I was on the phone yesterday with a Home Builder – discussing their potential implementation of a new Customer Relationship Manager (CRM) for their business.  They sheepishly admitted that they “needed to grow up” when it came to managing the Leads coming into their business. 

Currently, they had no CRM – nor any formal plan in place – to handle the Customer Leads that landed in their inboxes from a few different places (their own website, external real estate websites, Model Home traffic, etc.).

Instead, the Leads were all directed and handled by the individuals they relied on to sell their homes.  Their Sales Team consisted of both internal Salespeople and External Realtors – all who sold from the Model Homes.

And the Leads collected by this Team were scattered about in inboxes, individual spreadsheets, or – at worst – not even being managed at all. 

Given the current environment – where Sales were slowing due to rising interest rates – this Home Builder decided it was time to get serious.

It’s funny how slowing sales impels folks into action, isn’t it?

As for this Home Builder, I can’t point fingers and shame them by shaking my knowing head at them. 

My family’s homebuilding business was very much the same way for the 24 years I was involved.  Sales had been good through the early 2000’s, and we were just trying to keep up with the demand.

Anyone who’s lived through “the Crash” of the late 2000’s knows what happened (and it ain’t pretty).  Leads dried up faster than my hair coming out of the shower (note:  I don’t have too much – so – if you weren’t sure how fast it dries, it’s about 5-10 seconds).

At that time, we wanted to start “growing up” our Prospect Lead Management, too.  We also used both an internal Sales Team and external Realtors.  So, the conversation with this Home Builder really hit home with me.  It was like I was listening to my own family exploring a CRM.

Their conversations and issues mirrored what we faced, too.  Read on to find out if you might have the same considerations, too.

What Were Their Concerns?

This Home Builder worried about exactly how to broach the subject of bringing the Leads into one central location. 

Their internal Sales Team wasn’t as much of a concern to them.  After all, they were paid employees and would need to follow practices put in place by their employer.

However, the external Realtors were commission-only, and they had to sell homes to make any money.  And most of those Realtors were not exclusive with this Home Builder – also selling re-sale homes (and – as hard as it is to hear – sometimes the homes of their competitors).

Since they were Independent Contractors, didn’t they own their own Leads?  Who was this Home Builder to collect the Leads for themselves?

Let me tell you why.

Why Is It Important To Own Your Own Leads?

Collecting (and managing) your Prospect Leads in one location is so important for a Home Builder, because these Leads are your lifeline and are the source of your future cashflow (and profits).

They become even more critical in times when sales slow (or, gulp, plummet).

In one location, you can quickly find them and reach out/call/market to them.  Leads sitting in personal inboxes, computers and/or spreadsheets are next to impossible to find when you really need them.  Knowing if those Leads are even in the market anymore is another concern.

Still not convinced?

Let me add this. In case you didn’t know it, your Sales Team can leave you.  Even your Realtors.  And they can even go and work for your competitors.

And those Sales Team Members will not want to necessarily start from scratch with their new Home Builder.  I can pretty much guarantee you that they will have the Leads they collected while working for you, and they’ll take those Leads with them to your competition (and you won’t even know it).

Hopefully, I have your attention now.

But – even with this information, you still might be hesitant to bring this up with your internal and external Sales Team and need more motivation to make the move. 

So, let’s look at the investment your Company has already made to capture Leads.

The “True” Cost of Lead Generation

At first glance, this Home Builder thought that they only had a few expenses to handle their Leads to date.

They paid a popular homebuilding/real estate national lead generation website a monthly fee for those Leads to be forwarded to them.  And they paid for some advertisements here and there (both online and off) to generate some more Leads.

Overall, they figured it was a pretty low-cost approach.

But let’s look at a few more costs that they (and you) should consider – all of which really are helping to generate Leads.  Get your calculators ready!

  • Annual Base Salaries of In-House Salespeople – Most Home Builders end up paying a base salary to their salespeople to keep them (which is, essentially, an “advance” on future commissions). Additional money is paid out to the Salesperson after the commission amounts have surpassed their base salary.
  • Benefits/Insurance for In-House Salespeople – It’s a given that benefits and insurance are offered to employees of a professional Home Builder.
  • Commissions paid to Listing/Selling Real Estate Agents – That commission fee is coming out of your pockets for the Leads that they brought to your Company.
  • Cost of Each Model Home – You paid for the construction of a Model Home for your Sales Team to work in. This also includes the amount you paid to furnish it to make it appealing to future Buyers.
  • Finance Costs of Model Home(s) – Unless your Company is flush with cash, you probably used financing to build your Model Homes. And, believe it or not, the Lenders like to make money by charging you interest…..every month….until that loan is paid off.
  • Maintenance of Model Home(s) – Those models use electricity, gas, water, sewer. They have lawns that need cut and (for many) snow to be shoveled.    Those are costs associated with lead generation, too.
  • Your Website Maintenance – Keeping your website up to date and live costs money (and, maybe, someone on staff dedicated to making sure it’s up-to-date).
  • Lead Generation Websites – Mentioned above, these are the monthly costs that you pay national sites (Zillow, New Home Source, etc.) to send you Leads.

Think about these costs to your Company.  I’m sure there are even more that I didn’t think of.  If you did pull out your calculator, my bet is that this amounts to a pretty good-sized sum – and it becomes your true cost for lead generation.

Hopefully, this opens your eyes.  And I’m giving you permission to talk to your entire Sales Team and tell them you’ve earned the right (heck – paid for the right) to own your Leads.

Then, find yourself a way to manage your Leads through a CRM that works for your Company.  There are certainly homebuilder-specific CRM programs (that I think are the best choice); however, it’s more important that you get anything that can allow you to collect and pro-actively manage those Leads for your company.