{"id":3414,"date":"2019-07-15T14:07:00","date_gmt":"2019-07-15T21:07:00","guid":{"rendered":"https:\/\/collegeofrealestate.net\/?p=3414"},"modified":"2019-07-15T14:32:26","modified_gmt":"2019-07-15T21:32:26","slug":"why-this-broker-spends-155000-per-month-on-lead-generation","status":"publish","type":"post","link":"https:\/\/collegeofrealestate.net\/why-this-broker-spends-155000-per-month-on-lead-generation\/","title":{"rendered":"Why This Broker Spends $155,000 per month on Lead Generation\u2026"},"content":{"rendered":"

<\/h1>\n

\"Why<\/h1>\n

Why This Broker Spends $155,000 per Month on Lead Generation\u2026<\/h1>\n

[mashshare]\n

For most new broker owners, the idea of shelling out more than the price of a brand new Porsche on lead generation every month is pretty hard to swallow. Most of the time, many brokers don\u2019t even spend a dime on lead generation. After all, they\u2019re paying the damn rent! Why should agents, especially newer ones, expect to be given leads for nothing? Most brokers would laugh if you brought this up in a meeting.<\/p>\n

Luke Monroe is not like most brokers.<\/p>\n

The Investors Approach to Attracting & Keeping Talent<\/h2>\n

While Luke Monroe isn’t exactly an outsider to the industry, he came to residential brokerage from the harsh, cut-throat world of investing.<\/p>\n

He began by focusing on the mistakes of other brokerages make when trying to expand into new farm areas. They always start out with expensive office spaces, branding, ad campaigns, the works.<\/p>\n

Then they scramble to find talent and get them working.<\/p>\n

Instead of the traditional model, Luke decided to run the brick and mortar side of his business, Kendrick Realty in Pleasant Hill and Orange County California lean, and invest heavily in the lifeblood of any brokerage. While doing so, he began undercutting the competition by buying leads DIRECTLY from Zillow, Realtor.com and a few other sources.<\/p>\n

Luke\u2019s strategy was massively successful. He was not only able to recruit and keep top talent, but devised a points based training program that saw brand new agents closing deals in their first month and recently opened up a second office in Orange County.<\/p>\n

The Close: Interview with Luke Monroe<\/h2>\n

The interview with Luke includes: how he scaled his lead generation, where he buys leads, how his teams nurture leads and more.<\/p>\n

Emile:<\/strong>
\n\u2026 Where your company is because that makes sense for all of those things basically to happen. For us, I am buying leads where I have the opportunity to do it. Where it makes sense according to our metrics, as opposed to just where I live. We\u2019ll find the opportunity first, secure the lead source, and then find the agent to take advantage of, plug into our system, take advantage of that lead source second.
\nLuke Monroe:<\/strong>
\nSo, it\u2019s very important to me as the broker and also kind of to our brand and our promise to our realtors that the leads always come first. I\u2019m never going to say, \u201cHey, join our brokerage and then we\u2019ll try to find some leads, and all of these good things will happen.\u201d The order is reversed where I\u2019m saying, \u201cHey, look at the screen. This is what I have coming in in the area. Currently, we don\u2019t have somebody here. That could be you; let\u2019s talk about that as an opportunity.\u201d<\/p>\n

Emile<\/strong>:
\nRight, I think that\u2019s a really smart way to handle it because you\u2019re going to the places where you think there\u2019s going to be new business. Maybe a missed opportunity where other brokerages are kind of dropping the ball, which is pretty frequent, I\u2019ve had at least in New York. So, one other thing that a lot of the smaller teams, or people that are just starting a boutique brokerage, one of the biggest kind of pain points they have is scaling, scaling your business.<\/p>\n

It makes sense because you\u2019re already outlaying money, maybe you\u2019re renting office space, you\u2019re hiring two ISAs instead of one. So, it\u2019s a little scary, you know? So, can you talk about maybe when you guys were starting out, even from an agent level, or maybe as a brokerage level; whichever you think would be more apropos here. And then just how do you, \u201cOkay, look. I\u2019m spending 400 bucks a month and I\u2019m doing okay.\u201d How do you make the call to say, \u201cOkay, I\u2019m going to just 10x this thing and go up to three grand a month or five grand.\u201d How do you make that decision? Is there a tipping point that you guys have found over the years? It\u2019s like, \u201cOkay, now we can turn up the heat.\u201d<\/p>\n

Luke Monroe:<\/strong>
\nYes, but I think the timeline for us was much more condensed. I came to our brokerages from a real-estate investment background. I didn\u2019t have a background in real-estate brokerage operations, which has been to our advantage and disadvantage in the sense that we weren\u2019t constrained by the group-think of how it\u2019s been done in the past. But also, the reason this happened that way for so long is some of those things make a lot of sense. That we had to discover on our own, so to speak. When we were setting up our brokerage, the first one in Northern California, it was really with the end in sight. I didn\u2019t have an interest in starting with one agent trying to do more organic growth, figure out how to make it work with one person and then go to the second and the third and the fourth. We were buying leads primarily at that point from Realtor.com, and the reason I liked that product is because it let us scale very quickly. It gave us a little bit of predictability and it let me go from being a no-one. No brokerage, no agents, to being one of the 20 largest buyers of real-estate advertising in the country where we were still in my living room before we got our first office.<\/p>\n

So, we were able to achieve scale very quickly. That was very important to what we were trying to do because a lot of people that have worked with online leads before and usually struggle with online leads. In my view, the problem they have is that they can\u2019t achieve scale. So, they\u2019re spending 500, 1000 bucks a month and that\u2019s getting them three or five leads a month. You can\u2019t do anything about that. You can\u2019t build systems around it, it\u2019s not predictable; you can\u2019t build scale from that. You have to be available 24\/7 for an entire month to take eight phone calls that could come in at any hour of the day. That\u2019s just not effective in my mind for anybody.<\/p>\n

So, one of the first things that I knew I had to do was get to a scale a certain number of leads that would allow me to justify having an in-house call center team. Basically in-house ISAs so that we could 24-7 respond to every lead as it came in, whether the agent was available or not, and start engaging that client, start a conversation and be able to move those relationships forward. So, when we\u2019re talking about, \u201cWhere do we start. Did we start at $125,000 a month?\u201d No, but I think we started at $30,000 a month and grew at five or six thousand a month since then pretty consistently to get to where we are now.<\/p>\n

And that was necessary, kind of, to create that scale. It was difficult also, certainly at the time obviously, it\u2019s a big cash outlay for what we had as an unproven concept, and the call center team salary\u2019s were all in addition to the direct ad sense. It was a very expensive business model to set up, but I had a very strong belief that it was going to work. There were some questions along the way that whether or not it would work with me or with somebody else, but I knew that it was going to be a successful strategy.<\/p>\n

Emile:<\/strong>
\nYeah, it\u2019s really interesting because it\u2019s sort of the opposite of what most people think a brokerage is \u2026 They conceive of how a brokerage starts or how a brokerage grows and it seems like you\u2019re taking kind of, \u201cOh, we got the great people and we scrimp and save. We got the good people, and then better people, then we hire slightly better.\u201d And you\u2019re like, \u201cWell, why don\u2019t we get the market first?\u201d Let\u2019s get the customers then maybe we start build up the team to work those customers.<\/p>\n

And that seems like how it works in most other businesses. You need the product itself and you need the customers sort of first and foremost. Having a huge staff of people who are paid, which I think that\u2019s sort of maybe one of the flaws of the system in the real-estate issue where, \u201cOh, no one gets any salary.\u201d And it\u2019s easy to justify just a body count. Getting thirty people and you get some sort of spread out distribution where 10% reduces 80% of the deals.<\/p>\n

Luke Monroe:<\/strong>
\nRight, exactly.<\/p>\n

Emile:
\nLet\u2019s sort of switch gears a little bit and see if we can drill down into the weeds a little. So, do you find \u2026 and this is something, again, that is a super common question. And again, it\u2019s a very personal answer and it\u2019s something that\u2019s going to change depending upon what skill levels someones at etc, etc. Do you find that there\u2019s a different quality of leads, say, from a Zillow premier agent or a realtor, or maybe boutique company\u2019s with bold leads, or market leads, or any of those guys. Have you found a qualitative and\/or quantitative difference where like, \u201cHey, Zillow\u2019s great for seller leads, realtor\u2019s great for buyer leads, I get crummy leads or bold leads\u201d or something. Can you talk a little bit about that?<\/p>\n

Luke Monroe:<\/strong>
\nYeah, I think there\u2019s always a difference in quality from lead source. We buy primarily from Realtor.com because I\u2019ve found the overall quality of the leads coming through Realitor.com to be superior to the leads we get from any other source. We do buy from Zillow, we buy from TORCHx, we buy from Boom Town, we buy from several other lead sources as well, as well as generating our own leads. So, our own ad words and real-estate website, at this point those things are all in place to augment the lead generation we\u2019re doing with Realtor.com as the consistent base for our lead generation.<\/p>\n

Emile:<\/strong>
\nOkay, cool. It\u2019s also like I said. It\u2019s really, really hard to \u2026 Because a lot of times people will say, \u201cOh, well, I signed up for Zillow or realtor, or TORCHx or whatever, \u201cOh, I stand there for three months and I got nothing.\u201d And there\u2019s so many variables. It\u2019s like a social science experiment in sense because it\u2019s like, \u201cWhat season did you sign up, what kind of lead nurturing program do you have?\u201d There\u2019s so many, so many, so many variables that it\u2019s hard to get a review from an agent who\u2019s getting a small amount of leads and to take it seriously sometimes, you know? So, really, really-<\/p>\n

Luke Monroe:<\/strong>
\nI think that\u2019s very much the case.<\/p>\n

Emile:<\/strong>
\nYeah, so again. You read a lot of these reviews online and you\u2019re like, \u201cAh, this company sucks, they\u2019re terrible.\u201d Well again, you\u2019re talking about four tipping points, maybe you need to scale it up just a bit. You go from 500 to 650, who knows, maybe that\u2019s the tipping point where you get 10 more leads or six more leads or three more good leads. It\u2019s always a tricky thing, so it\u2019s good, nice to hear someone who\u2019s thing is that scale to sort of have the similar idea here. Now even more nitty gritty, I heard that you guys built a custom CRM and I\u2019m just curious since, again, CRMs are a dime a dozen. There\u2019s so many CRMs, and all the features are feature creeps, so they haven\u2019t [inaudible 00:10:26] what weren\u2019t you guys getting from stock CRMs that are on the market? What features were you missing when you said, \u201cLook, we need our own solution here.\u201d<\/p>\n

Luke Monroe:<\/strong>
\nI think the biggest features, honestly, that we\u2019re missing was a true brokerage management level oversight built into CRM. Most of the products that were available did an okay job at doing whatever it was they were supposed to do. Typically, it was at the agent level for essentially just organizing data. For me, when we\u2019re spending that much money, I need to know exactly where it\u2019s going, who\u2019s doing what with it, how we\u2019re performing on it. And that wasn\u2019t a level of transparency I could get from any other products existing on the market. It was worth it, made sense for us to develop in-house. In addition to that, there are things that come up on the recording, on the interaction side that we thought were important.<\/p>\n

In many cases those features \u2026 it\u2019s not necessarily about adding additional features to the CRM so much as it is streamlining the experience. I think there are many CRMs that are out there that have far too many features, and so that user really gets lost. In the, \u201cDo I sign them up for a 3DX lead on this campaign?\u201d Nobody\u2019s going to remember all of that stuff. We want to keep it simple so that our agent\u2019s user experience is very efficient and the data\u2019s very easy to track and we can create standardization and keep everybody moving foreword; including all of the leads moving foreword as quickly as possible.<\/p>\n

Emile:<\/strong>
\nYeah, I think that\u2019s well said, again, the feature creep. Granted, they have to, it\u2019s sort of an arms race in a sense because there are so many CRMs on the market that if they\u2019re not offering the latest bells and whistles and, \u201cNo, we\u2019re AI.\u201d Whatever people are saying is AI these days. But then often the latest bells and whistles are kind of done in the water and people aren\u2019t going to spend the 60 bucks a month. And I think, again, building your own seems like it\u2019s going to be something that\u2019s going to be a lot easier to do going forward. Hopefully it will be a little less expensive. People can kind of cobble together a system from disparate parts, and Insightly or something is free and you work that into dot loop that you get from your association. So, I think we\u2019re going to get to a point where a lot of that stuff is free, and I think also that a lot of times the tools don\u2019t really matter. Do you give your agents their own IDX website? It seems kind of moot at this point.<\/p>\n

Luke Monroe:<\/strong>
\nYeah, at this point our agents don\u2019t have their own IDX websites, and that is something that we\u2019re kind of playing around with because we do have, for the company, several IDX websites that we operate. We have an interest in doing more hyper localized branding around our agents, but on what we would call their territory level. So, a grouping of several zip codes, not necessarily the being higher MLS IDX feed. So, at this point we don\u2019t have anything that\u2019s in place, but it is something that we\u2019ve talked about and are still considering.<\/p>\n

Emile:<\/strong>
\nI think that\u2019s something that\u2019s maybe a little redundant, almost, in some senses because if you have your brokerage website, you\u2019re based on the brokerage website, okay fine, it\u2019s not your website quote unquote. At the end of the day people are looking on Zillow, people are looking on Realtor, and you guys are getting the leads before they get disillusioned with Realtor and Zillow and then they go to some random realtor site and it\u2019s like \u2026 100% chance they\u2019re going to be at Zillow and Realtor, and there\u2019s a 1% chance they\u2019re going to be on a random realtor\u2019s website.<\/p>\n

So, I think a lot of people are maybe pushing money into the wrong thing. And they\u2019re not cheap, the place through sites you can get for \u2026 Okay, the baseline one is free, but it\u2019s very, very limited. People are spending 250 a month, and I think that it\u2019s fine if that\u2019s what you want to do and you\u2019re sort of on your own, but if you have a decent brokerage, I think it makes more sense to focus on that. Especially since trying to rank an individual realtor\u2019s site on Google is a full time job.<\/p>\n

Luke Monroe:<\/strong>
\nIt\u2019s very tough.<\/p>\n

Emile:<\/strong>
\nWe write articles for a living. We rely on Google for a living, we literally have an entire SEO team that does nothing but do that. At a brokerage level, sure, yeah. You build out individual pages for sort of mini, micro neighborhoods and you long-tail keywords that have very low search volume. But if you build that 1000 pages that are for these very low search volume keywords that people are very interested in, again, your really small neighborhood, maybe 20 people search for Alemeda Heights, I just made that up, it probably is a neighborhood in Southern California. Alemeda Heights best block, the best block to live, etc.<\/p>\n

A very small number of people will search there, but if you build out your site to catch all of those keywords, eventually you cobble that together and then you can get a few thousand page views a month, something like that. But again, at a realtor level it\u2019s so much work and I think people are kind of fed a false bill of goods where it\u2019s like, \u201cHey, here get this website for 250 a month, then you can rank on Google above Zillow.\u201d<\/p>\n

Luke Monroe:<\/strong>
\nThat\u2019s not a viable way to go, but for us when we look at that, and one of the reasons we are considering potentially doing that in the future is because we can peel off, like you said, some of the long-tail keywords for the very few leads. But if we can come up with an agent website template that just becomes part of a SAS platform that the brokerage has developed. Agents come on, we\u2019re plugging a bio, we\u2019re plugging in a photo, we\u2019re plugging in your local IDX, but it\u2019s all controlled by the brokerage so we\u2019re not paying 250 an agent for all of these websites. It\u2019s just a part of what we can offer our agents and we can peel off another one or two leaves a month, but higher quality leads more likely to convert, that\u2019s something we have an interest in. But at this point we need a latter to climb up the tree to get to that fruit. There\u2019s a lot more low hanging fruit that is a lot easier for us to convert at this point.<\/p>\n

Emile<\/strong>:
\nDefinitely, definitely. So yeah, I guess the last question is just about recruitment. And I think that\u2019s the second, even scarier pin-point than, \u201cHow do we grow.\u201d It\u2019s \u201cHow do I recruit good people, A. And then how the hell do you keep those people. Especially when you have company\u2019s like Compass that are coming out. I remember I was thinking Compass started out in Manhattan, and they were called Urban Compass and they hired a bunch of college kids with red backpacks to go take pictures of big apartments. And that didn\u2019t work, it was failed pretty much immediately, but they had some D.C. money and they said, \u201cLook, we\u2019re going to recruit agents from Corcoran and Sothebys and Stribling, we\u2019re just going to pay them.\u201d<\/p>\n

And I think it\u2019s such a cutthroat, maybe even more cutthroat than getting needs is getting the quality talent. And I know we talked to Barbara Corcoran about a year ago and we\u2019re like look, \u201cThis is a different era in the 80s. As a startup, how did you get the top talent from the the old school players, she\u2019s like, \u201cI literally and go, and if they made a big sale, they had a deal, I would send them a bouquet of flowers because he knew that their brokerages didn\u2019t care, you know?\u201d The broker wasn\u2019t patting him on the back and taking him out to dinner, the broker was like, \u201cThank you.\u201d And then \u2026 So, no one seemed to care about the agent back then.<\/p>\n

So, as far as I think now you guys are probably going to have a super easy time. I\u2019m sure there\u2019s people lining up out your door because they know they\u2019re going to get awesome leads from you guys. Was that always the way you handled recruiting? Or did you have a different strategy that you decided to just say, \u201cHey, we\u2019re going to give you tons of leads?\u201d<\/p>\n

Luke Monroe:<\/strong>
\nYeah, so I\u2019ll actually tell you two funny things on recruiting, and then get a little bit more serious. When we were starting, one of the things we discovered over time with recruiting, we put ads on Craigslist, on Indeed, on Monster, on all of the other job board sites. In our job tagline, one of the things that we do, and we were telling our agents, \u201cHey, this is going to make it really easy to recruit. I\u2019m going to spend $4000 a month on lead generation just for you.\u201d The response we got back from that was really low. It shocked me. I\u2019m trying to give you gold and you\u2019re telling me, \u201cNo, no, no, I\u2019m good.\u201d So, anyway my partner found this Facebook post for somebody else doing recruiting in Orlando from another broker who said, we do, I think it was $800 of lead generation for you a month. And he\u2019s looking at this Facebook post and it\u2019s got a ton of comments. People saying, \u201cWow, this is amazing, it\u2019s too good to be true. We need to sign up here.\u201d For us the ah-ha moment was, people just \u2026 you think it\u2019s too good to be true.<\/p>\n

They\u2019re not even engaging with our ad to come to us to have a conversation because they\u2019re saying, \u201cNah, nobody is going to spend three or four thousand dollars a month on real-estate ads to grow my business.\u201d That\u2019s not how the industry works. And so, we started changing the ad, and we brought it to 3000 and then to 25,000 and then to 2,000 a month and the lower we made the number for what we do for our realtors, the more response we got back. That was fascinating. We didn\u2019t actually change anything that we do on our side. We still do the same lead generation, but the perception just to get people to start the conversation and understand what we\u2019re doing was very different. So, I thought you would appreciate that.<\/p>\n

Emile:<\/strong>
\nThat\u2019s great, yeah.<\/p>\n

Luke Monroe:<\/strong>
\nAnd the other thing that we\u2019re doing now. I\u2019m in Orange county this week. I just wrapped up the Realtor.com top 20 conference down here and we\u2019re staying over a couple more days because we\u2019re looking at starting our next office in Orange County. One of the things we did, I put up the same ads to start talking to an office manager and talking to agents to join us for this office. The thing that we changed for that ad was how the first sentence says, \u201cJoin our growing team. Be a part of this startup getting up on the ground floor.\u201d Basically those keywords: new company, startup, it\u2019s exciting. The response has just been tremendous. It helps that we are growing, we are expanding, we are having success. People identify and like that, but just saying, \u201cHey, we\u2019re a startup and we\u2019re coming to open a new office and you can be in on the ground floor\u201d has really gotten a lot of people excited. Which again, for us is the same thing everywhere we go, but just changing that little bit of our presentation has gotten people very excited about what we\u2019re doing and wanting to come and join us. That\u2019s been great. As far as \u2026<\/p>\n

So, I was just going to say. Going back to the original question just as far as recruiting, what we\u2019re trying to do. When one of the biggest things, honestly, that we look for in recruitment is what my wife calls people who want to grow the pie. Somebody who is coming to us because they are excited about doing better. They\u2019re excited about us doing better, they\u2019re excited about clients doing better. One of the things that \u2026 Here I am with my two offices and forty agents telling Compass what I think they need to work on.<\/p>\n

One of the things that I\u2019d have a concern with in that growth model is so much of what they\u2019re doing. Paying agents to come on board. They\u2019re getting really great top quality agents, but it\u2019s just the latest shiny object. So, if you\u2019ll come join me because I paid you this, then you\u2019ll go join somebody else because they paid you this plus what, right? For us, I am very proud of all of the agents that are part of our team, and the retention that we have with those agents because we really have a great relationship where it is truly mutually beneficial for us, for our agents, for our client. Everybody is growing their business together, and that\u2019s something that is really central to how we function as a business. I\u2019m not going into a new office saying, \u201cOkay, we need to get deep penetration, we need to get to 200 agents.\u201d Our focus is much more on an office is going to be 15 or 20 people. We\u2019re all going to get along very well in a smaller set-up, and that\u2019s how we can all be successful together.<\/p>\n

Emile:<\/strong>
\nYeah, and again such an important lesson. The broker joint I worked for in Brooklyn a couple years ago, we\u2019ll remain nameless for now, but same thing. The broker focused on small area that was just gentrifying like mad and there was new developments and there was some land use things that have changed. That\u2019s what we had, we had a small team. I think we had twenty something people and it was five or so years before you say, \u201cOkay, let\u2019s get another office out in Crossford heights and let\u2019s, you know. So, it\u2019s just a slow growth thing but after, I think about 10 years, the company was totally dominating a huge swath of North Brooklyn. Which, when we started out, it wasn\u2019t such a valuable \u2026 I mean, it was still a valuable \u2026<\/p>\n

It doesn\u2019t matter what, even an area that has low home price is still valuable because there\u2019s a lot of movement there and a lot of people moving, whatever. But still, it\u2019s just a slow growth sort of strategy, and the one thing he said that kind of stuck with me is basically what you said. And he\u2019s like, \u201cLook, I could hire 10 times as many agents as I have with the drop of a hat. New York City we have exclusive buildings or I have a waterfront.\u201d But he\u2019s like, \u201cI don\u2019t want you.\u201d I want to know everybody I worked for. I want everyone to get along, I want to have sort of a teamwork thing where it\u2019s \u2026 a lot of agents sort of see their co-workers as the competition, which they are in some sense. But we truly felt like a team. I would walk into work and I\u2019d know everybody there and, \u201cHey, can you take this showing for me?\u201d Or, \u201cHey just saw this crazy listing, you got to bring your client.\u201d etc.<\/p>\n

Luke Monroe:<\/strong>
\nI really think that\u2019s critical to building the strong foundation that any brokerage can grow from. Especially the way we\u2019re set up with our territories, our agents can feel like a team. There\u2019s no concern that I\u2019m going to take leads from you or you\u2019re going to take leads from me because everybody knows that I get the leads that come in to my territory and my zip code. They come just to me. So, we\u2019re not in competition, we can be friends, we can collaborate, and we can grow together, which I think is really an unfortunate miss for many other brokerages because everybody is in competition. I can never really be your friend because we are colleagues, but competitors. And the way we\u2019re set up, what you just described really can happen. We can get along together, you can watch my leads when I\u2019m on vacation, I\u2019ll watch yours while you go on vacation. Part of what the brokerage does is provide the consistency and trust that our agents aren\u2019t worried about, \u201cI have to get every lead.\u201d Because they know that we\u2019re good at it. We\u2019re going to deliver on that promise. There\u2019s always going to be more opportunity so we really can collaborate as friends, as a team; not just as competitors.<\/p>\n