Our guest today is Jordan Muela, CEO of LeadSimple.com, a sales CRM software tool designed specifically for property management firms. Jordan and Alex discuss how successful property management companies use both Pay-per-click and Pay-per-lead strategy to scale and grow their businesses.
How to Scale a Property Management Business Through Pay Per Click and Pay Per Lead
Hello and welcome to The Property Management Show. I am your host, Alex Osenenko. My day job is serving as the CEO of Fourandhalf, a marketing company working exclusively with fee-based property management companies. I have spent the last seven years of my life helping property management companies become more successful by improving sales, marketing and operational efficiencies. In this show, we’ll deconstruct success down to its key components and invite subject matter experts to help you improve every facet of your business.
The topic today is how to scale a property management business through Pay-per-click or Pay-per-lead methods. Our guest is a resident expert on anything to do with sales, and he is specifically experienced in the Pay-per-lead world. He runs a company called ManageMyProperty.com. Today we are talking to Jordan Muela, the CEO of LeadSimple.com.
Q: Please walk us through the ManageMyProperty.com. What does it do and what is it all about?
I started in the industry working for a venture-backed Homeowners Association company back in 2007. From there, we decided to start a business that sold leads. It’s a Pay-per-lead model and it’s called ManageMyProperty. Then, we started a second company that provides lead software, and that’s called LeadSimple.
Q: So ManageMyProperty is exclusively for management companies. Is it exclusively for residential property managers, or does it deal with other sorts of leads?
About 90 percent of our business is with the residential market. There’s a small portion of homeowners associations that we work with, but the vast majority of the work we do is for single family homes.
Q: I see some consistencies with companies being very successful with Pay-per-lead and Pay-per-click and then some companies are more reserved about buying leads. I’ve created a list of five common traits that make companies successful with these models, and I’ve asked Jordan to put together his list as well. We’re going to compare our notes and see what we can come up with. That should help our listeners decide how to buy leads. So what is the first reason that people are successful with Pay-per-lead campaigns?
People are successful because they understand what they’re paying for. There is a high volume of churn, which means there are a smaller number of companies who stay with it. They dominate because they have a great strategy and they stick with it and sell. Then, there are other companies that will come into the market, do it for a period of time and determine that it is too expensive or it doesn’t work, and they go away. That disparity does merit having an understanding of how this works. Folks that are succeeding know what they’re paying for. They understand this is an opportunity to make a sale and it’s not an actual guaranteed sales result. It’s not like getting referrals. For people who are just starting out, they don’t get past the referral stage. Referrals are fantastic, and we always want to optimize that. However, it’s not a push button mechanism that will give you leads on demand. So if you want to scale your business, you’ve got to explore the scary world of paid marketing. Pay-per-lead is one of those options.
Another thing to understand is how the bidding model works. The bidding model will be a first price or second price auction. A first price auction is where you bid $10 and you pay $10. A second price auction is where you bid $10 and you pay up to $10, but the system will manage your bid and keep it as low as possible while still maintaining the best possible rank. Those are two pretty different systems. One is not better than the other, but with a lot of Pay-per-lead services, we’re talking about a paradigm where that lead is going to go to more than one vendor. Consumers are seeing a list of companies and deciding who they want to contact. They’re going to want to talk to more than one company; this is a huge asset and investment, so you’re aware of the fact that it’s nice to get quotes from more than one company. For some property managers, that comes as a surprise or a disappointment. You want an exclusive lead, but that’s not how it works.
So it may not provide the best return on your investment to bid yourself all the way to the top of the list. There are 10 companies in a list and any consumer who contacts a person on that list will probably contact three or four companies. If you’re in the top three or four spots, you will likely get a high percentage of the leads without paying top dollar. So it’s healthy to manage your bidding strategy well.
A lot of people will ask us how well the leads convert. They want to know the conversion rate. However, it’s a misnomer that there’s a universal and meaningful statistic that can be provided. In general, it ranges from five to 40 percent. With that kind of a range, the number means nothing. What matters is how well you do with the leads. A lot of the companies that end up not succeeding with Pay-per-lead feel like the lead source didn’t work. The truth is a sufficient sample set is needed to have an informed opinion. All of the marketing channels work, but you have to be able to efficiently close your leads.
Q: So the Pay-per-click works in a similar way except that it doesn’t go to other competitors. So property managers would bid on a position on a certain page for Google search. For example, the search might be “Memphis property management.” You can bid a top spot for $5 per click. You get that click, and from there you don’t get a lead; the click goes to your landing page or your website, and from there you hope to get a call. A consumer has a bit of time to research and read what you have. They can watch your video and read your reviews and then decide whether to contact a property manager. It’s similar because it’s paid marketing and I think our customers are successful with Pay-per-click because they understand unit economics. At the end of the day, if you’re willing to pay $500 for a revenue stream of $7,000 over the lifetime of the customer, paying $500 to acquire that customer works out well. Some companies have been around since the 70s and they’ve never advertised once. They manage 1,000 units. There are also companies that can achieve 1,000 units in four years. It depends on how aggressive you want to get or how much growth you’re looking for. That’s why we’re talking about scaling the business. This isn’t a sustainability strategy; you use Pay-per-click and Pay-per-lead to grow and execute your marketing plans. What is your next reason to explain why customers succeed?
This is a lifestyle decision. Different companies have different goals. Some are happy to keep it as a one man show, with a lean business model. Others have significant growth ambitions, so it’s up to your own goals as a company. You definitely have to be realistic when it comes to goals.
The second point with Pay-per-lead comes down to response time, or how long it takes for you to follow up on a new inbound lead. This demonstrates why some companies are radically more successful with Pay-per-lead. The whole business model dictates that you are charged per inquiry. So to facilitate that, you cannot receive inbound phone calls. That lead you are getting comes as an email or maybe a text message. It’s up to you to respond.
If you ask people whether they think responding is important – you’ll get an unqualified yes. If you ask people if they personally follow up, they’ll say yes. If you’re in a room full of property managers and you ask them to raise their hands if they respond to leads within an hour, about 75 or 80 percent of them would raise their hands. Most property managers think they respond within an hour. We were very happy to accept that assumption until we actually started running a business selling leads, and we realized that this is not the case.
We did some research and tracked leads and we found that in aggregate, it was taking 39 hours on average for a property manager to respond to an inbound lead and they were making 1.6 call attempts. As a lead provider, that was not a pleasant statistic to uncover. That had dire consequences for our business model, and that’s one reason we transitioned to software.
When we did a broader study, we realized less than six percent of companies in any given market will respond to email leads in the first 15 minutes. The reality is that companies that call within first five minutes versus companies that call after half an hour are on average 2,000 percent more effective at getting someone on the phone. When you look at Pay-per-lead, you know your lead has competition. That lead is talking to other people. So it makes no sense to pay for these leads and not call them immediately. When you call someone immediately, keep them on the phone. Eventually, you’ll hear a competitor trying to call in and that’s a good sign.
To make this happen, there has to be a process and some technology involved. If, in house, you know that when a lead comes in you will hand it off to one or two agents, you can’t let it get complicated. There has to be a system in place to distribute the leads. Even if you are the primary sales person, you need a backup person. A lot of people will resist this, but if a lead comes in from your Pay-per-lead provider, in a perfect world your administrative person or your secretary is at least calling the lead and saying thank you, and alerting them to the fact that you will be calling.
Q: I’m not sure I agree with that. We record hundreds and thousands of calls in our Pay-per-click campaigns because we want to monitor quality and make sure we can help our customers get real when it comes to selling. We hear time and time again is if the answering service or someone less competent gets to the lead first, it’s usually not a pleasant conversation. Get in the mind of a person who is calling for a property manager; there’s a big need and there are specific questions. They need answers. A lot of times, they get deep into struggles with bad tenants or inspections. I feel like someone less experienced reaching out could be a bad idea, do you not agree with that?
Well, let’s get more specific. If we’re talking about a call center, you’re right. A call center that handles your business as well as plumbers and electricians and attorneys should not be calling your leads or representing your business. I’m talking about someone who works inside your office and has a very limited scope of response. This is not someone who can field all questions or have a conversation. This is simply a call to say thank you and introduce your company, and then to schedule a time for the primary sales person to have a call. If that person is in your office, they will know if you’re tied up for the next three hours. This advice is specific to Pay-per-lead. You can maybe fudge on this a little bit for an inbound call or a referral. With Pay-per-lead, it’s competitive and there are already three other people calling that lead. So it’s do or die at that point.
Q: I understand that. I think the customer picks up on experience and merit and how well the person is able to answer questions. Even if the phone call is scheduled, I feel like the opportunity to connect is lost and someone else can connect. That’s why my list of reasons for success includes having a competent and dedicated sales team in place, ready to process those phone calls. Specifically, I find that people fall into the trap of tasking the sales person with other things. Maybe you’ll have your sales person do some owner reports or marketing or blogs. You end up loading your sales person with those low value tasks that need to get done, and they can’t get to the phone at the right time. Then, there are all around performance issues. Or vice versa and having your property manager field sales calls. Property managers are excellent at managing properties, and they are so emotionally invested in their accounts. But if someone new comes in, they are like strangers. They love their portfolios so much but if someone unknown approaches them about managing property, it’s like a prospect has to do as much selling as the property manager sometimes. Does that make sense?
I do understand where you’re coming from. The mental orientation is important. It’s hard to switch from task to task, it comes with a price.
Q: Some smaller companies don’t think they have the opportunity to hire business development representatives or sales people. However, I think a sales person is an asset on the balance sheet.
Absolutely. A lot of times, I hear people say they want to buy half a sales person. Or a quarter of a sales person. That’s challenging and I don’t have the answer, but you’re right.
Q: So what is point number three? Why will people be successful using Pay-per-lead services in property management?
Having a compelling offer. When someone is reading about your business within the context of a list of companies, you have to stand out. You have to put yourself in the shoes of your prospect. I feel good about my services and I’m doing my best, but if I’m in the shoes of my prospect, in what way will I stand out? There are so many dimensions on which this can happen. Here’s where it’s not going to happen: by saying you have the best service. Or, you love your customers. Or, you’re number one in your market. Those phrases mean nothing and we hear them over and over again. When the Internet was new, there were these banners on the websites and everyone loved them, but then people developed banner blindness. No one can see the familiar and similar things anymore. It’s the same with offers. You need to provide a pricing offer, which is monetary, or risk offers, which is a hedge against risk, or content offers.
With the pricing offer, it’s offering one month free or you give a discount on the first three months or the fee will be reduced. There is flexibility. You have plenty of ways to slice and dice and move fees. Just always have something you can give when necessary. Give a price concession that is small and nominal that makes customers feel good. You don’t want to reduce your overall fee. That is a long term give that will cost you a lot of money. Have a financial give you can offer on the front end.
Offers related to risk include tenant guarantees and eviction guarantees. Be careful and do not call it insurance. You cannot provide tenant insurance or eviction insurance unless you have jumped through legal hoops and can provide insurance. You need a compelling offer that will stand out and get people to hit the submit button.
Q: We are aligned on that because I think it’s similar with Pay-per-click. The success elements are similar. This one echoes it: successful companies always have stellar online reputations. Pay-per-click is a little different; they get a chance to dig in and see reviews. The Pay-per-click marketer needs to show all the good things people have said about you. There has to be a landing page that consumers go when they click your ad. It must convince people you are the best. You need a great online reputation and a clear value proposition. Having a special offer helps conversion, but if companies can show their positive reviews and establish value propositions, they can be successful. The answer to “why should I hire you?” must be very clear. If that answer is clear AND there’s a special offer in place, you’ll really be able to convert leads to business.
You are so right about that. Reputation is a big deal and we live in this strange era where your reputation has a numerical assignment to it. What I didn’t mention was brand, and it’s a similar concept. In a perfect world, you have a fantastic brand and people see it and feel something. That’s beyond the scope of what we’re talking about, but reputation and brand matter a lot.
Q: Brand emphasizes more stability and it really reaches established companies with more resources. Reputation can be earned within a year with hard work. I know some young companies that obsessively focus on customer experience and their competitors are baffled about what’s going on. This company all of a sudden has 800 units. This is because someone is actually picking up the phone when you call. Old school companies do a great job when they stick to their core values. If there is less emphasis on customer experience, the customer will leave a bad review and the company will suffer. It’s tough to run a business, but it’s not as tough to run a good business – do you agree?
Absolutely. The reputation factor is a big equalizer. A company that’s been around 100 years with millions in annual marketing budgets can face a small upstart that pays attention to customers.
My number four point is leveraging lead nurturing. The lead refund policy with Pay-per-lead providers is a good way to introduce this. You’re paying for leads and you’re paying for closed business, ultimately. If this strategy doesn’t result in closed business, you’re going to stop paying for it. But, with Pay-per-lead, people are more attuned to the lead being the deliverable. If the lead didn’t work out, and someone else got hired, they’ll ask for a refund. A lot of Pay-per-lead companies have a refund policy. Some of them are sticklers; the biggest provider out there – All Property Management – stands solid on their refund policy and they won’t refund everything. You need to understand and accept that. This is relevant because being on the other side of it, I’ve seen these lead refund requests come in and those refunds come out of our bottom line. So we follow up with the lead to find out if they were contacted, if they were happy, and whether the lead actually exists. Doing those follow ups with refunded leads; we hear all kinds of things. Some of them will say no one ever called them. That means that a company might be trying to get the lead refund even after they didn’t contact the lead. The truth is, the average number of phone follow ups we saw was 1.6 follow ups by phone. That is terrible. You need a good follow up process in place.
So when we talk about lead nurturing, we talk about having a clearly defined written and documented follow up policy. This is not your best intention or shooting from the hip, but something that is actually documented. Write it down and do your best to follow it. That will formally define what good follow up looks like. Hold yourself accountable to it. That’s for the short term. In the long term, meaning after 14 days, people write these leads off. You paid for that lead. If you keep the lead and nurture it, you’re building a relationship. Most people will disregard any leads if they don’t get the business in the first day or two. Don’t throw them away. There has to be an ongoing follow up process. It may be automated; sending out interesting and compelling emails that people will want to read. It’s not you calling every month, it’s you educating consumers and providing value. Give them information and education.
Think about the monthly budget you’re spending on Pay-per-lead or Pay-per-click. Once you spend it, that money is gone. When you build and structure a lead nurturing process, it costs you money but after that one time investment, you can benefit in the long term. This will supply dividends for years and years. There is no better ROI than developing a lead nurturing system within your business.
Q: Lead nurturing is something that both of our companies partner on and there has been incredible feedback with our customers. We are actually offering a free sales book download that will help listeners establish their follow up process. It’s a simple four step sales process that is available. I agree that lead nurturing is an asset and the longer you have it, the more people you have following you, which will close more business. My number four point is that Pay-per-click is more successful when lifetime customer value is increased. People with complimentary business units, like maintenance and construction or contractor services or real estate sales and investor services – those are the complementary businesses that increase the lifetime value of the customer, therefore providing better unit economics. So the customers who can squeeze $20,000 per customer in a lifetime versus $7,000, are higher bidders. They are willing to pay more, so they will outshine the competition. So my number four point is complimentary business units.
I couldn’t agree more. Another way to increase your lifetime value is to develop a process for getting consistent referrals from your clients. Get reviews from your clients and be aware of services you can provide tenants as well. There are a lot of opportunities there. Companies who bid aggressively can name to the dollar what their lifetime customer value is. They calculate it, believe it and bank on it.
The fifth most important reason that customers are successful with Pay-per-lead is tracking. Choosing to be disciplined and knowing what’s working and what’s not. It comes down to tracking. So when these leads are coming in, you need to know where they came from. With Pay-per-lead, that’s easy. With Pay-per-click, you can have a tracked phone number or a landing page to make this easy. You must know where leads come from. Just recently I looked and had a hard time clicking through search results to find people who are using landing pages. It’s huge for tracking and for converting. Why are more people not using landing pages?
Q: There are a few misconceptions out there. The perception is that it’s too expensive to have a purpose-built landing page. With all these conversion optimization metrics – you have to know what you’re doing. So it comes down to this – it’s much easier not to do it and send customers to the website and hope for the best. I’ve found myself in those shoes before in my other experiences. You default to the easy way. What do you have to add before I share my number five point?
Just that without tracking you are fundamentally flying blind and burying your head in the sand. You need to track. You need to know how many leads came from each source and you must have a way to ask people who call you how they heard about you. Track your conversion rate, too. People love to speculate on these numbers but they hate to track them. People who are saying that they close 80 percent of their leads are not using accurate data. Advertising to scale, most companies can say they close around 40 percent. If you close 80 percent of your referrals, that’s great. But get serious about tracking and establishing which lead sources are working and which aren’t. You have to track your follow up process too. How quickly are you calling people back? How many follow up attempts are made? What’s going wrong when things break down? You need an activity-based model. It’s not personality or skills. Get a good model with accountability built in. You need tracking, so get some technology that allows that to happen.
Q: My number five is close to yours. These companies that are successful have a marketing plan and a dedicated budget for portfolio expansion. They are ready to accept scale and growth. Some companies dabble. They get a few leads and then they decide it’s terrible and won’t work. Or, they tried Pay-per-click five years ago and it didn’t work so they’ll avoid it. That’s like saying I tried a car before and it was terrible so I’ll never drive a car again. But there’s a variety of cars. The big Cadillac you didn’t like isn’t relevant to other cars. Besides having a system for tracking or a plan to be able to review your results and improve, you can invest money in specific channels that are working. You need a plan in place. We ask the customers we work with how many properties they want to gain next year. They’ll structure what they want and what they will accept. Those companies that aren’t successful have no vision of what they want to get out of their advertising efforts. A marketing plan is important.
Absolutely. If growth is only optional, you’ll get optional results. If it’s not optional, there will be accountability and results and it will happen.
Q: Do you have any parting words?
Always test, experiment and don’t be content. Try new things and explore. There is so much potential and room for expansion, especially if you’re working smart and being persistent. This is an exciting time to be growing a property management company.
If you want to contact Jordan, check out ManageMyProperty.com or LeadSimple.com, which is a CRM lead management platform.
Thank you for joining us.