Strength in Numbers with Marcus Crigler

Episode 59: You’re Making Money…So Why Does It Still Feel Like You’re Losing

• Marcus Crigler • Episode 59

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0:00 | 41:10

If money is coming in, why does it still feel like something’s off?

In this episode, Marcus Crigler and Kaden Hackney break down one of the most misunderstood parts of a real estate business: your marketing and sales numbers.

Listen as they discuss marketing, one of the hidden secrets in the field, and why marketing is more than just graphics.

This episode is all about knowing your numbers, fixing what's broken, and making smarter decisions backed by data. Enjoy the show!

You’ll Learn How To:

  • Track your real return on ad spend
  • Break down your sales funnel from lead to close
  • Use data to fix your marketing
  • Improve conversions without overspending

What You’ll Learn in This Episode:

(03:00) Marketing is a numbers game

(05:27) What does a sales funnel look like?

(06:01) Why ROAS matters

(08:14) The real estate funnel

(11:02) How bad data leads to bad decisions

(13:29) Maximizing your return on ad spend

(13:52) Tracking performance by marketing channel

(15:27) Treating marketing like a science experiment

(21:32) What “good” conversion rates actually look like

(24:03) How to identify what’s really broken

(27:03) Real example: fixing a drop in appointment rates using data

(32:10) Closing deals, not just contracts, is what really matters

(34:40) The role of integrity and reputation in long-term success

Who This Episode is For:

  • Real estate investors who feel stuck or inconsistent
  • Business owners who don’t fully understand their numbers
  • Anyone spending on marketing but unsure what’s working

Why You Should Listen:

This episode helps you zoom out, and if you understand where the breakdown is: marketing, sales, or operations, you can fix it fast and stop guessing.

Connect with Marcus Crigler:

SPEAKER_02

If your marketing material says, hey, we only buy crappy houses, and you keep getting calls from people with gorgeous houses, I don't care that your marketing says this. The data says that it's inspiring people with really nice houses to call you and they're not the right fit. So you got to change the marketing.

SPEAKER_00

Welcome to Strength in Numbers, the podcast for real estate entrepreneurs who are tired of being broke and not having control of their finances. If you're ready to finally take control of your money, slash your taxes, and start building real wealth, you're in the right place. And now here's your host, Marcus Krigler.

SPEAKER_02

Well, my name is Marcus Krigler. I'm the founder and CEO here at Beck CFO and CPA. I've got my partner here, Caden Hackney. He is the tax director, tax partner here at Beck CFO, and also runs a lot of the operations here within the organization as well. So today we're talking about a carryover from a couple weeks ago, which is core profit driver number two, right? And so we started last session off talking about the core four profit drivers. You've got cost of goods sold, you've got marketing, you've got people, and then you've got interest, right? You've got cost of capital. And so those four things are the main profit drivers of any real estate business. And when you learn to minimize the cost of those and maximize the returns of each one of those areas, you start to find ways of maximizing the profitability of your overall organization. And so it's not one of those areas that you're going to focus on as a real estate entrepreneur. It's every single one of those areas. And last time we talked about cost of goods sold and getting the cost of doing the deals down, right? And that could be, you know, several different ways of doing that. We talked about several different ways of doing that, several different strategies that we're seeing real estate investors go through to reduce their cost of goods sold and ultimately increase their profit margins in business. So that was a good conversation that we had last time, but this time we're going to talk all about marketing, which is funny because a lot of people don't really put CPAs in this big marketing uh guru box, right? I think that's kind of one of the funny things is a lot of people look at CPAs and like, why are you talking about marketing? And one of the hidden secrets of marketing is that marketing's numbers. It's funny that at the end of the day, the companies that we see do the best, that we see have the best results in their company as far as return on ads bend. And we're gonna get to what that even is here in a little bit. But the ones that get the best results and are the most profitable are the ones that don't look at their marketing from a graphics standpoint. They don't look at it from a they did I put the right content on the right letter, did I write the right words? They're testing and they're looking at results, and they are maximizing each result that they get, right? That's what the best are doing, and we can dive a lot deeper into that. But this is all a numbers game. Marketing is all a numbers game, and so that's what you know we teach a lot and we talk about a lot in the CFO department is how to analyze those numbers, how to focus on those numbers, how to improve those numbers. And there's times in our CFO meetings where our numbers or our entire meeting is just going over the marketing numbers and each level of the marketing numbers to figure out what needs to be improved. Sometimes I feel like a CMO more than a CFO. So, you know, it's kind of interesting when you really break it down to that level.

SPEAKER_01

Well, I think ultimately the CMO is probably going to be more focused on, hey, let's go and use these different channels, and they might have suggestions on content or form of you know, form of marketing and things like that. And that is sometimes like you're saying, like people don't know the comparison and contrast. So like we're probably not like our marketing guy literally told both of us that we suck at creating hooks and we're we're terrible at it. And that's why we pay people to help us with that because that's not our strength. But yeah, Marcus is right on the money, the numbers piece of this. You know, we're curious, we like numbers, we analyze the heck out of those. And when you break it down, like you were just talking to Marcus, that pipeline, that funnel of how people move from being an unaffiliated person to becoming a lead to you know, all the way down to being a paying customer. There's a lot of numbers and analysis that goes on there that can get very muddy. Like we see it with people's financial statements. We see that they don't necessarily understand that because of how they've organized this, and they're not looking at the right things and uh taking what they can from that. And that that hurts you. So anyway, Marcus, I think it might be a good idea to start with. You know, what does a sales funnel look like for somebody who's kind of unaware with that? Just run through that really quick so we can lay the playing field out.

SPEAKER_02

So I think first and foremost, you gotta let's make sure we're talking about the same thing here. So when we're talking about core for profit driver, number two, it's maximizing return on ad spend. And so there's two functions of this. There is marketing, which is function number one, but then there's sales, which is function number two, and those two work together in order to give you a return on ad spend, right? And so your marketing without good sales is not gonna give you a successful return on ad spend or it's maximized return on ad spend, and certainly the other way around, good sales without good marketing strategy is not gonna give you a good return on ad spend. And so, really, what we're looking at, and again, if if ROAS, right, that's what we shorten it down to is row as return on ad spend. Basically, what that means is I put a dollar in to advertising, and I'm going to expect some sort of return above that dollar to come back to me. And it could be two dollars, it could be three dollars, it could be five dollars, it could be ten dollars. The higher your ROAS, the more return you get. So if you have a 10 ROAS, that means you put a dollar in and you got $10 back out. We love that. We want more of that. You know, a two ROAS would be a you put a dollar in and you got two dollars out. It's a tougher business model, right? And so what we've got to look at first and foremost from a 30,000-foot view of your business is what is your return on ad spend overall? What is your current row as? And once you figure out what your total current row as is, which is going to be every dollar you put into marketing and the revenue that is produced out of that marketing, and once you're able to diagnose that, now we can start getting into how to improve it. But a lot of people start to focus in on every individual category first, right? And we can talk about those individual categories as well as we get through this. But the first place to start is where are you at overall? What's your average row as as a company? So if you spent $10,000 in marketing spin, how do you trace the revenue to that marketing spin and how much of it? And so that's a crucial, crucial metric that you got to have for any business. And again, we're gonna talk about ways of improving that in this live here, and we're gonna do it through numbers, which is kind of a funny thing to think about, right? So you asked about the funnel. So the funnel for a real estate business is very simple, and it's not, and it's pretty much the same for every business, but we all have different terminology for it. But the funnel looks like this you get gross leads that come in. This is somebody that gets a hold of your company, some way, shape, or form, and they reach out to you, right? That they may or may not want to do business with you. They reach out to you. It could just be that they called and told you to F off, but they've reached out to you, they got your contact information, and they you've inspired them to make a contact, right? That's a gross lead. A net lead is somebody that's actually interested in the product that you're selling in real estate. That means buying. They're looking at selling their house and they have raised their hand and said, Hey, we're looking to sell a house. Now, there's a lot of people that have a lot of arguments into what a true net lead is. But the reality is if somebody is entered into your pipeline and they said they're interested in selling their house, they are a net lead to you. It doesn't necessarily matter when, it doesn't necessarily matter how much, doesn't necessarily matter how, it doesn't necessarily matter if they can, it doesn't necessarily matter any of that stuff. They've raised their hand, they've said that they are interested in selling their property. From there, we go to appointments. From net lead, we go to appointments. Whether you are a phone appointment company or a belly-to-belly appointment company, your numbers are going to look drastically different here, but you're going to go from net lead to appointment. And each function down this funnel has a different kind of metric that goes with it, right? And so from appointment, what comes out of an appointment, we go from to contract. From contract, we go to close, right? And so when you are looking at marketing, marketing creates two of these functions, and then sales creates the other functions. So marketing generates the gross lead, which hopefully a high percentage, we like to see 70-ish percent, give or take, right? 70-ish percent of your gross leads getting to net leads, which means your marketing dollars are getting in front of the right people, right? So if you're getting a whole bunch of gross leads and it's like, okay, well, 30% of my gross leads are actually net leads, are people that are actually interested remotely in doing business, then you're spending 70% of your dollars on the wrong audience, right? That's where the numbers come into play. You know what I mean? So if your marketing material says, hey, we only buy crappy houses and you keep getting calls from people with gorgeous houses. I don't care that your marketing says this. The data says that it's inspiring people with really nice houses to call you and they're not the right fit. So you got to change the marketing because the data is what should tell you to change the marketing content, not hey, I think this'll work.

SPEAKER_01

Yeah. Right? Yeah, that makes a lot of sense. There's no rhyme or reason to it, and that's the counterintuitive a little bit, right? To your point, if you're saying, hey, I only spend money at night, and then people keep coming and asking you to buy something during the day, you'd be like, What the you know, like instead of getting stuck on that issue, like sometimes I think we just like decide to fight and chew on something, even though it that doesn't matter, just let it be what it is, like let it be, let the data say what it is.

SPEAKER_02

The investors that we see that do this the best, that are objective about their marketing, are the ones that let the marketing data tell the story, and they also are very good at attributing their marketing data, right? And so, you know, we go back to numbers and statistics here. If you don't know how much you're spending in marketing, step one, if you don't then step two, know how much you're spending in marketing by channel, step two, now you're gonna have a hard time attributing these gross leads, net leads, appointments, contracts, closes to these various marketing channels. So I started by saying marketing is responsible for the top two, sales is responsible for the bottom three, right? Once it becomes a net lead, now it's the sales department to have the right conversations to turn that lead into an appointment, into a contract, and then ultimately your uh dispo department to turn it into a close, right? Or your contract department to turn it into a close, your title department or your however you're running that back end. But the marketing is just such a small piece of it. Then you've got sales, and then quite honestly, you've got internal operations to get it all done, and so that's how you have to maximize your return on ad spend. But it's one thing to do it as a full company where you take all of your leads and then all of your net leads and all of your appointments and all of your contracts and all of your closes, and you take it for all of your marketing sources. And if you do that, you're probably better than I'd say 75% of the real estate investors out there. If you've got that data and it's good data and you can rely on it and you're making decisions on it, you've got pretty good data, and you're probably better than 75%. But if you want to get to the top tier, the 90%, you start figuring out how you attribute that information, that same information by marketing type. And so each marketing type is going to have a different return on ad spend, right? So your direct mail campaign, your cold calling campaign, your text message campaign, if you're still out there doing that, your TV campaign, your PPC campaign, your PPL campaign, all of these marketing campaigns, your Facebook campaign, right? Billboards, radio. I just listed off 10 different marketing sources, not to mention referrals, going after referral strategies, all of these things that if you can start tracking gross lead, net lead, appointment, contract, but then you can attribute each dollar to each expense, right? Each type of marketing expense. Now you can really pick out which ones are the performing ones and which ones are the not performing ones, and figure out where to put the gas down and where to pull the break. Because again, we started with overall return on ad spend. Let's say it's four times. Overall ad spend is four times, but then we get down into our buckets. We've got eight, nine different buckets of where we're spending our money. And we find out that this bucket here and this bucket here are at two times return on ad spend. And so we say, Whoa, whoa, well, we're gonna cut that. Direct mail over here is at five times ad spend. We're gonna put that money into direct mail and we're gonna see if that works and we're gonna test that. And we're gonna see if that takes our overall return on ad spend up. It might, it might not. We don't know the answer to that. It's a test. We don't know the overall results until it actually happens. We're making an assumption, right? I talk about when I get on stage, Caden, I talk about going back to like sixth grade science and talking about creating a hypothesis, right? And so marketing is all about creating a hypothesis and then going and seeing if your hypothesis is correct. You remember back sixth grade science when you were like, all right, we had to write down what we think is gonna happen when we do this and this, and we put these two things together, it's going to turn blue. All right, cool. This is my hypothesis. Oh no, it didn't. Why didn't it do it? Why did it do it? Right. That didn't prepare me a lot for science in the future, but it prepared me a whole lot for analyzing data and analyzing numbers and making decisions, right? That's what we're doing every single day. We're trying to make a hypothesis, analyze if we were right, and then decide, oh yes, we were right, here's why, or no, we weren't, and here's why not. Let's try it again.

SPEAKER_01

So I mean, we're in we're we're mixing some interesting buckets here. First, we started talking about marketing, and then we said, Hey, we're CPAs. Now we already got people throwing. Now you're throwing the scientific method. I know we're going everywhere and bringing up, you know, I my science project was testing which butter popcorn was the best.

SPEAKER_02

So what was your what was your uh hypothesis?

SPEAKER_01

It was uh Orville Redenbacher, you know, we thought that that was gonna be the best, and then I think it ended up being pop secret, pop secret one. So, you know, you guys go don't take my word for it, go test it. At any rate, though, I mean what you're saying is is really interesting though, because a good example. So this is we're bringing all of it together, right? So statistics, when you're looking at data, statistics tells you that if you're trying to predict how inputs create outputs, okay, that's what an equation is. So a lot of us remember like the equation for a line, y equals mx plus b, something like that. We're getting a little scientific. Well, when you have multiple different variables, so an example here, PPC and direct mail and TV marketing, okay? Those three channels, you know, if that's what you're working with, and like you just said, we said, hey, this one's underperforming, let's move the money over. What you're gonna find by moving that money over is was there a positive correlation between PPC and direct mail? Were people getting your mail and deciding to take action because they've already seen you on their phone while they're clicking around on Facebook or whatever? If they're taking action over here because of this, you're probably gonna see that money movement actually reduce your effectiveness of your marketing. Or vice versa, if you see that ROAS goes up, then you know nobody was given a flying hoot about PPC. It doesn't matter, it wasn't it wasn't part of it. So you're over here, think about it. You're like mixing some freaking chemicals up in a a little marketing.

SPEAKER_02

Well, it is it's a big science experiment, it's pretty fun. Well, and here's the thing that's crazy. So it is fun, it's a lot of fun, but it's all testing and it's all feedback. And the thing that's interesting about it is we get to deal with clients all across the nation, and there's even another factor in it, which is you know, which we haven't even talked about, which is location, which now takes this guy's experiment that's working here in this area, take that exact same concoction and go put it in this area, it doesn't work as well. It doesn't work as well, right? They've got to add a little bit of different juice to it for whatever reason, and so that's why we talk a lot about hey, yes, get ideas from what other people are doing, see what's successful, but you gotta test it in yourself. And I'm telling you, there are so many people that go all in in marketing because somebody else has had X amount of success. Like, here's, and I'm not gonna pick on TV too much here, but I'm gonna pick on it for a second. TV is one of those marketing strategies where I've seen people dive into it because somebody else has had a lot of success with it, but they don't understand what their success means and how much work it took to get to their success at that particular marketing channel. And so, you know, I've seen people compare their TV budget that is ten thousand dollars or fifteen thousand dollars a month to somebody that's TV's budget of two hundred thousand dollars a month. Well, these don't work that way, right? These are two very, very different TV campaigns, they're very, very different strategies, they're very, very different ways of utilizing TV, and you can't compare those, those are not apples to apples, right? And so I think that's another thing that you've gotta, and why we talk about this is you've got to build your marketing engine for you. And and again, it's a scientific approach. Yes, you've got to have creative, yes, you can't just put out there some random stuff that nobody's gonna like or somebody's gonna be offended by or whatever. You've got to have some thought into it. But the reality is it comes down to data, and so we see these engines. So we talked about we're gonna come back to the funnel. We're gonna come back to that funnel. We're gonna come right back around to it. So gross leads net leads to appointments. So the high performers that we see turn those net leads right around 40 to 50 percent appointments. Some might be a little lower if they have a little high higher criteria for appointments and they don't go on every appointment. Some might be higher if they're phone appointments and are able to do more over the phone. But that 40 to 50 range is about where we see net lead to appointment be pretty healthy. And so What that now allows you to do again, you can look at your data to say, okay, what conversations are we having in that funnel to turn these leads into appointments? And if we're not consistent, if we're inconsistent in that, should we is there a different conversation that we need to be having? Is there different, by the way, it could be different marketing you're having? You're not setting yourself up for the right conversation. And so that is a big piece of the puzzle. And then from appointments to contracts, well, a good acquisition manager is gonna close 25 to 30 percent of the appointments they go on, and so it's all numbers. If your acquisition manager is not doing that, you can now go in and say, Hey, here's what's broken.

SPEAKER_01

Yep. So I've I've heard you call out a few different points along the way, right? You talked about gross leads and converting to net leads. You said that should be about 70-ish percent. That tells us that we're getting in front of the right crowd. Yep. So if we're not getting in the right crowd, that's a marketing issue. If we're getting in front of the right crowd, we've got our 70% with net leads. And then you said about 40 to 50 percent convert to appointments.

SPEAKER_02

Of those 70 of net leads, 40 to 50 percent of those will should generate an appointment. So it you know, when we're talking about 40 to 50 percent, it's of the next higher level in the funnel, right? It's not of the gross leads.

SPEAKER_01

And and where we're at, if we were tracking 100, just as an example, 100 gross leads create 70 net leads. 70 net leads should lead to about 28 to 35 appointments. Yep. All right, 28 to 35 appointments, and then if we're not hitting those appointments, so if we're not hitting those appointments, that's telling us that our marketing material is not driving intention into appointments. Is that what I heard?

SPEAKER_02

It could be marketing material, it's gonna be one of two things. So it is either, and and I won't say it's the marketing material, it's an opportunity to teach within your marketing material, right? To set up the conversation better in your marketing material, number one, so to set the expectations for an appointment. It could be there, but more likely than not, this is your lead manager that's going to need some focus, right? And so they're not booking enough of those net leads to appointments, so they either don't have the right relationship building skills, right? They're not building the right rapport, they're not asking the right questions, they're overqualifying. Maybe they're even you know rewarded improperly. You know, I've seen that happen where you think you're rewarding your lead managers for the result you want, and you're actually not, right? So you might look at the compensation structure for that. Um, but ultimately that's where your focus is going to be. If you're not getting enough appointments, it's either, and again, it's probably not. It could be something in the marketing, but it's likely in the conversation of the sales of that first person that they're talking to in the organization, right? Lead manager, inside sale, whatever you call it.

SPEAKER_01

And so it sounds like our scientific approach is bringing us to a crossroads where maybe it's more art at that point. You got to kind of use some science art form.

SPEAKER_02

That's uh well, exactly right, right? Science is just gonna tell you what isn't working, it's not gonna tell you necessarily how to fix it, right? The art that's where the art comes, that's where the sales training comes into play. That's where getting the experts into the picture comes in. But here's where most people fail is they don't know what's broken, right? So, you know, if you come in there and you're struggling in business right now, you're like, well, my return on ad spend sucks because my marketing's bad. Okay, well, did you actually look and see how many gross leads you were generating, how many net leads you were generating, and were is your marketing actually bad? Or is your sales team not performing? Because you might be focused on the wrong piece of the puzzle, and that's where the science comes in, is it's supposed to point you in the direction of what's broken.

SPEAKER_01

Yep. No, this is all really, really interesting. And then ultimately, once you get to that point, you know, you have to follow whatever you think the answer is and probably be deploying money to solve that issue, whether it's marketing, you might be spending some money on marketing, getting that dialed in, or you might be spending some money on training, getting your sales team operating at a more effective, efficient level and stuff like that. So this is this is you know breeding investment into your business where you need to be investing time and focus and money ultimately.

SPEAKER_02

Well, and you know what's interesting? What gets measured gets results, right? And so if you're not measuring these places, you're not gonna get results in them. This is a funny story because we're talking about this right now. We have a client, CFO client. Again, these are the things we're talking about. We're talking about each step of this funnel. And in their funnel, we were projecting this is how deep we get into projecting our financials with our clients. Is we're projecting out how many leads they're gonna get based on their ad spend, based on their cost per lead, and that goes down to how many appointments they should have and how many contracts and so on and so forth. We're projecting that out based on what their real numbers are. And what we had found was in Q1, their net lead to appointment ratio dropped to 34%. So below 35%, when we know it needs to be, we were projecting 40. That's what we were projecting. We were hoping it could be a little higher, but we were projecting 40. And so we were off with our revenue forecast because our appointments were low because our lead managers weren't setting enough appointments, and so it was quick that they were able to jump in, fix it. Guess what? There wasn't some magic bullet training that they did. They came in, they put the numbers right in front of them. And I will tell you the first 15 days of the month of, and they actually found this obviously a little bit longer ago, but it's been about a month that they've been adjusting this, and they're up to back up to 40%. And it's just putting the numbers back in front of their face and saying, guys, we're supposed to hit this. And these are this is the expectation, this is what doing well in this role looks like. And it wasn't some magic bullet training, it was just putting the numbers back in front of them to let them know, hey, we're not doing what we're supposed to be doing, and that has changed things. We'll see if it keeps up, but that's how you can easily just go in and again point your finger at where what's broken in the return on ad spend model, right? This is all going back to that second profit driver of the return on ad spend because each one of these layers has its own complexity to the overall calculation of return on ad spend. And if you, I mean, let's just be honest, guys, of the four profit drivers, this is pretty important one of them, right? I mean, this is the one that drives a lot of the revenue of your businesses, but each one of these factors inside of the return on ad spend calculation is critical to your success, and maybe more critical now than ever, because it's so much harder now to make a dollar than it was three years ago. I'm seeing it across the board, and so you've got to be better in order to make the amount of money that you used to be able to make in real estate. I'm just seeing it, and this ad spin part is a big function of it.

SPEAKER_01

Yeah, absolutely. So we've got our appointments. Our appointments are about 40 to 50 percent of our net leads, which is 70 of gross, all right. From appointments, how many contracts we get in?

SPEAKER_02

Should get 25 to 30 percent of those as contracts.

SPEAKER_01

Okay, so what's broken if we're not getting that? Sales, acquisitions. Okay, so our sales that would mean sales training, you know, maybe we need to be listening.

SPEAKER_02

Better conversations, listening on calls. I know our buddy Steve Train's got the AI tool out there that can improve your sales objection proof AI, objection proof AI, that's right. So having better conversations is is what it's gonna take. And honestly, accountability towards those salespeople, right? Accountability towards your acquisition managers, they've got to be accountable towards their results, and I and I will tell you that is a hard thing to do. That is a very, very difficult thing to do, especially when they were acquisition managers when this business was easy and now it's a little harder. It's hard to push them to another level because they used to be able to do X, Y, and Z and make X, Y, and Z. Now you're telling them they need to do A, B, and C in order to make X, Y, and Z, right? And so it's different now. And so we're seeing some of that push and pull with acquisition managers and the sales team, and we're seeing a lot of turnover there, to be honest with you, because of that, because we're not seeing that will to come in and do whatever it takes to make those numbers. But it's funny when you get new acquisition managers in and you're training them under the new economy that we're in, they're having success. It's interesting, right? Because they're not used to the old way. Um, it's kind of the four-minute mile conversation, right? And so, you know, these guys don't know what they don't know.

SPEAKER_01

Yeah, that makes a lot of sense. So here's actually like a contrarian question, a little bit. Sure. What happens if you're getting more than 25 to 30 percent contracts? Like, let's say you're getting half of your appointments to close. Is that a good sign? Or what is there? And I'm asking genuinely, that's a curiosity that came up for me. What would you say?

SPEAKER_02

I think it all depends is on so a contract is not a close, so if you're getting 40 to 50 percent contracts and you're still, and again, we think closing is gonna be around 70 to 80 percent. So that 70 to 80 percent of your contracts should be closings, and if it's below that, you're getting a terrible reputation in your market, or you're gonna be out of business eventually. But your contracts to closes is gonna be 70 to 80 percent. So if you're able to close an appointment at 50, great, as long as your contracts are closing at 70 to 80 percent. That's what really matters in that scenario. So that's kind of the very last piece of the funnel. And we've seen this before where we've had acquisition managers locking up everything, but none of them get closed because they act locked them up at a high price without margin or a deal that just didn't work out for the company, and it puts a terrible taste in the seller's mouth, puts a terrible taste in the local economy's mouth, to be quite honest with you. And and right on it, and really it hurts the overall industry as a whole when we back out of contracts, and so we should be measuring that very, very closely and making sure that if we are putting our name on a contract in this industry, we are willing to uphold that contract. And I think it's it's very simple. The ones that are willing to do that and do a good job at it are successful, and the ones that don't, they're not around for very long. And I think it's gonna be an even shorter time period going forward. And so that's something you really, really, really, really, really need to measure because this is a perception economy. And if you are don't have a good perception, if you aren't looked at as somebody with high integrity, if you aren't looked at some at as somebody that can be trusted, nothing else matters. You can have all the best marketing, you can have all of the best salespeople, you can have all of the best everything, but when it comes down to people don't trust you, they're not doing business with you, right? And so you got to be able to get to that bottom of the funnel, right? Which is the close. That's how you put the very cap in on return on ad spin. That's the return part. And so none of everything else matters unless you get to the closing table. And so our goal should be every time we work with a seller, our goal is to get them to the closing table, right? It's not just to get them under contract, that's not good enough for in this industry.

SPEAKER_01

Yep, that makes a lot of sense. So don't look like a shark in the pool and expect people to want to get in and swim. That's right. That's right.

SPEAKER_02

That's right. There's a bit, there's a way to do this business with utmost integrity, and there's a bait way to not do it, unfortunately. And that way to not do it is hurting the ones that are doing it well. No, we've got to do it well, right? If you're listening to this, you've got to do it well. So that's the full cycle. That's the return on ad spend cycle, right? It all starts with putting a dollar out there, but it all ends with a closing, and there are so many little intricacies along the way between type of marketing, the funnel, you know, overall return on ad spend, all of these kind of things that you know, quite honestly, this is a billion-dollar industry just within helping real estate investors get that return on ad spend right. Billions of dollars going into this industry.

SPEAKER_01

Yeah. And so just to kind of tie this up, put a bow on it in this economy today. What are we seeing is is coming out as like an average return on ad spend? How many dollars are people getting in revenue for a dollar that they spend?

SPEAKER_02

And well, the business doesn't work unless you're at a three.

SPEAKER_01

If you're at a two, if you're at a two, you're screwed, you're screwed long term.

SPEAKER_02

Now, somebody's gonna come back and they're gonna give me this outlandish example, and I pretty much know what the example is, and I don't want to listen to it. So I'm gonna tell you that across the averages, not the outlandish scenarios, but across the averages, if you can't operate at least a three to one return on ad spend, you're gonna be out of this business. Let me guess. If you're really profitable at four, five, you've got a lot of opportunity to scale. If you're at five return on ad spend, you've got a lot of opportunity to scale.

SPEAKER_01

Yeah. So I would guess the outlandish is like a one-man shop, like no overhead or anything like that. You could probably get buy one.

SPEAKER_02

Well, I really mean like there's people that I know that are at like a two and a half times return on ad spend, but they're spending $300,000, $400,000, $500,000 a month. And so if you're spending $500,000 a month and you're making $1.25 million, the two points five, you know, return on ad spend can kind of work that way. You're still putting a lot of risk out in the market. It's still not what I would do, but does it work? Are you making several hundred thousand dollars a month doing that? Yeah, for sure. But that's such an exception to the rule. And most places across the country, you couldn't put that much money into the market and actually get a enough return, right? Most people places, if you put five hundred thousand dollars into marketing into a market, you're going to get like a one X return on it, right? If that. And so that's really the outlandish ones. The other ones certainly are you're not really marketing, right? A lot of people that are maybe spending five to ten thousand dollars a month in marketing can achieve really, really good high-level marketing results, 10, 12 times uh return on ad spend, simply because they should be targeting the most likely sellers. Your earliest ad dollars should go to the most likely sellers. And then the more you spend, the less likely that person is to sell you a house, right? So you want to focus your early dollars on the most likely, and then there's a law of diminishing returns over time. Where, like I said, you know, I kind of hinted at this a little earlier. If you're at five times return on ad spend, you've got opportunity there because that means there is a lot of lot more people out there that will sell you their property. If you could get that down to a three and a half, you would actually make more profit. Now I know that's crazy to think about. We don't need to go through the math, but you could do the math yourself and you could see how that could happen as you grow your marketing, even though your return on ad spend goes down, you make more money, right? And so that's uh that's something that you've and there's a fine line there because there is a spot where it no longer makes more money to increase your ad spend. The law of diminishing returns goes against you. So that's what that's a math, that's a science.

SPEAKER_01

Yeah, a little break-even points. Interesting, yeah.

SPEAKER_02

Oh, we didn't even get into that. We got so much more we could get into today. Let's stay on for another three hours.

SPEAKER_01

Yeah, right. We could have a whole seminar about this, it'd be funny. I like it. So, yeah, this is I mean, this is really, really great stuff for anybody, even if you've been doing this for a long time, just kind of getting that refresher of how the numbers kind of jazz together. And you know, if you're listening to this and having like an open, inquisitive mind, being a little curious, maybe you came up with some different science projects you're going to take into your marketing. And for anybody who's listening to this and says, Man, I don't have any idea what you guys are talking about. I know I'm doing a lot and we're we're generating deals. You know, you need some CFO services. I think there's maybe a world where you need to be going to our website, b eccfo.com, and getting that free consultation to see how we can come and break this down for you and help you do the best in your market with what you've got. Look at that sales pitch by Caden, he's the man.

SPEAKER_02

What do we do? We always forget, right? We always forget. We do, and I usually am like throwing it in like a curveball last second, right? Yeah, great job, great live today, good conversation. Uh, we'll be back in a week or two. Uh, we may slow these things down from going weekly to bi-weekly, we'll discuss that. But in a week or two, we'll be back and we'll talk about profit driver number three. Profit driver number three, which is human capital. That's gonna be a fun one because I always have a lot to say about people. So we can talk a lot about people and we'll probably talk a little bit about AI because AI is going to be a big piece of how we're looking at people cost in our business going forward. So looking forward to that one. Going to be a lot of fun conversations there for sure. If you are interested in working with a CPA firm that actually helps you make better decisions so that you can get better results, reach out to us at BeckCFO.com. We would love to help you out. Guys, until next time, keep making better decisions until you get better results.

SPEAKER_00

Thanks for listening to Strength in Numbers. If you're ready to take control of your finances and start building real wealth in your business, be sure to schedule your free discovery call with markets at BECCFO.com to get started. Thanks for listening, and we'll see you on the next FSL.