To find and maintain success (and profit) in real estate, you need to plan your work and work your plan. Tracking your success, where your efforts have succeeded and with equal importance, where your efforts have failed, will ensure the likelihood of your ultimate success in working your plan for real estate success.
It is undeniable that not every marketing effort you undertake will succeed. It is also true that all of your marketing efforts will never produce the same result every time. Thus, a savvy investor will implement a system in place to track all marketing efforts and ascertain not only the best allocation of resources but the pursuit of the most effective marketing strategies all according to the carefully measured performance of each marketing component.
An effective tracking system must include these three components:
(1) COST PER LEAD-take the cost of every call you get ($/lead)-divide the total cost of a marketing campaign by the number of calls you received from that campaign
(2) COST PER PURCHASE ($/purchase)-divide the total cost of a marketing campaign by the number of houses you buy from the calls received from that particular campaign
(3) PROFIT PER MARKETING DOLLAR INVESTED FOR EACH CAMPAIGN- divide the profit realized from a campaign by the total cost of that marketing campaign
Each component is an integral ingredient, your cumulative recipe for real estate success.
A marketing campaign may have enviable cost per lead statistics that go nowhere if no purchases result. For example, generated internet leads may cost less per lead than the comparative per lead cost for a direct mail campaign. If your analysis goes no further, you may never realize that the most crucial element in your tracking is which source has a lower lead cost to purchase without which all other efforts are meaningless in that final analysis.
Simply put, direct mail lead generation is better seed generation than internet trolling because most owners about to be foreclosed are in a state of denial and are not yet sufficiently motivated sellers. They are the seeds that need to be planted and allowed to grow into that purchase you seek. Direct mail, if done right, connects you with them more often than any other marketing technique.
It would be a mistake in equal measure if you only track the cost per purchase numbers. The reason you want to keep track of your costs per lead as well is because your number of purchased homes per marketing effort will not be large enough to make an accurate assessment of that marketing campaign.
In summary then, the coordination of these three statistical elements combined with your analysis of where your calls are coming from, renders your measured success sustainable.