing world!

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