At 8:58 pm last night, I received a call from a Kitchen remodeling company who wanted to follow up on the estimate they had provided me; in June of 2005! It took this company (I’ll save them the embarrassment of being named) 4 years to execute a basic follow up which has to set some type of record. There had been no contacts, no drips, no anything and then a call out of the blue. Even though four years is quite the exception than the rule, it did get me thinking about responding to Real Estate leads.

For four years, HomeGain has told its agents that to win business, you need to get back to your leads quickly. We would preach that response to buyer that registers on a website should happen within the first day or not all. If a phone call can’t be made; a personalized follow up email is just as good as long as the effort is made. More times than not, a customer would interject and dictate that the reality of lead response depends on the individual and not overall best practice. Some agents only take calls during particular hours; others are often busy with showings while many more claim they are just too busy to make the calls until their schedule allows. 

Was our advice about quick response wrong? Should reality replace best practice as the key to acquiring and converting online buyers and sellers into leads? I was beginning to think so until I stumbled upon a fascinating survey conducted by Dr. James Oldroyd at the Kellogg School of Management at Northwestern University and later MIT.

Dr. Oldroyd surveyed over 500 companies across all aspects business to see how they generated and converted leads on their websites.  The organizations from different industries, country of origin, yearly revenue and size all reported the same theme; not responding as quick as you can to online leads severely diminishes your opportunity to convert and close the leads. In fact, if you wait long enough to call you’re actually causing more harm than good the longer you wait!

Let’s look at some of the findings:

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Posted on behalf of Peter McCullough, Real Estate Training Specialist at HomeGain.

“A sales lead is the identity of a person or entity potentially interested in purchasing a product or service, and represents the second stage of a sales process. For a sales lead to qualify as a sales prospect, or equivalently to move a lead from the process step sales lead to the process sales prospect, qualification must be performed and evaluated. Typically this involves identifying by direct interrogation the lead’s product applicability, availability of funding, and time frame for purchase. If a sales lead eventually makes a purchase, this is called conversion and a closed sale. The ratio of sales leads that convert is often referred to as the conversion rate, a way to measure the effectiveness of a sales process, sales team, or sales person.”

OK. This is straight from Wikipedia.com. It is a straightforward description of a lead and it is relevant to the real estate community. However, I feel an analogy would help further reinforce what a lead is.

Everyone is familiar with the famous detective Sherlock Holmes. As well as real estate agents, Sherlock required leads to solve his cases and close them. A lead pointed him in a specific (or vague) direction. It was not necessarily the solution to the case, but it gave him something to pursue.

Real estate related leads are the same. They are not a closed deal; they point agents in a direction and give them something to pursue. In Sherlock’s situation, he could not afford to sit on the information contained in a lead; time was of the essence. Such is the case for real estate leads.

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I’ve been selling real estate for over eight years now and have had the privilege of observing both successful and unsuccessful Realtors. I have worked in the same office with and have been involved in transactions with some of the top producers in my area.

One thing I have observed about their business is that their lead generation is mostly systematic. Not all of them receive their leads the same way but the big producers have built up a consistent lead generation system where most of their clients contact them. Of course, there are successful Realtors who are out door knocking and cold calling but the largest producers seem to be chased and not chasing.

Where to Get Leads?

There are many ways to “skin a cat”. Realtors can farm geographic areas, build a web presence, advertise in print, use direct mail, purchase leads, or network with their sphere of influence. All of the avenues can lead to success. You just have to decide which of them work best for you. Non computer savvy Realtors barely know how to turn on a computer so they might not be suited to focus on the web. A new agent with few contacts may find it difficult to live off of their sphere of influence. There are very successful agents out there in virtually every market using one or all of these avenues to garner leads. If you do just one of these extremely well you will generate plenty of leads.

Goal: Be Chased, Don’t Be Chasing

If you have been in the business long enough you have probably cold called or door knocked. Some love it while the majority of the agents I speak with generally do not. Your ultimate goal as a Realtor is

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It goes without saying that anyone in sales should track their leads: Where they’re coming from, how much they cost, and how many close.

Why is this so important?

If you’re spending $500/month on a lead source, and you only close one deal per year from that source, then you paid $6,000 to close one deal. If the lead source provided you a $1MM closing, then it was definitely worth it. If, however, the closing was a $250k home, then your money is probably better spent elsewhere.

While detailed lead tracking is always a great idea, it can become a bit complicated, unless you have sophisticated software to help you with the process. However, tracking return on investment is relatively easy, and is a great place to start tracking leads, if you haven’t already.

If you’re a real estate broker, manage a team of agents or a solo agent, the first step is to itemize your lead sources.

Common sources include referrals, sign calls, ad calls, purchased leads, and web leads. It’s a very good idea to be as detailed as possible when categorizing lead sources. If you purchase leads from multiple sources, you obviously want to know how much each source produces.

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Last week FrogPond.com launched FrogPond TV, a marketing tool (great for real estate professionals) that keeps the viewer informed on current business topics in a concise and enjoyable format.

Susie Hale, founder of FrogPond.com and wife of Bob Hale of the innovative Houston MLS caught up with Louis Cammarosano at Inman Real Estate Connect San Francisco last month for an interview that would accompany their kick off announcement of their new product, FrogPond TV. During the interview, Louis talks about the pre-launch of Homegain’s AgentView that was released earlier this week.

Here’s the FrogPond TV interview:

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I recently read an excellent article published by Baylor University, “Lead Generation: What Really Works”, which articulately discusses lead generation. The three categories the writers included in this article were lead generation, conversion of the lead to an appointment, and closure of the appointment to a transaction.

One of the studies I found particularly interesting was finding out the extent that real estate agents and brokers take to keep records of their lead generation efforts. And for those who keep records, how detailed the records are that they keep.

For “conversion to appointment” only 23% of the respondents reported their records as Moderately Detailed or Extremely Detailed. With a mere 32% reporting moderately or extremely detailed for “closure to a transaction”.
With a reported 17% of the respondents marketing budget allocated on the Internet or Website activities, unfortunately, or fortunately for us, the online world remains this big black hole. And, without keeping detailed records, it shall likely remain this ominous, monstrosity, money pit for many but it doesn’t need to be this way.

HomeGain’s BuyerLink does a great job of tracking your advertising budget. I’ve been using BuyerLink for years now. The concept is that it’s up to you to keep on tracking your results from the initial lead generation, to conversion through close.

Regardless of your preferred marketing method, they discuss how are you attracting your leads? Are you “seeking” or “attracting” your leads? In today’s tough market the survey results reflected that more seek oriented (60/40) for highest lead conversion in a tough market.

Of the leads generated 58% were buyers and 42% sellers. Many brokers, including myself, consider home buyers a premium in this Continue reading this post