November 03, 2015
With The Coming Market Shift, Referrals Are All The More Important
What is the #1 source of business for real estate? I'll give you a hint. It's not email marketing, social media, or door knocking.... It's referrals.Why is this? If I receive an email newsletter, I may open it. But truthfully, given the number of emails I receive per day, I won't. Likewise, I may see an agent's posts on social media, but I'm probably going to quickly scroll past them as I skim past the deluge of updates scanning for items from my closer circle of friends. And an introduction via door knocking -- well, the personal touch is nice, but that seems like a lot of time and energy spent for a pretty low percentage return.
Converting Relationships Into Referrals As A RealtorReal estate is a business built on relationships and trust. We cultivate these relationships over time through personal interaction, creating and maintaining strong connections that lead not only to repeat business but also, crucially, to referrals. In a world where we're constantly being bombarded with ads, e-blasts, and mass social media updates, a genuine 1:1 relationship is the exception.Nationally, we're seeing a shift (read: slowdown) in the market. This doesn't apply across the board, but where it does, it's steadily spurring a reduction in inventory and much more cautious buying and selling cycles. In times like these, it's even more important than usual to maintain good relationships with your network. Leads aren't magically showing up in your inbox from online sources, and the ones that are typically have a low conversion rate. In a more conservative real estate environment, most buyers and sellers aren't searching the web to find someone to represent them. They're looking to agents they already know and trust, or agents their friends and colleagues already know and trust. They're making decisions based off genuine, personal relationships.Yes, these types of relationships take effort, and they also take time. But again, a word to the wise: Inventory is tightening, and we're heading into an even greater market shift. A long lead to listing is better than no lead to listing; A slow-moving, but committed buyer, is better than a flakey buyer or no buyer. Nurture your network over time so that when the time does come for your contacts to make a move, you're first in line to win their business.
An ExampleI'll use my family as an example. In a similar market environment where inventory was slim, we were referred to our realtor, Kristen, by one of my dad's colleagues. With her help, we bought our first house in the area. Kristen always remembered my birthday, sent me cute trinkets on holidays, and even came to my graduation. Eventually the time came for us to move houses. We had received numerous marketing materials from other realtors, but because she had maintained such a wonderful relationship with us, Kristen was the only person we even thought about calling. Likewise, when friends mentioned buying or selling their homes, we were glad to put them in touch with Kristen directly.
To hit my example home, 88% of buyers would use their agent again and 63% of buyers who purchased their home in the last year have recommended their agent to another buyer.
These numbers would probably be at 100% if the personalized relationship continued over time.
What The Actual ROI Is In Your NetworkNone of this talk about network ROI is groundbreaking news. All seasoned real estate professionals know how valuable their networks are and how important it is to maintain those relationships over time.What I can't emphasize enough is why this is particularly critical right now. Inventory is shrinking. Not only is your network your most valuable source of business, but as the market tightens, it may for a while be your only source of business.Give your contacts with the attention they deserve. If you want to win their business, earn it. Drip campaigns are easy, but they're impersonal, and the recipients know it. Social media marketing is trendy but similarly ineffective; you're simply adding to your contacts' overwhelming feed of unsolicited information. Send a personal email. Pick up the phone. Go to your neighbors' dinner party because you say you love interacting with people - and you do. The time you put in to cultivating genuine relationships will come back to you in the form of loyalty, repeat business, and referrals.Remember, your network is a goldmine, but only if you truly tend to it in a personalized manner. You can no longer send 500 unpersonalized messages to a purchased list and those 40 social media posts blasted out aren't effective. Look at your conversion numbers and you'll see the real story.Fight the inertia. Reach out to your contacts. In real estate, your network is still your greatest asset.