Property Management Growth with DoorGrow DGS 220: Cold vs. Warm Leads in Property Management
Do you know the difference between cold and warm leads? If not, it could be costing you thousands or tens of thousands of dollars…
Join property management growth experts Jason and Sarah Hull as they reveal the ugly truth of using internet marketing and pay-per-lead services. Learn the difference between warm and cold leads and how to attract more warm leads in your property management business.
You’ll Learn[02:46] What’s the Difference Between Warm and Cold Leads?
[06:28] What are the Problems with Cold Leads?
[14:14] How to Get Warmer Leads
Tweetables“The difference between a cold and warm lead is that they know you, trust you, and like you.”
“Cold leads are only good when they come in for maybe about the first 10-15 minutes.”
“Sales and deals happen at the speed of trust.”
“Not all leads are equal.”
Resources Transcript[00:00:00] Jason: One of our clients came to us, and we said, "what have you been doing for the last year to try to grow your business?" because they have not been very successful, they were doing a pay per lead service. They bought 322 leads in the last year. And I said, " how many doors did you get out of those 322 leads?" And they said that they got like 18.
[00:00:26] Welcome DoorGrow Hackers to the DoorGrowShow. If you are a property management entrepreneur that wants to add doors, make a difference, increase revenue, help others, impact lives, and you are interested in growing in business and life, and you're open to doing things a bit differently, then you are a DoorGrow Hacker.
[00:00:42] DoorGrow Hackers love the opportunities, daily variety, unique challenges, and freedom that property management brings. Many in real estate think you're crazy for doing it. You think they're crazy for not because you realize that property management is the ultimate, high trust gateway to real estate deals, relationships, and residual income.
[00:01:00] At DoorGrow, we are on a mission to transform property management business owners and their businesses. We want to transform the industry, eliminate the BS, build awareness, change perception, expand the market, and help the best property management entrepreneurs win. I'm your host, property management growth expert, Jason Hull, the founder and CEO of DoorGrow, along with Sarah Hull, co owner and COO of DoorGrow. Now let's get into the show.
[00:01:26] All right. I always trip up a little bit trying to like introduce you. Like it's really hard, co owner, COO, like they both start with the same first letters and my brain's like COO's, owner, COO... I don't know. All right. So we were talking about today's topic and what we wanted to talk about. And what we were planning on talking about today is property management leads, specifically the difference between cold and warm leads. And a lot of you probably already know what that is, especially if you've been listening to the podcast a while, but I still get asked this question. I'm explaining, like these marketing channels will only give you cold leads and the close rate is only like 10 percent on those or worse, and these channels will give you warm leads, and people are like, "what's a warm lead? What's a cold lead?" I still get asked this question. So we're , to answer that today and we will give some examples of those And and help you figure out maybe a little bit towards the end, how to get some more leads because everybody wants more property management leads. How do I get more leads? And one of the challenges we can get into is related leads is sometimes you think you need more leads, but what you just need maybe is less leaks or maybe some better channels. So we'll chat about that. Okay, so Sarah, what's the difference between a cold and warm lead?
[00:02:51] Sarah: Oh, that's such a good question.
[00:02:53] Really there's a lot of differences, but I would say the main difference is like, where does it come and what is your close rate? Those are, I'm going to say, your two big ones. Where does it come from and what is your close rate?
[00:03:05] Jason: So Here, like, let's make this really simple for those of you listening. Now, a lead may start out as cold. It will, if you are effective, it will warm up, and then it will become hot, and then you will close the deal, right? So, what is the difference during this transition? The difference is trust level. That's the difference. The difference between a cold and warm lead is that they know you, trust you, and like you. That's the big difference between a cold and warm lead. They know you trust you and like you, then they're warm. Now, how do we create more trust? How do we make sure that they feel like they know us authentically and truly, and how do we get them to like us, right? And that's what makes a warm lead. So cold lead examples. Let's let, what are some typical cold lead examples?
[00:03:58] Sarah: Online really like, "Oh, I did a Google search."
[00:04:03] Jason: Okay. Yeah. Online. So we've got like SEO related to search engine marketing. We've got like Google ads, like pay per click. And I'm not saying "paper click" some people like think I'm saying I think it was paper click Like you're clicking papers.
[00:04:19] Sarah: Sometimes people say it so fast. It's like yeah paper click, you know.
[00:04:22] Jason: So those non nerds out there it is pay per click. Right, so per every click you're paying some money right is the idea of PPC. All right, so we've got SEO pay per click not paper click and then we've got...
[00:04:40] Sarah: I can't wait to see the transcription. I know it's going to be great. He's saying the same thing.
[00:04:45] Jason: Super confused... content marketing and then we've got social media marketing and then we have... you mentioned also pay per lead. Not paper leads not like made of paper leads. Okay, pay per lead. So pay per click example would be like google ads, facebook ads, things like this. You're paying for clicks or you're paying for views, right? And then pay per lead, that would be something like you know, lead services, like that. Yeah. Lead services that you pay to get leads. The end.
[00:05:20] Sarah: And this is like true in every industry, like every industry that sales is a part of it, they're like, "Hey, we will sell you leads," and then you essentially, you buy a lead, you pay money, you buy a lead.
[00:05:32] And then you think "Hey, here's this person. And I will call them because they are interested in the thing that I am selling."
[00:05:39] Jason: So let me give you an extreme example of cold lead marketing. One of our clients came to us, they had 1300 doors. Their BDM came on to one of our calls and we said, "what have you been doing for the last year to try to grow your business?" because they have not been very successful, and they said that they were doing a pay per lead service. And it's a very common one. A lot of people do in the industry, which is APM allpropertymanagement. com. I said, "how many leads did you buy from them?" because you pay per lead. They bought 322 leads in the last year. And I said, "cool. How many doors did you get out of those 322 leads?" And they said that they got like 18.
[00:06:23] Sarah: Something like that. So like a 10 percent close rate would have been like 32.
[00:06:27] Jason: So they, yeah, it was really bad close rate. Right now to compound this, and for those of you that want to do some math on your own cold lead marketing, I have a calculator for this.
[00:06:39] You can go to DoorGrow.com/ cold. That's my cold lead calculator. Wow. Yeah, it's old. Can we update that video? Maybe. There's a really old video. I have a much skinnier, less muscular face with a very big beard and mustache on it. So you might see it. I almost don't want people to go there. Oh, stop. I don't care how cool I look. It's good stuff. So go to the cold lead calculator. Don't watch the video. Put in the math and see what your cold lead acquisition cost is because here's where they'd spent money and i'm guessing it's like I don't know what apm charges nowadays maybe it's 50 bucks 60 bucks 80 bucks something somewhere in there. I'm guessing So 322 of those and then, but they're paying to have a full time BDM that's working on this and they're paying to have a setter working on this as well. That's a lot of expense annually. We're talking tens and tens of thousands of dollars, right? And so they're spending all of this money and they got 18 doors.
[00:07:38] If we took all of that expense, the business owner took all of that expense. And divided it by 18, that acquisition cost would be ridiculous. It would be ridiculous. This is like giving maybe a year, years of free management away just to get a client. It's not a profitable way to do growth, right? Now there are some that do these different cold lead channels, but they have to build an entire mechanism.
[00:08:04] They might have multiple BDMs there. They have sales CRMs. They're following up immediately as a lead comes in because the race is on. Cold leads are only good when they come in for maybe about the first 10, 15 minutes and then conversion rates drop like 80%. Right. So you have to like have immediate follow up and you have to be first. You have to be the first one to call them because APM, for example, is going to give it out to multiple companies.
[00:08:28] Sarah: Yeah. That's the thing to kind of keep in mind too, is, and I used to deal with this when I was in the insurance world is when you buy leads... yeah ..Like even if they tell you like you're the exclusive one, you're never it's never an exclusive lead It's never just being sold to you never because they're in the market. Tell you like, "oh. We won't sell this to anybody else." Like yes, you will. Yes, you absolutely will. So they're sick. You're selling it to multiple people who are trying to buy the same thing and then you've got it like hit that really fast
[00:09:01] Jason: Yes, so if somebody is looking online, that means they're at the end of the sales cycle, that means they're now hunting and looking, they're not just going to do one thing. Usually they're going to keep going until they find what they're looking for. And so even if it's an exclusive lead from some sort of service, and there are other services that will give you exclusively, which means they're not going to give it to five companies, they'll just give it to you. The challenge is these people are still in the market. They're hunting and looking now.
[00:09:31] Sarah: Before we get into warm leads, I was just so burned on this, like in the insurance world that I was like, : I'm never freaking doing leads again." Even if you're like, "Hey, I only want to like deal with qualified leads, right? Like I don't want like these like shitty, crappy leads that you call them and they're they have no idea who you are." They have no idea why you're calling them You're like, oh because you know, you were interested in getting a quote on your insurance and like "no I wasn't. What are you talking about?"
[00:09:58] Fake leads? Like, "I don't know how they got my information." So, like, crap leads. Like, real crap leads. Or... There were services too that would try to tell you they were more qualified, like in the insurance world for anyone who kind of is familiar, there are different coverage levels, right? So like in property management, there might be different tier levels in your pricing plan. You might say, "Hey, I only want to get people who are going to be in my top pricing plan. Send me those leads." And typically this is like the portfolio of, you know, what I deal with. And. Based off of that, they should be able to, like, use their algorithm to find people who are similar to that and push those people to you in the form of leads. Sounds fantastic. It's not because it never works that way. Even if you go, "listen, like I only want the people, you know, that have like full tort and like, you know, stacked coverage and like, you know, at least a hundred, 300 liability, send me only those." And then you'll get these leads and you call them and sure enough, you pull it up and they have like, Limited tort, they've got like no UMUIM, they've got like state minimum coverage and you're like, "this is not the lead that it's paying for." so you're paying for like a premium lead what you think is going to be like a qualified top tier lead and come to find they are not qualified and they are not top tier. So like, that's just the other thing to kind of keep in mind is even like, even the services that are like, "Hey, we're going to screen them more for you and like, tell us a little bit about, you know, what your top tier looks like, and we'll push you more people that have that Like algorithm, right?"
[00:11:38] And it just, it doesn't work that way. It just doesn't. It sounds really great, but it doesn't end up working that way. So, more often than not, you're talking with people that sometimes they have no idea what you're even calling them for. They are they're completely in the dark feel like, "I don't even know how you got my information I don't know why you're calling me. I don't even know what property management is," like they have no idea they're not interested or they are interested but now like they're being bombarded Because that lead is being sold to like multiple companies. So even if it's just you and one other company, now you've got two people who are calling going like, "Hey, you're interested in property management."
[00:12:18] And now that kind of puts them in like, it almost gives them like the buyer's power, right? Because they're like, "Oh, these people are now chasing me" like, "Oh yeah, Fred called me over here and Jason called me over here, but they're obviously both interested in working with me." Right. So it it just changes the dynamic a little bit. So that's kind of something else to kind of keep in mind when you're dealing with any kind of like pay per lead
[00:12:42] Jason: service.
[00:12:43] Yeah. They'll start regretting their decision to fill out some sort of lead form when they start getting called by multiple companies. Okay.
[00:12:50] Sarah: And they will continue to sell it even though like, because they don't like this, the service doesn't know. So if I was interested, if I was a legitimate lead and I was interested in property management. They might sell my lead to multiple companies. But if I talk with, let's say Jason, who does property management, and Jason closes the deal.
[00:13:10] Well, the service that is selling my lead does not know that Jason closed the deal. So technically I'm like off the market. I'm not interested in looking for another property manager anymore because I already found one and I closed the deal. They don't know that. So they will continue selling that lead.
[00:13:25] Jason: Okay. All right. So yeah the challenge with cold lead marketing and property management, the feedback I typically hear, and we used to do like Google ads for for clients. And one of the biggest challenges is you're always going to get a lot of people filling out lead forms or clicking on stuff because they know property managers will start to call them that are vendors.
[00:13:47] This happens all the time. Like vendors are like, "Hey, I want to talk to some property managers, so I'm going to fill out these lead forms. I'm going to click on their ads, and I'm a plumber, and I'm not interested in property management. And so some of these services like APM, they will like, if you tell them this was a bad lead, they will refund your money. To their credit, the challenge is imagine how many leads come through that nobody goes and ask for a refund. This still becomes a profit center for them.
[00:14:14] So, all right, so let's get into warm leads. So the challenge with warm leads is that people don't know necessarily what they are, how to get them. So let's talk about what a warm lead is. A warm lead, or look, these are people that know you, trust you and like you. We've established that some examples of higher trust or warmer leads would be leads that come in from your online reviews. If you have really good reviews, that could be a warm lead channel. They're like, "Hey man, they're the best rated company on Yelp or they're the best rated company on Google, or they have the most reviews on Google and they're rated really well. You know, I already can trust them," and they might read some testimonials to say "these guys are great. They're awesome The business owner's fantastic. The team's cool," like all that and they'll be like, okay now they have trust. So there's things that are trust indicators that help create trust. The website. Your website also can help create trust And so a lot of what we do with our clients at doorgrow is we show all of the trust leaks that exist in throughout the sales pipeline You've got leads that come in, but then if your business has all these trust leaks after it, it's like turning on the hose, getting more leads. And then you have all of these leads. And so we want to shore up all of the leaks that kill trust because sales and deals happen at the speed of trust. You've probably heard me say before. And so we want to increase the trust level throughout the process because that warms them up and allows you to close deals.
[00:15:43] So online reviews might be a channel for warm leads, referrals. Word of mouth you know, and these could be referrals from agents. This could be word of mouth from like your existing clients. Things like this have a high level of trust. They're like, "Hey, use this company." Now, what's really important to understand is that most warm lead channels, warm leads usually come before cold leads in most situations. Which means the warm lead table, the referral word of mouth table, usually the scraps that fall off of that table, the shitty cold lead, terrible scraps that fall off the referral word of mouth, warmly table are what are going to be looking online. So any online channel, SEO, paperclip, content marketing, social media marketing, paper lead, these are able to find and attract people that are at the end of the sale cycle, which means they're more price sensitive. They view you more as a commodity. They're getting bombarded or talking to multiple companies. You're now just all property managers are the same and they're looking for the cheapest price. And so if you're able to capture them earlier in the sales cycle, like even before they're searching online, even before they could even see online reviews, and you can capture through word of mouth or referrals or warm lead channels. You're going to be able to close deals at a higher price point. There's less price sensitivity and your close rate is really high for most referrals, I'm guessing most of you will say, close to a hundred percent, you know, it's something super high.
[00:17:14] If it's not higher than 70%, you have bad breath and you don't know it, right? It's like 80, 90%. So it's the opposite. So we've got warm leads at like 90 percent cold leads at like 10 percent or worse. Now the other challenge with cold leads and warm leads is cold leads take way more time. It takes a lot more time to nurture them, talk to them, phone calls with them. And a lot of times you still won't even get the deal. So you're wasting a lot more time trying to get business with cold leads. Warm leads take way less time. So if you eliminate all of your cold lead marketing channels, which we help a lot of our clients do completely eliminate advertising expense altogether, and then we help them. They're able to grow faster. So that company we talked about before, if they didn't have the 322 cold leads to work, and they spent all of that time with their setter and their closer, their BDM focused. And that's business development manager is what that stands for. Everybody asks me that. If those are focused a hundred percent on warm lead strategies, they would have added a hundred or hundreds of doors.
[00:18:20] One of our clients did just that. In contrast, came to us with 600 units in less than a year. They had added over 400 units, and they had broken the thousand door barrier. But it's because they were not focused on cold leads and their BDM full time was focused on real strategies that work, that were able to help them capture business much faster.
[00:18:45] So here's the question I usually ask. Would you rather have 10 cold leads or five warm leads? If you do some math here, 10 percent close rate, you have 10 old leads you might get one deal. Five warm leads, you'll probably get four. You'll probably get four deals out of five warm leads right? And you're going to spend way less time, probably two to three times less amount of time in trying to nurture somebody, talking to them, visiting the property, etc. Less time wasting. So if you're a small business owner and you're trying to grow a business, one of the worst things you could do is to muck up your lead generation with cold lead marketing that takes a ton of time and gets you very little yield and is super expensive because warm lead marketing costs basically 0.
[00:19:38] And you're like, "yeah, but it takes time." It takes less time than cold lead advertising does. It takes less follow up time, less time. So less time, less money, more deals. And a lot of people don't get this. They're like, "well, I just, I don't want to do all that work. I just want to throw money at the problem."
[00:19:56] Cool. Keep wasting your money while my clients are kicking your ass. Like we'll help them do that all day long because our clients are crushing it when it comes to adding doors and they're not spending any money. So they have a lot more bandwidth to be able to afford to improve their business and improve operations because they're not spending two, three, sometimes four or five grand a month on internet marketing.
[00:20:19] So they're able to grow faster.
[00:20:20] Hopefully all of you understand the difference between cold leads and warm leads. Not all leads are equal. People come to us all the time. They're like, "I want more leads." Well, if that is the thing that you're going to marketers and saying, "I just want more leads" with the assumption, the false assumption that all these are equal, you are red meat for a wolf that's going to destroy you, right? Because they're going to take your money and they're going to give you leads, but you don't know the difference between cold and warm leads, you're going to be taken for a ride and you're going to spend a lot of money and you're going to be one of those clients that comes to us and says, "I just spent a ton of money on X company, or, you know, ABC company or whatever for marketing, and I don't have a lot to show for it, but I've spent a lot of money and I've wasted a lot of time and I haven't added hundreds of doors, you know, over the last few years."
[00:21:11] So we would love to help you grow and scale your business, do things that are more effective and focus on warmer lead strategies and move your business forward, help you get all these leaks shored up. We have an amazing program in our mastermind. Our clients are crushing it. We have more case studies and testimonials than any other coaching property management coaching out there on the planet. I think we collected on the last year. We made like over 40 case study videos, and these are just videos we're capturing during our interactions and our calls with clients.
[00:21:44] And we would love to see you grow and succeed and help this industry grow and succeed and stop wasting your time, energy, and money, because we know if you spend a lot of money on cold lead marketing, and you're not getting a return, then you're losing money. Good marketing should make you way more money, that's an ROI, just like investing in rental properties should make you way more money in the long run than you're spending.
[00:22:10] You should have an ROI. And if you don't, then your business is going to suffer. Your customer service is the first thing to go down the drain. And then you're the next shitty property management company. And there's way too many of those in the industry, and savvy marketers, clever marketers are the ones that I think are destroying and hurting this industry in aggregate.
[00:22:29] And we're on a mission to change that here at DoorGrow. So I think that's it for today. We talked about cold leads, warm leads. Hopefully all of you understand the difference and reach out if you'd like some support and to get more warm leads.
[00:22:41] And until next time to our mutual growth. Bye everyone.
[00:22:45] You just listened to the #DoorGrowShow. We are building a community of the savviest property management entrepreneurs on the planet in the DoorGrowClub. Join your fellow DoorGrow Hackers at doorgrowclub.com. Listen, everyone is doing the same stuff. SEO, PPC, pay-per-lead content, social direct mail, and they still struggle to grow!
[00:23:12] At DoorGrow, we solve your biggest challenge: getting deals and growing your business. Find out more at doorgrow.com. Find any show notes or links from today's episode on our blog doorgrow.com, and to get notified of future events and news subscribe to our newsletter at doorgrow.com/subscribe. Until next time, take what you learn and start DoorGrow Hacking your business and your life.