To use an ISA or not – that IS the question!
Mitch Ribak is the CEO of Inside Sales Agents (pictured), and Broker of Tropical Beachside Realty. Mitch has spent a decade perfecting real estate lead follow-up, and is an expert on online lead conversion and ROI. We asked him to be a featured guest author so he could share his story and wisdom with you.
It's been a little more than 11 years since we started our ISA program at my brokerage, Tropical Realty Beachside. The results have been amazing, but the process that got us to where we are has been even more amazing. We overcame barriers that many real estate teams face every day, and learned how to triple our investments as a result. Let me tell you the story.
The whole thing started on a whim, when one of my agent's assistants, Juli, told me she was going out to look for a job since her boss was leaving the business. Instantly, I had an idea. I told her I was frustrated with our agents not calling their leads, and asked if she would be interested in making calls on their behalf. Juli jumped at the idea, but had no idea what was in store for her…
I knew from the number of sales I had as an agent that there were hundreds of thousands of dollars being left on the table. I just didn't get it. As a broker and a business man, I was frustrated. How could agents not call their leads?! It didn't make sense to me.
Juli called leads for about a year and we saw some results, but not many. We realized we needed to make even more calls, so we hired Marlana as a second ISA. Over the next few years our numbers grew, but so did the competition.
To stay ahead, we had to become stronger at lead conversion. Our numbers, though good, were never good enough. Once a month, Juli, Marlana and I would have a conversation about what was going on and the reality became obvious: they were doing more admin work than phone calls. That's when we had our "Aha!" moment and knew it was time to make some changes.
We had lots of challenges in those early years and we invested in overcoming them. In addition to spending a small fortune building our own website and lead conversion systems, we constantly tweaked those systems and our agents' follow up processes.
We became more analytical of our processes, testing our own methods, and really focused on figuring out what works. In the end, we came up with a follow up system that took our lead conversion to 2.5% on short term leads and currently at 5.6% on long term leads (this means leads from 2009 are not converting at 5.6%. We still have 200+ active leads from that year). More importantly, it gave us a predictable system to generate sales year in and year out.
I've spent over a decade testing what works, but you don't have to.
This brings us back to my original headline, "To Use an ISA or Not – That is the Question!"
Ask yourself this: how much money are you spending on lead generation, your websites, CRM, and any other tools you are using? To me, it's always been about ROI. I don't really care how much money I spend monthly on leads or solutions as long as I'm getting at least a 2-3x return.
So, what are you getting? …If you are not in the 2-3x your ROI range, you might benefit from an ISA or an ISA service. The larger you are as a team, the lower your ROI will be as the cost to maintain a larger group increase both in lead acquisition and lead conversion.
Let's look at some of the numbers my brokerage has done for years. The example below are my 2015 numbers:
|Annual Cost of Lead Program - Software, ISAs, Marketing||$300,000|
|Average Number of Annual Sales from Leads||325 (with 25 agents on leads)|
|Average Sale Price||$217,000|
|Database Size (2008 - 2015)||45,000 Leads|
|New Leads in 2015||~9000|
|Total Sales Volume||$70,525,000 from Leads|
|Total Lead Sales Commission (Based on 2.75%)||$1,929,438|
|After Split Team $||$969,718|
|Net After Lead Acquisition & Conversion Costs||$669,718|
This has been an example of a typical year we have had at our brokerage the last several years. Our total volume for the brokerage runs around $130 million - $140 million.
Here are the most important elements of an ISA service:
- ISAs call leads when they come in – an ISA ensures you have coverage on weekdays, weeknights and weekends, even when you or your agents aren't working.
- ISAs nurture leads until they are ready to buy – 54% of our sales from leads come from leads from any given year, while 46% are from leads that are a year or older. An additional 22% of our closed leads are more than 3 years. Never give up until someone tells you to leave them alone!!
- ISAs keep your agents accountable – Once you give your leads to your agents, what happens? Do they call the lead once and never again? Do they create a saved search like it's supposed to be done? One of my favorite lines is from the great sales guru Chet Holmes who said, "They don't respect what you don't inspect".
- ISAs help you understand your numbers – Once you have the systems in place, it's important that you analyze and understand your numbers to be able to get peak performance out of your agents that are on leads. ISAs help you keep track of this data and better understand your team.
- And finally, ISAs help you decide who to shift out of the lead system. If an agent isn't performing, an ISA will identify that, allowing you to bring in fresh agents who will work the leads efficiently.
Obviously, there is a lot that goes into mastering lead conversion that I'm not talking about in this post. For example, one of the biggest mistakes I see is team leaders and brokers hiring the wrong agents for their Leads Team—but that's for another blog.
For my brokerage, our ISA team has been the most important aspect of our Lead Conversion Systems, and has drastically improved our profits and ROI. Software is great, texting is great, drip campaigns are great, but nothing—nothing—converts leads like good ole fashioned phone calls! CALL YOUR LEADS!!
Final tip of the day: Pay attention to the agents on your lead system. Those that are doing 60% or more of their business without your leads are more likely to convert leads at a much lower rate. Agents that have no idea how to generate their own leads but want to work are perfect candidates. Agents that are hugely successful on leads will only be effective on leads for a couple years. Once they have had 30-50 sales, their referral business will organically grow, therefore making leads much less important in their life.