What is the cost per lead for Real Estate Industry?
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I was going through my Quora profile when I stumbled upon a vague yet interesting question.
The user wanted to understand how much it would cost to generate leads in Google Ads campaign, specifically in the Real Estate Industry.
The exact question went like, “What is the approx cost per lead for the Real Estate industry in Google Adwords?”
So I decided to answer the above query with this blog.
Also, to clarify how the cost incurred to acquire a ‘customers information’ varies within the different segments of the Indian Real Estate industry.
Let’s touch upon a few important aspects of this question before we dig deeper.
What is Cost Per Lead?
Let’s first understand what the term Cost Per Lead(CPL) or Cost Per Acquisition(CPA) means.
These terms mean the same and are often used interchangeably.
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 service.”
There are several ways for a business to capture the customer’s intent, the most common these days are
- Provide a phone number to call the business or,
- A form on the website to fill the details or,
- Provide an email address or,
- Integrate a chatting app
How much information is captured seldom depends on the marketing goals of a business.
To bring the customer to a specific landing page where you want him/her to read about your offerings and then fill out their details for further communication, at times businesses have to run advertising campaigns.
Google Adwords(rebranded now to Google Ads) is one of the major platforms among others to run these advertisements on.
One of the important metrics while running an Ad campaign is to understand the average cost per acquisition the business incurred.
It gives your company an estimate about the marketing budget you would have to allocate to create a pipeline for sales.
How To Calculate CPL?
In order to calculate CPL’s you, Divide the Total Amount Spent by the No. of Inquires you receive
CPL = Total Amount Spend / Total No. of Inquiries
For example –
Suppose you spend INR 15000 on your Google Ads(or Adwords) campaign and you received 5 Calls & 15 Form submissions from the campaign so your CPL would be
Cost Per Lead = 15000 / (5 + 15) , which will give you a CPL of INR 750.
This means on an average you would have to spend INR 750 on Google Ads to capture a customer’s intent.
Estimating Marketing Budget based on CPL
Now that you are aware of Average Cost Per Lead, you can reverse calculate it to understand an estimate on the monthly/quarterly or yearly budget required for running a successful lead generation campaign.
Let me explain how?
Suppose, you need 100 Leads to convince 10 Real Estate customers (10%) to visit your Project Site. More often than not, an Indian Real Estate customer buys or leases the property only after visiting the site.
You’re aware you would have to spend 750 on Google Ads to capture a customer’s intent so to capture 100 leads you would have to spend
Budget = 750 * 100 = 75000
You would have to shell out INR 75000 on an average to get an estimated 10 Site Visits.
However, another question that may arise here
How to deal with Duplicate Inquiries?
There may be instances where you find yourself with multiple inquiries, through your Google Ads campaigns, from the same customer.
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 lead, then in a separate column, I calculate Cost Per Unique 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 in making this process seamless. If you are starting fresh you may want make a note of this somehow.
It is vital to have a reporting methodology set in place, otherwise, the report may be inaccurate and can affect your campaign optimization efforts.
Now that, that’s out of the way, let’s come back to the original question
How much does a Real Estate Lead Cost?
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 India, in general, is divided into four categories i.e.
- 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 customer information of an individual whose budget to buy an apartment (or flat) is under INR 20,00,000 in Delhi NCR would be much lower compared to someone who is looking to buy a Luxurious Villa worth INR 1,00,00,000.
Then there are some other factors as well that may influence your lead generation efforts like
- Location of the Project – Whether the project is located in a prime location or how well it’s connected to major destinations.
- Brand Awareness – Whether it’s a well-established or a relatively new brand in the market. New developers, in general, have to spend more on lead generation at higher acquisition costs.
- Offers – Having an offer or discount in place increases the probability of inquiries at a lower cost.
- Offline Promotions – Offline buzz helps convert customers online because offline visibility triggers an online search or discussion on various forums.
Based on my observations and historical data that I’ve accumulated running multiple real estate campaigns over the years, managing over INR 2 Crores worth of Google Ads campaigns.
Here is what I found the average CPL’s for various 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.
If your cost for acquiring new leads is going higher than this then you need to get your campaigns optimized immediately.
One More Thing…
What is the Lead to Site Visit Ratio in Real Estate?
Site Visits are important for real estate business, whether you’re a real estate broker or developer, that is the single most important measure.
As I stressed in the start, more often than not, sales closures in real estate don’t happen without a site visit.
As a business, it helps to have a ballpark figure about the Estimated Lead to Site Visit ratio for online campaigns. Here are some observations from my campaigns that might be of help :
- If you’re scheduling 1 site visit from 10 leads your campaigns are doing Great
- Scheduling 1 site visit from 20 leads your campaigns are doing Good
- Scheduling just 1 site visit from 30 leads your campaigns have room for Improvement
- If you are scheduling just 1 site visit from 40 leads your campaigns are performing Below Industry Average
- If you are getting 1 site visit from more than 50 leads your campaigns are Performing Bad
Mind you, these numbers are heavily influenced by your sales team’s skills and the project you’re marketing.
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 of the project in person to gain more information is known as Site Visit.
What is conversion rate in real estate?
Here is the Lead To Site Visit Conversion rate:
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
What is the average cost per lead on Google Ads?
Here is what I found the average CPL’s for various 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