Recent article by Kris Lindahl on why buying leads is not a healthy way to build your business highlighted the bifurcation in the industry between agents who buy and work leads online and those who don’t. I have been in the real estate business for over 20 years and have seen the pendulum swing from one extreme to the other.
When I walked in, they taught me to build relationships and prospect in a circle around a new list. We use the old reverse phone books to call and email neighbors, and we faithfully hold open houses. It worked in the year 2000.
The rise of platforms
Then Zillow and Trulia and realtor.com and a bunch of other websites came on the scene and started selling us zip codes and leads from “hot” buyers and sellers. Many agents bought the pay-per-play system and got hooked on it lead generation method.
We learned how to work with these new leads. (Quick to lead! Pick up that phone and return all calls within five minutes or you risk losing the lead.) And for a while it worked. I opened my own brokerage agency in 2007 and built it by buying office-wide leads and training my agents on how to handle Internet leads effectively.
While I did hear some complaints about how these types of leads were useless or of poor quality, I found that it was not true. Internet leads were just different, and it took a different skill set (and patience) to work with a Zillow or realtor.com buyer than it did to work with someone who was referred to you by a past client.
In general, Internet-generated leads are higher up the funnel, and it takes time, patience, and a grasp of the hand to close them. It is not unusual to close buyers 10 or 12 months after they first enter the platform. But for many years, that’s what we did, and from 2007 to 2018 our office had a very good return on investment (ROI) on our monthly ad spend.
Speed to lead
Then in 2018 something changed and I noticed that we were spending more and more on zip code purchases, and the conversion numbers were dropping. Only a little. This accelerated in 2019 and 2020, while at the same time, one of our support advisers on a portal we use advised us to stop rating our buyers over the phone.
The “speed to lead” had gone from speed to answering the phone or returning that call to speed to having them face to face. on a visiting date.
This tactic was not going to work in our office. We are in a small rural area that attracts investors and buyers from big cities two to three hours away with cash to buy rental units. We discuss with callers where we are located (physically, distance from them) and if they are familiar with our area before scheduling an appointment.
We ask them if they are working with another agent to avoid stepping on another agent’s toes. We discussed the steps to begin the buying process and asked if they need help with financing. We ask questions about your needs and wants, so we can narrow down the search and get to know you a little over the phone.
We do this before scheduling the appointment. We are qualifying buyers and also educating them on the next steps to owning a home so that everyone is on the same page.
We do this to prevent someone from driving for three hours to look at a house in the northern part of our county and just say, “Oh, I didn’t realize I was so out in the field!” We do this because our sellers expect us to bring qualified buyers into their homes (especially during COVID-19).
And we do it to educate and prepare buyers on how the home buying process works and what steps they need to take to get a home they love.
With the lack of current inventory and multiple offer situations, we have less time than ever to show some houses, make a decision and get financing. Everything is happening within a compressed time schedule.
On the one hand, Internet shoppers who are spoiled by 24-hour delivery services want and need fast and efficient service. On the other hand, buying a property is not the same as ordering a pair of shoes that UPS can easily return.
Yes, we have to offer fast service and jump in to grab the phone or risk losing it. But no, we don’t have to agree to meet a stranger at a property 20 minutes in advance, and with little or no idea who this person is.
All properties are local. It may work in some areas, but in my part of rural America, it just isn’t practical. Also, by the time we get home in today’s hot market, it may already be under contract (although it still shows as active on all search sites).
Backing towards the mark
Once I realized that the playing field was changing, that incoming leads seemed to be less and less suitable for our office and how we handled the process, and that calling buyers seemed to be of lower quality and more difficult to reach. convert, we change our marketing approach.
In 2020, we revamped everything and reduced online portal purchases to almost zero. Almost. I still believe that you need multiple sources of lead generation, so we will keep a lower purchase on Internet leads, but it has really been reduced to less than 10 percent of the spend we made in 2018 and 2019.
With the recently released budget, we diversified our spending into three categories: community building, online marketing (generated from our own platform), and print / direct mail.
We have always had a “We are local. We are global ”, as we are members of LeadingRE. We are the number one independent company in our area, and this has helped us compete head-to-head with franchise companies. We have a strong presence in our chamber of commerce and many of our agents volunteer throughout the community.
We allocate part of our budget to support non-profit groups in our area. We are sponsoring the adoption of a dog on a monthly basis for an animal rescue this year. One of our agents recently spearheaded a fundraising campaign for an educational workshop for children in his city. He started by donating $ 500 and created a “match my donation” effort that skyrocketed to $ 5,000 overnight. using social media.
While we do not expect people to buy or sell with us solely because of our donations or fundraising efforts, our activities have not gone unnoticed. Recently, at a quote appointment, a person referred to us by a friend commented on our presence in the community and specifically said that we are doing “good things” for the city. It is a win-win.
We always had a strong email past customer list and potential customers from our online sources. It’s true that our marketing on that list was always sporadic. We send out a few monthly newsletters or updates, then nothing for months. This seemed to fall by the wayside the busier the office got.
Now, it is a concerted effort. I prepaid for 12 months of “constant contact” which means if I don’t use it I’m wasting money because it’s prepaid. Use it or lose it. Suddenly I am using it. Imagine that.
We do two emails a month: a monthly update and a market statistics update. I can expand it to include only listed / newly sold, but I don’t want to bombard them with too much information. Right now it’s working.
Although some always unsubscribe, we have a healthy growth rate and open rate of 15-20 percent on a mailing list of thousands. Every time it comes in, we get some stragglers e-mailing from heaven asking a question about real estate or raising their hands for help.
Print / direct mail
The biggest expense we have right now is our EDDM (All Door Direct Marketing) through the USPS. We send a monthly postcard to two large agricultural areas: one immediately around our office (3,900 addresses) and another in a city where we have a strong presence and market share (5,000 addresses).
We send out the same oversized postcard once a month for four months to convey our message: We are your neighbors. We are your local experts. Is working.
For the same dollar spending that we used to allocate to online leads, we have built a strong presence in our community and regained market share from larger companies and franchises. Our brand has shown that we don’t need to buy leads to dominate a territory.
Knowing your numbers
What you make what you need is to know your numbers: Where are your potential customers coming from? What is your conversion rate? What is your return on each channel you spend money on?
If you’re looking to stop paying for leads, start there. Keep a close eye on every closure you had in 2019-2021. Where did each closure come from? How much did you take home (business dollars if you are a broker or GCI if you are an agent) from each closing, and then what did you spend to buy leads from that source?
Once you know your numbers, you will be able to track over time if the lead source is still a winning show or if the quality of the lead decreases over time (as I noticed). Keep investing money in platforms with a positive ROI, not those that will make you lose money.