We use the terms "conversions," "close," "leads," and others regularly—but to the uninitiated, these terms can be confusing. Sometimes, these terms depend on who is "selling" them—sometimes, they have multiple meanings.
At RentBridge, we're devoted to clarity in property management marketing! In today's blog, we're are going to cover what conversion, close, and other crucial terms mean from a property management marketing perspective.
First, let's get up to speed on some precise definitions for what these key terms mean—and the role they play in your metrics.
Your conversion rate is the number of people who become a contact out of your total traffic. So if 200 visitors out of 1,000 submit a form and become a contact, your conversion rate is [(200/1000)*100] = 20%.
Conversion rates can also refer to the percentage of people who took a desired action. Some examples of this might be the number of people who purchased an offer from an eblast. However, for this post, we mean brand new contacts that are converting (submitting their information) for the first time.
The close rate is the number of sales-qualified leads your sales team is able to turn into customers.
A lead is a contact that converted on your website—but has not taken enough additional actions to become a marketing qualified lead.
Marketing Qualified Lead
A marketing qualified lead or "MQL" is a lead that is more likely to close than other contacts. This is usually determined by assigning values to actions on a website (lead scoring) and setting a point value at which a lead moves from lead to MQL.
Sales Qualified Lead
A sales qualified lead is a lead that is even more likely to close than a marketing qualified lead. These are the leads that will be most receptive to your sales efforts: they have taken enough actions on your website to signal sales-readiness.
A Note on the Sales Lifecycle Stages
Property management is an industry in which leads require follow-up faster than many other industries. You're nine times more likely to close a deal if you call within 5 minutes of a form submission.
When an owner converts, they are likely doing so because of a pressing concern, sometimes called a "pain point." For this reason, we set our lead scoring thresholds low and adjust from there—so you don't have to worry about missing out on a lead that is ready to talk to sales.
So, What Is a Good Conversion Rate?
The e-commerce industry average conversion rate is 2.04%, and the industry average for real estate is 2.9%—but real estate as an industry is so much more than property management.
We have had new clients come to us with initial conversion rates as low as less than one percent—meaning less than one person out of 100 is submitting a form on their website. With tenant traffic comprising a large percentage of overall traffic (on average at least 15-30% of home page clicks), a conversion rate of 2-3% starts to look appealing.
Keep in mind: not every lead submits a form! Plenty of investors still prefer to call—and you need to count those new contacts toward your overall conversion rate. In the digital age, you can guarantee the person calling has looked at your website or encountered other marketing materials before picking up the phone.
What Percentage of Deals Should I Be Closing?
Ultimately, there is a bit of math involved in understanding what your close ratio goal should be. You need to start by determining the annual value of a new client.
- You can usually get a good idea of your annual value is by taking last year's revenue and dividing it by the number of clients it took to produce it. Now you have an idea of what a new client is worth.
- If your goal is to add 50,000 in new revenue in 2020, and a customer is worth 1,500, you'll need 33 new clients to hit this goal or to close an additional three clients per month—not counting replacement clients to negate churn.
Keeping track of conversion rates, MQLs, SQLs, and close rates helps you predict whether you are going to meet your growth goals or not. With property management marketing that has a focus on inbound marketing techniques, you can build a strong base of recurring, qualified, and relevant traffic. Matching this increase in traffic with opportunities and incentives for them to convert and become a sales qualified lead will help your sales team easily close to hit your goals.
What's the "Health Status" of Your Close Rate?
At RentBridge, you might describe our approach to property management marketing as a "holistic" one: our goal is to work with the whole client and create a relationship with your sales team that addresses what's ailing your growth. Feedback from sales helps us to adjust our strategies—so we bring better leads to the fore that are easier to convert.
Interested in learning more about partnering with RentBridge? Book an appointment with us for a total business "checkup!" While you wait, take a look at our property manager's guide to SEO! It's free, and it covers tactics that help you develop the traffic that's the key component to the definitions we covered in today's post!