The Internet has influenced a structural shift in most real estate professionals’ marketing mix. Whether you work for an independent or branded residential agency, it is becoming increasingly difficult – and painful – to ignore marketing your firm or yourself on the Web. From personal Web sites to sophisticated search engine marketing programs, the sourcing of new business and clients is increasingly an online proposition.
What events are influencing this structural marketing shift?
Fueled by the average American’s thirst for information and scarcity of time, the Internet is where the action is today; in real time.
According to Search Engine Marketing, Inc., by Moran & Hunt (IBM Press 2006), total Web users surpassed the 300 million mark in 2004, with paid placement advertising generating nearly $3 billion in 2005 and expected to grow to $5.5 billion by 2009. Naturally, real estate professionals are among those turning to the Web as a source of new business in the form of lead generation.
Besides this volume of both bodies and dollars orbiting the Web, consider further that, according to the National Association of Realtors (NAR), more than 70% of those initiating the sale or purchase of a home begin doing so online. As of 2006, 72% of all Internet users in the United States have the use of broadband to access the Internet, according to Neilsen/NetRatings. That’s 103 million Americans able to quickly view and download large graphics files such as photos and virtual tours available in over 930 MLS databases across the country.
With the maturity of the Internet and the genesis of third party lead generation Web sites, many agents and brokers are in a quandary as to which, if any, such vendors they should engage to increase their online marketing exposure.
That is not surprising. A recent Google search of real estate lead generation Web site search yielded 9.3 million results in just .36 seconds. From www.agentconnect.com to www.zillow.com, and everything in between, a vast labyrinth of Web sites and vendors await an agent’s search in cyberspace.
Eager to enroll real estate agents into their program for a fee with promises of robust, qualified, and exclusive leads, many of these vendors fall short of agent expectations for a variety of reasons – not all of which are the vendors’ fault.
So, what is an Internet or e-commerce lead anyway?
Well, let’s consider what a lead is in the first place. According to the Merriam-Webster Online Dictionary, a lead or prospect is a potential buyer or customer.
Chad Pinson, managing director of contact referral Web site HomePoint.com (www.homepoint.com), states a qualified real estate lead is a consumer who:
• is likely to retain professional assistance from a real estate agent,
• is qualified to consummate a real estate transaction because the consumer is:
o Ready - Will make a purchase or sale decision within 12 months of initial contact
o Willing - Either wants to, is compelled to, or must do the transaction
o Able - Has the legal and financial capacity to consummate the transaction.
With regard to the Internet and e-commerce then; what is a lead?
Many agents who enroll in online referral programs such as www.HomeGain.com, www.RealEstate.com, www.HouseValues.com, www.HomePoint.com, and others are under the impression – rightly or wrongly, depending on the vendor’s sales force – that every referral from such programs is a qualified lead.
This is not necessarily so. Some programs offer pre-screened, qualified leads, but many do not.
For instance, www.Lead2Realty.com prescreens subscribers’ leads, and charges between $30 and $70 per lead, depending upon whether the lead is a buyer, seller, or combined buyer and seller. More often, such referral programs generate potential leads in the form of contacts. A contact exists when a search engine such as Google, Yahoo!, AOL, and MSN is queried by a searcher for real estate topics such as sell a house in Green Bay, or Buy a home in Denver.
Through these search engines, a potential client (the searcher) identifies and visits a Web site included among the search results to screen properties and consider real estate agents to list a home for sale or to assist in the purchase of a home. Typically, these Web sites require the searcher to enter contact information in order to gain access to the MLS database available through the given vendor’s site. The operative term here is contact information, not lead information.
While it may seem a matter of semantics, the difference between contact and lead information significantly affects the value of the referral. A contact does not become a lead until some reliable system or some knowledgeable party qualifies the lead as described above. This is where many referral program Web sites disappoint their subscriber agents. They call contacts, leads, which sets an unrealistic or false expectation for the subscriber agent. So, when the agent subscriber responds to an e-mail lead referral and follows up with the potential client, only to be advised by the person that they just wanted to see what homes are selling for in their neighborhood and are not presently in the market, the agent subscriber is disappointed and often perceives the referral service as a poor resource for new lead generation.
Most such Web sites also generate their fair share of bogus leads that occasionally slip through quality control screening. Some are both creative and humorous. For example, one service recently received a home seller request for assistance from a ‘Hugh Afner’ of Lake Shore Drive in Chicago. A customer service representative called the contact’s phone number in Chicago and was directed to Hugh Hefner’s personal assistant at the Playboy Mansion in Los Angeles. Needless to say, Hefner had not inquired about listing his property for sale on the referral site. Clearly, when such bogus leads reach an agent, they further diminish the perceived overall value of all real estate referral program Web sites.
Now, two key agent issues are presented by the contact versus lead scenario described above. First, how to overcome the disappointment associated with the lead, not contact, expectation set by the referral program Web site. Second, the dilemma of what the agent should do with a given contact. Is this person a waste of an agent’s time, or is he or she a potentially premature lead in need of nurturing and/or a source of additional referral business?
Let’s address the lead expectation issue first. As any savvy real estate agent knows, the sales industry is a numbers game. They know that their performance is a function of their arduous farming, direct marketing, networking efforts, and also their hustle and intelligence. Based on these painstaking and enduring efforts, top agents consistently outperform their peers because they know they need to engage X number of client suspects, to convert them to Y client prospects, to convert them to Z clients, to convert them to revenue-generating transactions. Given this funnel, it may seem that contacts would be a reasonable starting point for generating leads. Does it make sense for agents to view all the people they meet in person as contacts and/or potential leads and clients?
Most agents don’t strongly believe that everyone they meet or who crosses their path will become a client, but most good agents treat everyone as though they might become a client. This is often true whether that person has articulated a real estate need or not. As such, wouldn’t the “contact” that searched a given Web site’s property database have expressed a known curiosity about real estate activity in a given neighborhood? And if that given neighborhood is in a subscriber agent’s primary trade area, shouldn’t they be entered in that agent’s customer relationship management (CRM) database so as to be further engaged by that agent? By so doing, a savvy agent can expand their contact base by adding a client suspect who has knowingly expressed an interest in that agent’s trade area. By adding a qualified “suspect” to your CRM database, you have increased the number of suspects from which future clients will be drawn.
Bonnie Cox, a 28-year industry veteran and a broker with RE/MAX Masters in Denver, Colorado notes the importance of staying in contact with as large a group of consumers as possible. Her contact system has helped her close over 80 transactions in the last two years.
Bonnie explains that, “When you (agent) receive an Internet lead, consider it the beginning of a long-term relationship … while most buyers appreciate a brief contact during the initial relationship building period, they will almost certainly want to do much of the property research on their own.” Following the initial Internet contact and follow up, Bonnie “immediately enrolls the prospective buyer in her newsletter and monthly ‘drip’ marketing program.” According to Bonnie, that prospect will now have two monthly automated contacts in the form of the newsletter and “drip” e-mail marketing campaign.
Using the Internet to take a longer-term view on prospecting seems counterintuitive.
The Internet is known as a real-time, get-the-information-fast and make-it-happen-now medium. It clearly is a mechanism for doing so. However, according to an independent study by Hebert Research of Bellevue, Washington (commissioned by www.HouseValues.com), sellers take an average of nine months researching and pondering the issues surrounding the sale of their home before listing and selling their property. Sellers conduct pre-research for 5.5 months, active research for 1.4 months, and take 2.4 months actually selling the home. Conversely, the study says that buyers take nearly 17 months from the time they first contemplate purchasing a home before actually consummating the purchase. Buyers conduct pre-research for 7.1 months, active research for 5.5 months, and spend 4.1 months actually finding, negotiating, and closing the purchase.
In traditional real estate prospecting, agents tend to focus on listing and buyer representation prospects during the selling and buying phases identified in the Hebert Research report, that is, the three-month period for sellers, and the four-month period for buyers. Agents tend to focus on these two areas because: 1) as commission-only salespeople, agents must focus on the short term, and 2) prior to the Internet, it was very difficult to identify prospects in the pre and active stages of real estate research. While the Internet hasn’t done much to change the agent’s compensation plan, it has significantly increased the likelihood that an agent can both identify and engage a potential prospect in the pre and active research stage. But this is where technology and historic industry culture tend to clash.
So, how can agents change their short-term focus to engage more prospects earlier in the sales cycle? The answer is to embrace change intelligently, and to reduce the pain associated with such change.
Agent focus in a new market
Agents need to ask the right questions of agent referral network providers, recognizing the value of a good contact, and converting good contacts to leads at the appropriate time. For example, ask a referral network sales representative the following: Who is considered a lead – anyone entering data in your system’s Web site while viewing properties? Or, are leads those who request more detailed property information or agent assistance? Are a given referral network providers’ contacts pre-qualified? If so, what does that process entail? What questions are asked of their Web site visitor?
Besides qualifying the contacts provided, agents should probe further to understand how the contacts are distributed to the referral providers’ subscribers. Are leads distributed simultaneously to multiple agent subscribers, who then compete for the given contact’s business? Are they considered exclusive to one agent subscriber per geographic territory, such as a ZIP code? If so, is there a time-sensitive component to the exclusivity?
Many referral network providers recognize that Internet searchers are impatient; studies show they must be contacted quickly to be converted to a qualified lead. This is true even if the contact is engaged early in the sales cycle as described above. In 2005, more than 70% of consumers utilized the Internet before making a real estate decision, and half of those concluded business with the first agent with whom they made contact, according to the National Association of Realtors. As such, many contacts are exclusive for specific periods of time, and will be sent to another agent subscriber if the first agent subscriber does not respond within a given timeframe.
In closing, the Internet and real estate referral network providers are now an established and recognized source of new business in residential real estate. Now, it is up to agents to convert contacts to leads, leads to clients, and clients to revenue¬-generating transactions. One possible first step is for agents to subscribe to quality e-commerce real estate referral programs, and manage their lead expectations.
Kyle Cascioli is an Adjunct Professor of Real Estate in the Burns School of Real Estate, part of the Daniels College of Business at the University of Denver. He is also Manager of Real Estate Services at HomePoint.com (www.homepoint.com), a consumer-centric real estate Web site that provides vendor, marketing, and agent-referral services in selected markets across the United States.
Cascioli is also the broker-owner of Barrett Associates, Inc., a member of the National Association of Realtors, the Colorado Association of Realtors, and the Aurora Board of Realtors.
