February 05, 2016

Buying Leads vs. Mining Your Network for Leads


Real estate agents, what's your marketing strategy look like? If you rely solely on buying leads, passive marketing campaigns, and putting your picture on bus stop benches, you may want to rethink that strategy. While it may be effective intermittently, your most qualified leads don't always come from buying a list and sending out a big batch of cold emails.

We're here to argue for the case of mining your own network and taking the extra time to nurture your contacts and network in order to get far more qualified leads and create more lucrative business for you. Don't worry, we've got the math to back us up too!

Find gold in your network...

It all adds up

Let's throw some math in here for you to further back up our claims.

First off, if you subscribe to a listing system for the purpose of getting leads, featured listings, and access to particular zip codes, you could be spending upwards of $200 per month. For the basic plan, you can spend $30, for a step up it's $70, and finally $200 a month. And what's your return?

Listing System : $30/$360

Contactually basic : $29/$348

Listing System : $70/$840

Contactually professional : $49/$588

Listing System : $200/$2400

Contactually enterprise : $99/$1188

Sometimes a real estate agent, can spend upwards of 6K a year for a tool to get leads. Let's say only two of these are qualified. That means the cost per lead would be 3k each. Ultimately, if the deal is large enough it would pay for itself. However, these two leads would require nurturing and lead qualification. This process can take weeks or months and then you have to factor in the time investment that comes into it as well.

Even if you look at the plans above and none reach the height of 6k previously mentioned, it is still cheaper and a better long-term strategy to deploy a lead generating machine out of your own network.

Why taking the time matters

Sure, taking the time to build relationships may not be as time effective as other methods, but it'll be well worth your effort in the long run. Think about those advertisements with your photo on the bus stop bench as the 'old school' way of doing things. It goes hand in hand with the flyers you printed out and mailed to prospective clients, and sometimes your weekly or monthly email newsletter is considered 'old school' too. These are the expensive way of doing things and really, are they always effective? Even if they are, it's incredibly hard to track those metrics and your ROI at the end of the day.

[caption id="attachment_6906" align="aligncenter" width="648"] Percentage of buyers/sellers who would recommend their agent or use them again by age group. via NAR[/caption]

Taking the time to build up genuine relationships with your network is not easy, we'll happily admit that. But as we've pointed out time and time again, your network is your net-worth, and the more you put into those relationships, the more you can get out of them. No, this doesn't mean sucking your contacts dry and using them shamelessly. But what you want to ask yourself is, 'If I reached out to my contacts tomorrow for client referrals, would they come through?' If the answer is 'I have no idea' or 'No' then it's time to start nurturing your network by adding some value to those relationships so when it's time for you to ask them for those referrals, they're more likely to give back to you.

According to the NAR, a full 40% of all home buyers in 2015 found their agent through a referral by someone they knew. That leads us to the conclusion that spending your time focusing on your network of contacts is the key in gaining better and far more qualified sales leads. People are far more likely to trust or take the advice of an established relationship in their life over an advertisement they only saw once or twice.

There are three variables in this equation:


In this case the lyrics are true, the mo' money [spent], the mo' problems [you have]. Throwing money at blind marketing campaigns isn't always your best option, nor will it produce the best leads for you at the end of the day. Although it may be the easiest option if you're short on time. If you feel that you're acquiring quality leads at a certain price, make sure you're taking the time to nurture these leads so that they are qualified.


The second variable is of course time. Don't we all wish we had more of it? The more time you put into your network and relationships, the better your lead quality gets. According to our math, this is by and large the cheaper option.

Lead Quality

Finally, the outcome we're all looking for is excellent lead quality. It's the more time you spend on your relationships, not the money you're spending that creates those crucial referrals from your network. As your relationship marketing time goes up, the money and the cost eventually goes down...and lead quality goes up!

Now what?

Do the math, is the money you're currently spending on buying leads, email lists, traditional advertising, and zip codes adding up to quality leads? You may want to compare those costs to the cost of adopting a CRM and getting your contacts on a nurture campaign. Nurture that network. Everyone knows someone else that may need a real estate agent and more people are turning to agents they already know that they can trust.