The 4 Immutable Laws of Lead Generation

Alright, welcome back. Business Freedom Podcast. This is the Good, Bad, Ugly edition of the podcast and I am joined today with a guy that I've gotten to know pretty well over the last couple years. Here we did a deeper dive into just his philosophy on life and business and struggles and all that. But Greg and I got to chatting about just lead generation and sort of inner workings of how do you scale a business without. Without paying a bunch of money for it. So Greg, I'm gonna let you just kind of dig right into it because this is one thing we weren't able to touch on last time we chatted.

Yeah. So I think my business if you can't. And once again I'm doing Our goal this year is to do 400 units. You know, whether we make it or not, it's hard to say. Last year we did 336. This year pending and close, I think we're about at 120, 125 deals right now. So we're actually on target to 400. We have seasonality here in Michigan and I think we were at 170, 180 units before we started adding paid lead sources and up until 250 units. And people would be surprised and a little underwhelmed by the simplicity of what I'm doing. We had we're running Pay Per Click Commissions Inc. And at a secondary website of which I kind of just pay for and ignore and somehow it returns enough that I don't cancel it. And we weren't doing anything else up until probably six months ago. I have added Zillow back. I'd never paid Zillow before. There's some changes in our marketplace. So I started doing that seven months ago and that can get dropped at any second. Everybody on my team knows that. But we've tried to keep it really simple, focus on our sphere, past clients, referrals. We do pretty good with Internet leads. We converted about 3%. So we closed about 35, 36 deals from commissions Inc. Over this year. And Open house is very traditional business. And part of it is our average sale price is low and our average commission rate is low. So there's not a lot of room there for spend.

And it's funny, I was digging into the financials of a guy who did 447 units last year and this month as we're recording this, he is going to spend $90,000 on marketing. And it's not sustainable, like just paying for growth. So let's dig in. What are the three things we can kind of lessons that you've learned. And as you see the market right now about where we should be getting our business and how you're able to. You know, your approach with the growth of your team is more like this robust, healthy growth, right? It's like 20 to 30 additional units per year. One year you had a bigger growth year. But what advice would you give us if you had to bullet this thing out in three bullet points, lead gen for, you know, 20, 19 and beyond, what would it be?

Yeah, you're right. We almost to the. We do 20 to 30 units a year, which works out to about 15% a year. 15 to 20%. And if you told me I could double my units next year, I would not do that. I would not want that. And even if I could double my income, I just don't. I couldn't sustain that kind of growth. So I kind of know what my sweet spot is, really. That translates into people, which I had a hard time, which a lot of people have a hard time with that. I wanted to grow a team without people. And I thought, well, I'll get another computer program of which I won't use, and somehow that'll magically work. That, or maybe I'll hire an admin or another admin. Because I didn't want to have agents. I just. I don't know why I thought that. So we can add, you know, we can get one person up and producing a year. And what we've. I've really been doing that's having great success recently is training my agents, that revolutionary thought process of actually training them myself. Not outsourcing that, though. I'm not opposed to outsourcing that. But we had a change up in the outsourcing. I'm like, well, I'm just gonna do this myself. Well, come to find out, half my agents don't know how to do what I would consider basic things like have a conversation about real estate, ask for a recommendation or referral. Because I never explained to him how to do that. Now some of them did, because that's just how they naturally operate. Some of my highest. I got a guy selling 75 houses. He'll sell 75, 80 houses this year. Up until three months ago, he didn't know how to start an organic conversation about real estate. I said, well, just say to someone, hey, how's your job going? And he goes, he asked me, why in the world would I ever say that? I. I go, I don't know. It's just the way it works. But we had to roleplay that. And it took us a time. And a couple of my people on the phone talk a lot, but don't set appointments. So we. We eliminated. I go, all you can say is, hi, how are you doing? And immediately, once you start having conversation, just ask them if you can be their realtor. They're like, what? I go, just ask them. And he set for. He set four appointments in one morning after he did that, because he just got. He goes, hey, are you looking to buy a house? Yeah, we're thinking about it. He goes, can I be a realtor? And they're like, I guess. And so I really started working on training that, working on developing their sphere, not just my own. So if they have a sphere, we'll take over that marketing and work with them on that. And then working on converting leads over the phone and doing well with those type of conversations, because I think it is important. This isn't going away. People are not going to. Zillow is not going to wake up tomorrow and go, hey, let's. Let's go open a grocery store. Do something differently. There's going to be a new Zillow tomorrow that's going to be selling leads. And it's just the way it is. And we need to understand that. Compete with it and monetize it.

Yeah. And so the way to protect that. So that's one big. And I don't think. I don't see a lot of team leaders really investing in their teams. You know, if you really had just a conversation as if you were a buyer with your agent, you'd be. You'd be devastated with the way they have that conversation.

Devastated. Surprisingly devastated. What's. We've been working on this. We're having real fun with it, too. It's a blast. We're laughing. And because they understand, they're like, wow, we're not good at this. And they've been on training calls for years, kind of just a hair under the shadows or getting the bulk of it. But they don't listen. They talk over everybody. I'm like, you guys can't even. You're not even role playing this well. Like, what are you doing with real people? And it's hard because you don't. You're like, oh, I gotta take time out of my day to train somebody how to do something I think they should do nationally. I'm not sure that's the best attitude.

Awesome. So spend time. Train your agents. Number two, so what does your past client program look like? How do you generate referral business I.

Have a very elaborate four touch program. We don't have a 66 touch program or a 30 touch or we do a few things a year and we're really trying to develop that. So we don't. We do a couple mailings, we send out some free stuff, home shows and those type of things. We try to stay in touch. My probably the best thing we do is my closing coordinators are really good with people. That's the person that has the last contact is really good. We're trying to ask for referrals during the process. So we are and we did. We do about nearly half our business with sphere referrals and past clients, maybe about 45%, 48%. And we do shockingly little for that. We've learned to provide really good customer service. We're really energetic. We're always will answer the phone, get on stuff right away. But there's a huge opportunity for us there. But just doing the basics, really trying to stay connected with people, talk to people, have conversations about real estate when you're with them has produced really, really good results.

Awesome. So let's dig into point number three. And unless you have one, I think it's. You mentioned it. You're in a market where you can't afford to spend a whole lot of money like a drunken sailor. So talk about, you know, economic model, how that feeds into your lead generation.

Yeah, it's interesting. And you and you mentioned it previously, we had a conversation where it's not like my agents are happy making half the amount of other agents in other areas or the admin here. We still have minimum wage laws and there's still competition in the marketplace, but our average sale price is half close to it of what maybe a more robust market is. So a couple things we've been working on for about six years is maintaining our commission rate. And that has probably played more into our business plan than anything. And also which I've been working on for three years as waiting for that time when sellers no longer pay for buyer's agents commission. If that happened tomorrow, we would be relatively unscathed. Unless the whole community just revolted. Because we collect the commission from the buyer. We make that very clear that this is how this works. We'll ask the seller to pay for it. But this is on you. This is what we charge and we've been doing that for years. So that has certainly helped. And then we don't have room for waste. We don't have a lot of room to generate leads. So when I do generate Leads I good or bad? I started with Zillow about 7 months ago just as test and I knew it was gonna cost me. You know, I knew I had to put up about 40 some thousand to do what I wanted to do. 48,000 over a six month period. And I had that money set aside and then I spend it, write the check and then I make sure it comes back and we have to get, you know, four, four times is our really break even and scary. Six times it's like, okay, that's really good. And 10 times is obviously what we're all probably looking for. So whenever I do anything, I make sure I have the money set aside up front, which is really slowed down. Probably more than anything my production over years is I don't do anything until I had money to do it for six to 12 months set aside.

I love that. Okay, so that's point number four. So economic model is that basically 10% and then lead with revenue. Every team leader I know is leading with expenses. So last point here, talk a little bit about the philosophy of leading. And I just want to make sure everyone on the third point, economic model dictates that 10% of your top line can be spent on lead generation. So if you're a million dollar team, you could spend roughly about $100,000. And it's not all like you spend it and it comes in right away. But overall you can't get out of whack with that. This year we'll probably be about 7%, you know, on a $3.6 million top line. But talk about the fourth point now is lead with revenue and your philosophy there.

Yeah. So back just to comment on it, we have really struggled with getting up to 10% because we started with zero. And that seemed good to me and I just was afraid to spend money and I wasn't sure whether we would do the get it. If we spent $1,000, I'm not sure we'd get that money back. So we spent almost nothing last year, probably up until 300 units. We might have been spending 3%, maybe, maybe not. Maybe that's a lie. Probably not. And now we're probably, we might be pushing 7, but actually now as a business I'm like, okay, we need to spend money. I need to get up to that 8, 9% range at least because we need to generate marketing, advertising and some of these sources I consider marketing. As far as leading with general revenue, how it started for me was I really wanted to own a business all my life. I wanted to be Successful, own a business. I now had a team and I had no money and I had some debt and I could not figure it out. I could not, how are we going to do this? So I cut my salary down to an amount that would make most people weep because I go, we got to pull profit out first. Because if I can't pull profit out first, I'm never going to have money to invest in marketing or this business on the next hire because I wouldn't hire even an admin until I could pay them for six months and I'd have that in the bank. So I really just cut it off. And that was probably 10 years ago. I just cut it off. I go, this is, this is the, my third of the bucket goes to profit. That leaves a third left over for agents. So I started paying myself. I was an agent at the time, on my team, run my team and selling. And I started paying myself the same thing. I was proposing I would pay another agent. And it was a little rough, but it quickly turned around because now I go, wow, we have profit now what do we do with that? Well, come to find out, the government wanted some of it, which was pretty surprising to me. So we had to work through that for a couple years of always being behind on that. And then we, you know, remember when I wanted 100 grand in our business account and that happened pretty quickly. And then I go, wow, that's great. Although now I was really worried when I had zero or I owed 30 or 40, I wasn't that worried. I thought, oh, we'll make this work. I had 100 and no debt in my business seven or eight years ago and now I was really scared. I'm like, oh geez, what do I do now? This is real money. And that was the turnaround. And since then everything we do, we leave with revenue. And I tell my team, if I tell you to do something, whether it's admins or agents that isn't producing revenue, isn't producing income, isn't producing profit, you need to tell me to stop it and you need to probably tell me why and you probably need to do it in somewhat of a nice fashion. So I don't know, get me mad or something. But, but you, you really need to go, hey wait, we're wasting time over here. This lead generation source sucks. This is going bad. This, you've got us doing all this work and it's not producing results. And we're every team meeting, every, we have one meeting a week on Tuesday and every meeting is like, what is working, what isn't, and we break down that as a team. And I'm more than willing to hear because they're on the front ends right now. I'm not on the front ends. I'm not, you know, I'm not on the ground doing the work. So I need to hear from them.

Yeah. Awesome. I just titled what we're going to call this Good, Bad, Ugly. It's the Four Immutable Laws of Lead Generation with Greg Miller. So there you go, my friends. Greg, appreciate your time. I know you're a busy dude. Blessed to be part of your journey and to have you in real estate B school. So good stuff. We'll talk to you soon.