FloorPop  - Marketing Best Practices for Homebuilders, April 11, 2007
Vol. 8, Issue 1: Copyright 2007 Blair Kuhnen.  All rights reserved.

FloorPop FloorPop (Flr-pop) n. 1. The new home buyer who visits a homebuilder's community and writes a contract for sale the same day. 2. The sound made by a salesperson clicking their heels high in the air and returning to the floor after a prospect signs a contract to buy a new home the day they first meet.

Homebuilder Online Lead Conversion Rates

Several builders have asked me "What should my online lead conversion rate be?" and it is a perennial favorite when I speak about online sales counselor (OSC) programs. This month I share with you a few guideposts you can use when setting up your initial goals and expectations.

There is not a specific lead conversion rate target for a best practice OSC program. Every builder operates with a different set of variables. Some of the factors that affect your conversion rate include:

  1. The strength of your market - hot markets get better, more complete leads
  2. Your calls-to-action - a good offer gets consumers clicking
  3. The usability of your website - if they can't find the button, don't expect them to use it
  4. The quality of leads - leads from your own website are always your best leads
  5. The effectiveness of your lead handling process and your on-site sales force.

Does this mean, there is no answer? Let me share with you a starting point.

Breaking it Down

To get one sale you need physical traffic units. My work with builders with active OSC programs suggests a closing percentage between 25% and 35% for appointments set by your OSC. Start with a goal of 25% (1:4) and go from there. You need just 4 appointments to generate a sale.

To get an appointment, you need dialogs with leads. Start with a goal of 50% dialogs turning into appointments or (1:2). So, you need 8 lead dialogs at this point. If you confirm your appointments the night before, you can expect at least 80% of the appointments to be kept. If your ratios are heading in the wrong direction, make the handoff to the onsite warmer with a 3-way call.

Unfortunately, not everyone will want to talk with your OSC no matter how well they write emails and how strong their phone skills. A good starting point is setting a goal of 15% to 20% of leads turning into dialogs, or about (1:6). So, it takes about 50 leads to generate one sale. That is a 2% closing ratio. Is 2% bad? It depends. Good OSC's often tout ratios twice as good or as you are about to learn, significantly better.

It's important to start measuring these variables and try to improve where it makes sense. The real question is not how do I compare to some national norm, but are my ratios heading in the right direction. It's about focusing on improving your ratios.

Let's keep going up the marketing channel. How many website visitors will it take to generate 50 leads? I like to break this down into how many will respond to your call-to-action (i.e., click on a lead button) and those willing to complete the online form. A good form completion factor is about 1/3. Yes, 2/3 of users bail out after clicking on the link, but a good call-to-action can get people clicking. If 1 in 20 click to the form and 1/3 complete the form, count on it taking 60 unique visitors to generate one lead. In a good market, this can be as strong a 1 in 10, but 1 in 30 or 40 is still strong.

So, the bottom line is that you may need 3,000 unique visitors (60 visitors x 50 leads) to your website to generate one sale to a lead generated from your website. Where are you going to get your next 3,000 website visitors? If you are driving them there through search engine marketing and spending $0.50/click to get them there, it will cost $1,500. Improve your Internet lead follow-up process, and you can do better.

How Good Can You Do?

Mike Lyon, from Simmons Homes in Tulsa, Oklahoma is one of the best online sales counselors I have had the pleasure of speaking with. Simmons is the leading builder in Tulsa, Oklahoma and has reasonably good lead volume coming from their website, www.newhomesource.com, and www.move.com.

How important is the Internet to Simmons? According the Lyon, "We see an average of around 20-25% of our total sales volume as actual Internet customers." Let me put that figure in perspective, in hot markets with long interest lists, high percentages are common. It's not so common in the more pedestrian markets most of us live in today. By my calculations, Simmons is running at about a 6% conversion.

Where Lyon really excels is converting leads into kept appointments. His key is quick, consistent and personalized follow-up to each and every lead. "No lead is slipping through the cracks. When you couple that with a fast and personal response to an email request or phone call, customers will respond in the form of an appointment. That is the true measure - lead volume means nothing if you can't convert them into an appointment and ultimately a contract." says Lyon.

Lyon's appointment rates from leads are at my top range of experience. Does he have a secret of converting leads into appointments? He does, "Asking for the appointment. Sounds simple, but the bottom line is most OSC's are not asking enough. I ask for the appointment in almost all of my email or phone conversations." Maybe you should too.

If you have responded well and qualified the lead, then there is no reason you should not be asking for the appointment. Do this and see how strong your Internet lead conversion rates can be."

Blair Kuhnen is the publisher of FloorPop. He is VP of Marketing for Builder Homesite, Inc., He can be reached at 817-658-7698 or via email at kuhnen@earthlink.net.

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