Sunday, December 03, 2006

Time to evaluate what worked

This time of year is a great time to take a look at your real estate marketing investment and determine what has worked, what has not, and what needs to change to make your 2007 financial goals. My specific approach to evaluating whether or not my investment in marketing, advertising, mail, email, etc what successful is to list out and determine the ROI from each marketing activity. I believe an economist once observed that if an investment does not provide an associated return, it is an unnecessary expenditure. I take this approach when looking at all of the money that I have spent last year and when evaluating my budget for next year.

My specific approach to budgeting and evaluating my marketing ROI for REALTOR Success Tools is as follows. First I list in a spreadsheet all of the expenditures that I have made in promoting my real estate related business over the past year. This includes real estate flyers, business cards, email marketing, real estate letters, direct mail, printing, advertising, classified ads, websites, pay per click, CPM advertising, web directories, and anything else that may have been used to promote my business.

Next to each of the items I list my overall cost or investment for each marketing item. Next to that I list the reach or number of people that the tool is expected to reach. For direct mail and email programs this is pretty easy. For the newspaper ads, billboards and other public advertisements, I estimate based upon the data that I have. On the fourth column I add the number of direct clients that the marketing tool has generated. There are a few campaigns that you will be able to identify a specific number, and if you are running a successful prospecting engine that exposes your prospective clients to your message often, you may have duplication in many of the activities. For those activities that may be counted as duplication, I assign weighted fractional values to each of the contributing tools. In the final column I print the total revenue that was generated by the clients that are listed in the previous column. For fractional numbers as described above I divide the revenue number among the contributing activities.

Now that I have this data, the value of each marketing investment can be assessed based upon the number of clients it brought to my door, the amount of money my clients spent, as well as the overall cost of the advertising investment. If I wish to calculate the specific return on investment of the different expenditures it is as simple as subtracting the revenue generated from each activity by its cost and dividing that number by the cost of the marketing tool.

Just by looking at these numbers I can determine exactly what marketing programs, advertisements and investments are worth keeping, and which programs were wastes of money. I can also rank them based upon their effectiveness and get a good snapshot of where my marketing worked and where it needs a lot of help. Finally, I can unilaterally cut any of the expenditures that did not provide any type of return from my plans for next year.

This approach to evaluating the effectiveness of your real estate marketing programs allows you to easily identify and plan the activities and expenditures for next year. This, in conjunction with your annual budget and goals provides a great foundation to start the year off right.

No comments: