What it is: You only pay for leads that end up signing leases.
What I like about it: With the pay-for-performance pricing model, if there’s no lease, then there’s no cost. So, it’s low risk and a higher reward for you as the property manager.
At the end of the day, you want leases. And this model is the most efficient way to ensure you are paying for the result you want. In our experience at Bell Partners, the cost per lease with the pay-for-performance model is usually a fraction of what you’d pay an ILS provider using a different model-usually in the $350 to $400 range versus well over $1,000 on a cost-per-lead basis.
It’s also easier to justify with your executives or your third-party owners. Since you are paying for success, you can say to them, “If we get a lease, you’re going to pay for it; and if we don’t get a lease, you don’t have to pay for it.”
With the pay-for-performance pricing model, it’s also easier to measure success. If you get a lease, you know exactly what it costs; there’s no complicated math or other assumptions in the mix. With some of the other pricing models, you don’t always get accurate cost-per-lease analysis because there’s not a direct link to the final outcome.
Plus, because you know exactly what you’re paying for and the measurements of success are super clear, in most cases, you can avoid many of the common disagreements over the fees your ILS provider is charging you. The vendors typically will not argue with your disputed leases or invoices provided that your traffic tracking is accurate.
Biggest drawback: The pay-per-performance model relies on accurate traffic tracking, which is sometimes difficult with online sources. Also, you have to make a comparatively large payment per lease which can make it more of a budget target than with other models where the payments may be less visible.
B. Kevin Thompson is senior vice president of marketing at Bell Partners.