Why You Shouldn't Care About Cost-Per-Lead, and What to Measure Instead

It's normal to obsess over how much your signed leases cost to acquire, and on the surface, it's all pretty straightforward.

Add up your multifamily marketing spend and divide it by the number of resulting signed leases.

The lower the spend and the higher the leads, the better, right?

Done and done.

(Source)

But there are several problems with tracking them on a cost-per-lease basis, starting with how they’re tracked in your marketing funnel.

Why You Can't Count on Tracking a Cost-Per-Lease Basis

Tracking cost-per-lease sounds like a no-brainer in measuring your marketing results, but what your CRM will tell you is that your top two lead sources came from something like:

Your community website
Your Google My Business Profile

In reality, this just isn't true. Your CRM can't track the earliest stages of your marketing funnel or leads that see several ads, reviews, and testimonials before converting to a lease.

Tracking cost-per-lease gives too much credit to just one or two sources.

So why not just track everything in your funnel?

Unfortunately, the attribution tech just isn't there when it comes to tracking sources on a cost-per-lease basis.

“Just because attribution technologies credit a channel as being a source doesn't mean that source was the catalyst for the conversion.” 📣📣📣 (Source)

You can only track it accurately with a manual attribution report and ask every single resident how they heard about your community.

Nope. It's not your imagination: This process is difficult, tedious, and not consistently accurate.

1) That resident could shrug it off and say, "A billboard, I guess," but later remember they heard someone talking about your community at work a few weeks before driving past that sign.

2) Or they could have been searching online for a new apartment, which triggered a social media ad later that day.

3) Maybe they didn't even click the ad but remembered the name of your community after seeing it, so they searched for an online review weeks later.

You see the problem here.

Tracking the cost-per-lease basis is messy, so nobody really does it.

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There’s Also Hidden Costs of Measuring a Cost-Per-Lease Basis

Beyond some serious attribution problems, there are also costs beyond marketing spend that you can't really account for or adequately measure:

👉 How long did it take your leasing agent to learn Google Analytics and determine which leads came from your community blog or online campaign?

👉 How much did it cost to research PPC ads, come up with a strategy, and implement it to see results?

👉 How much time and money did you spend on flyers, snacks, drinks, and promotions for that rooftop lounge party to attract potential residents to stop by?

Measuring cost-per-lease without considering the attribution weaknesses and how much time and money you spent doesn't give you very good info.

You end up making marketing decisions based on unreliable data instead of building and measuring sustainable leads.

What About Measuring Cost-Per-Lead Basis Instead?

Okay, since we can't really track cost-per-lease, what about tracking cost-per-lead instead?

Here's the issue with this method:

Cost-per-lead is a horrible way to track incremental success or your marketing impact.

Why??

Well, you could set up a marketing campaign that generates hundreds of $1 leads that look impressive when they fill up your CRM but, in reality, don't convert to anything like a signed lease.

We're not suggesting that you should just ignore tracking cost-per-lead and never measure it.

Here's the "but" to all of this:

Truth 💣: Putting too much weight on tracking cost-per-lead ultimately clouds your reporting. You end up with data about cheap leads that resulted in zero business impact or signed leases.

What You Should Track in Your Marketing Instead

Now that we've navigated through all the “should nots,” here's what you SHOULD track:

Measure the ratios of your qualified leads by their source.

This method is a VERY valuable way to measure which sources bring in the best lead quality.

After all, some sources could bring in a lot of cheap leads, but what if only 1 in 100 of those leads actually tour the place?

That marketing source is (mostly) wasting your team's time and your budget.

It's more efficient to use a source that only brings in ten high-quality leads but generates two tours instead of the other scenario.

You also spend less time and budget on that lower-lead-generating source.

Truth 💣: It’s better to go with a high-quality source than a low-quality one, even if it results in fewer leads.

Keep Your Eyes on the Prize (Signed Leases)

Remember to drill down to the leads that are actually converting instead of tinkering with every marketing source you can get your hands on.

It sounds simple, but it's easy to get caught up in experimenting with the shiniest new source out there, from TikTok to content marketing.

Sure, it’s good to stock up your marketing funnel…

But did they actually convert? Are they taking any consistent action, clicking links, following-up about rent specials, and showing up at your community events?

(Source)

At some point, your marketing isn’t about interested leads but signed leases.

If you discover that inbound marketing leads from your resident referral program work best, double down on that.

If a PPC campaign where Google's algorithm figured out which look-alike audiences worked best, focus on that.

It's always a good idea to stay open-minded to marketing methods and make changes if you see lackluster results, but the best leads are the ones that convert. It’s as simple as that.