What is the cost per lead for Real Estate Industry?
I was going through my Quora profile to answer a few questions around digital marketing. I stumbled upon a vague yet interesting question on the Adwords campaign “What is the approx cost per lead for the Real Estate industry in Google Adwords?”
So I decided to create a Blog around it and, ended up making a podcast as well on Cost Per Leads in Real Estate.
I’ve discussed the topic at length, on how capturing leads on Adwords for various segments in Real Estate. You can listen to it in the link below:
Let’s dig into the Quora query…
What is Cost Per Lead?
Let’s first understand what Cost Per Lead(CPL) or Cost Per Acquisition(CPA) or Cost Per Conversion means.
In layman terms ‘It is the amount of money you have to spend to acquire the information of an individual who might be interested in your product or services.’
That information may be in the form of
- Email, or
- Phone No or
- Interested Services
or a combination of multiple fields. It may differ based on marketing goals and the information a business want’s to capture.
You may have seen this on many sites, and on our site, Digital Tripathi, as well. Apart from the traditional entries like Email or Phone No. our team prefers to have more information about the services our prospects are interested in. The form can be more detailed based on business goals.
The Cost Per Lead is important to measure for the management especially while running digital campaigns. It gives you, as a company, an estimate about the marketing budget you would have to allocate in order to create a pipeline for sales.
How To Calculate CPL?
In order to calculate CPL’s you, Divide the Total Amount Spend by the No. of Inquires you capture
CPL = Total Amount Spend / Total No. of Inquiries
For example –
You spend INR 15000 on your Adwords Campaign and you received 5 Calls & 15 Form Submissions from that campaign so your CPL would be
CPL = 15000 / (5 + 15) , which will give you a CPL of ₹ 750.
This means on average you would have to spend INR 750 to capture a customer’s intent.
Though a question may arise here from the example above.
What if the same customer calls as well as fills out the form?
There are different ways to tackle this scenario, I prefer to capture ‘Unique Leads’ separately in the report.
First, I calculate the overall cost per leads then in a separate cell I calculate ‘Cost Per Unquie Lead’ as I’ve shown in the screenshot below.
Do let me know if you’d like to get a Campaign Reporting Template specifically made for Real Estate, comment below
Using a Lead Management System(LMS) or a CRM with LMS functionality can further help out making this process seamless.
It is important to have a reporting methodology to follow otherwise the information may not be accurate.
Now that, that’s out of the way let’s come back to the original question
What’s the CPL for the Real Estate Industry?
As stated at the start of the blog the question is a bit vague so let’s try to break it down.
First and foremost, Real Estate, in general, is divided into multiple categories like
- Uber Luxury,
- Budget Homes,
- Affordable Homes etc.
The cost of acquiring customer information in each category varies drastically.
Let’s say, for instance, the cost of acquiring a customer whose budget to buy an apartment is under 20 Lacs in Delhi NCR would be much lower compared to someone who is looking to buy a Luxurious Villa.
Then there are some other factors as well that may influence your lead generation and CPL’s of the campaign like
- Location of the Project – Whether it’s in a prime location or how good is the connectivity to major destinations, etc
- Brand Awareness – If it’s a well-established and reputed brand or a relatively new brand.
- Offers – Offers and discounts increase the probabilities of inquiries at lower costs.
- Offline Promotions
How much does a real estate lead cost?
As I said above CPL varies from segment to segment. Although based on my observations running multiple campaigns over the years while spending over 2 crores on Ads, here is the average cost per lead for real estate segments on Google Adwords:
- Uber Luxury – INR 4000+
- Luxury – INR 2000 – INR 5000
- Budget Homes – INR 1000 – INR 2500
- Affordable Homes – INR 500 to INR 1300
There you have it.
Now, if your cost for acquiring new leads is going higher than this then you need to get your campaigns optimized immediately or maybe look for alternative options.
What is the Lead to Site Visit Ratio?
Now, that you’ve acquired all those leads, for real estate business, whether a broker or developer, there is one most important measure to keep in mind. SITE VISITS.
More often than not, closures don’t happen in real estate without a site visit.
As a business, it helps to have a ballpark figure about the Avg. Lead to Site Visit ratio for online campaigns. Here are some observations from my campaigns that might be of help:
- Great – 1 site visit from 10 leads
- Good – 1 site visit from 20 leads
- Average – 1 site visit from 30 leads
- Below Average – 1 site visit from 40 leads
- Bad – 1 site visit from more than 50 leads
Mind you, these numbers are heavily influenced by your sales team’s skills.
To summarize this blog, we have covered:
- The definition of ‘Cost per Lead’ and how to calculate CPLs for Digital Campaigns with examples.
- We also briefly touched upon the concept of ‘Cost per Unique Lead’ and how to deal with duplicate leads.
- Then, we deep-dived into what is the average cost to generate a lead for different segments within the Real Estate Industry and the factors that may influence lead generation on Google Adwords.
- Also, we covered how often customer inquiries convert to site visits.
What is a lead in real estate?
A lead, in real estate, is the information a user shares with a real estate company or agent. This information is usually filled on the website(online) form or an offline form.
One may ask for information like Name, Email, Phone No. or Interested Product/Services or a combination of many fields. It is more efficient for businesses to know about user intent.
What is the cost of lead?
It is the amount of money a real estate company or agent has to spend to capture or acquire the information of a user. It is often referred to as CPL.
How much does a real estate lead cost?
The cost of capturing customer information in each real estate categories vary. It can range anywhere from average INR 300 for Affordable homes to INR 5000 for Uber Luxury projects. The lower the no. of buyers in a segment the more premium their information is.
What is a Site Visit?
When a customer visits a location in person to gain more information about the project.