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6 Ways to Measure Your Real Estate Business’s Digital Marketing ROI – What to Know

Digital marketing is now one of the cornerstones in businesses as modern consumers expect personalized online interactions for their needs. This pushes companies to churn out innovative ways to gain a competitive advantage in the highly competitive landscape, which is why 98 percent of CMOs combine the best of both worlds in their traditional and digital marketing efforts. 

No matter how progressive the strategy may be, marketers still need to identify if their efforts are generating revenue to ensure their campaigns are on the right track. That’s where return-on-investment (ROI) comes into play. This metric holds a crucial role in measuring a real estate business’s digital marketing success. 

What is Return-on-Investment (ROI) and Why is it Important For Your Real Estate Business? 

By definition, ROI is a way to measure the performance and efficiency of your investment, particularly the amount of return you get relative to the investment’s cost. You can calculate it by dividing the benefit (or return) of an investment by its cost, making it easier to compare and evaluate the results of your campaigns. 

It’s a fundamental measure for any business, used to develop a better understanding of performance and identify areas of improvement. It also reveals what you should cut back and who you should target the campaign to based on the metric results, which is why it’s a necessary profitability indicator that can make or mar your real estate firm’s marketing strategies. 

The theory of ROI is relatively straightforward—it looks at the cost of an activity to the resulting outcome. Measuring it, however, is on a completely different ballpark. Consequently, the guide below should help you track and analyze various aspects of your digital marketing ROI: 

Measuring Digital Marketing Return-on-Investment (ROI)

1. Conversion Rate

Conversion rate is a go-to metric when tracking your real estate firm’s ROI, primarily if your marketing campaigns are centered on converting leads into buyers. Understanding the conversion metrics will help clue you in on the steps to achieve this goal—from areas that receive positive feedback to the ideal allocation of your resources. 

Seeing as you are analyzing conversion rates, it makes sense to track it by channel. Identifying where your traffic is coming from can boost your performance exponentially as it allows you to invest in your top channels. 

2. Cost Per Lead

If your marketing campaign focuses on collecting new leads for your agents to follow up on, one of the best ways to land a closing is to measure the cost for each new lead to verify whether your ROI works well with the campaign. 

You can quickly identify your cost per lead by dividing the total ad spendings by the total number of leads of the campaign. You know your efforts are worth the investment if the price of each lead is less than what you can produce once the leads land. 

3. Lead Close Rate 

Integrating your review on your lead close rate into your collection of online analytics can also give you a clearer picture of the effectiveness of your digital marketing campaigns. The close lead rate versus the generated leads can serve as a benchmark for your new strategy as it lets you see areas that need improvement. 

4. Cost Per Acquisition 

Identifying the costs associated with selling a house is necessary in understanding your ROI. If you are dedicating more of your resources to acquire a customer that does not bring as much value to your company, it will have a direct, negative impact on your ROI. 

Calculating the cost per acquisition will reveal whether you are overspending and cutting into your margin, which you can determine by dividing the total marketing costs by the number of sales it generates. The result will help you see areas in your marketing campaign that are not generating returns, enabling you to lower your cost per acquisition. 

5. Average Order Value

Another way to track the metric of your digital marketing’s performance is to determine the average dollar amount that contributes to your ROI every time a client chooses to purchase one of your listed houses. 

By having a comprehensive understanding of your average order value (AOV), which you can achieve by dividing the total revenue by the number of houses sold, you can determine whether an increase is in order. Even just a small percentage of increase in the average value of an order can reward you with exponential amounts of new revenue. 

Of course, you can only increase your average order value if there returns for your customers. Improving your service and providing a better user experience is one way you can up the price of your AOV, or you can also take on up-sell or cross-sell opportunities when they arise. 

6. Customer Lifetime Value 

While the initial customer acquisition costs reveal areas that are worth investing in, the work doesn’t stop there. Your business runs on building a customer base that is loyal to your brand, so understanding the amount your everyday consumer will spend over time will showcase a customer’s overall value to your ROI. 

Looking at your customer lifetime value will let you see the long-term profit you can gain from a customer, making initial acquisition costs worth it for those who consistently contribute to your net profit over time. 

It’s one of the hardest to determine since it’s difficult to judge the value of a customer on their initial purchase, but developing the ability to look further ahead will help clear the bigger picture of your ROI in the future. 

Conclusion: Boosting Your Digital Marketing ROI 

Digital marketing is often centered on buzzwords like customer engagement and viral content, but failing to understand the metrics behind what, why, and how campaigns work will only reduce the impact of your efforts. 

Measuring return-on-investment plays a pivotal role in your real estate business’s digital marketing campaigns as it provides a full overview of your budget and returns, which can serve as invaluable information when allocating resources. To that end, the list above should clue you in on different ways to measure your ROI and boost your bottom line. 

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