We find that about 2% of web-based leads usually close within 6 months. That’s 2 out of every 100 leads – pretty dismal. (It goes up to about 3% over a 12 month period, but still very low). For most Realtors, this conversion ratio is too small for them to bother putting much time into web-based lead flows. Many will tell you it’s like finding a needle in a haystack. But our company is very close to cracking what we call the “web-lead dilemma”, which is as follows: Out of every 100 leads, each one of those leads is a live, breathing human being (assuming no SPAM leads, which we’re pretty good at filtering out). So one would have to think that of those 100 people, at least 25 to 50 of them (or more) will eventually buy or sell a home, right? How do we capture those eventual clients? How do we get to 5x or 10x the current lead closure rates? (We think a 25% close rate over a 12 month period is very achievable.) Here’s our plan:
- Capture the tire kickers: Our goal is to get people to be “known” to us, and the earlier in the process, the better. We don’t mind tire kickers or people who are just starting their home search… in fact, we welcome them. You’ll see why in a minute. So step #1 for us is to capture the tire kickers. We’re doing that by allowing people to “watch” a property for price or status changes, allowing people to “ask a question” about a property, allowing them to request more information or request a showing, etc. Basically, we’re trying to give potential customers a number of avenues, some of them very low-pressure, through which we can get them to “become known” to us.
- Skim off the really interested buyers/sellers: Our next step is to skim off the people who are ready to buy right away. This is where the 2% to 3% conversion rate comes from, and this is where most realtors quit their efforts. If someone’s not ready to buy right away, or at least within 3 months, it’s very difficult for a realtor to keep a relationship up with them, and understandably so. After all, the realtor has to focus on making immediate revenue. So, our first pass is to skim off the buyers & sellers who are really interested. When a lead comes in from one of the sources in point #1 above, it goes into a CRM (Customer Relationship Management) system and we are immediately alerted via email. We have a full-time staff that contacts the lead within 30 seconds to a max of 15 minutes from when it comes in (this quick contact is critical). Our staff member contacts the lead to see if they’re immediately interested. If they are, we assign a realtor from a network of top-producing agents to to handle the lead (we get paid a referral fee every time one of these leads closes). Our referral agents have access to a scaled-down version of our CRM system, where they can see a sales funnel showing all the leads we’ve assigned them, and the lead’s status. We can then track how each referral agent is doing, and send more leads to the agents that are producing well compared to the other agents in our network.
- Create loyalty: But here’s where the magic really happens – the vast majority of the buyer/seller web leads will not be immediately interested. Today, every single web lead system I’ve ever seen handles these people incorrectly. This is where we’re really going to shine. If one of our referral agents tells us the person is not responding to them, or is not immediately interested, the referral agent can put that prospect into a sales stage where the agent indicates as much to us. It then becomes our responsibility to create loyalty among those buyers/sellers. We do that through what we call “deep content.” We have an entire system dedicated to producing top quality content, mostly via dictation or blog postings. Here is an example of a conversation with a lender on what the market is doing. Here is another example on the pitfalls of short sales. Here is yet another example, a video on how to make effective lowball offers. Over time, we will provide this “deep content” to our prospects, but the messages will be branded by the referral agent. So if a prospect gets an email, which is a blog posting on the pitfalls of short sales, it will be available as an audio link, a podcast, or printed text, and the email will be “brought to you by Jane Doe,” one of our referral agents. If the prospect hits “reply” to the email to ask for more details, the email will go to Jane Doe, not to us. In this manner, we’re able to take the followup requirement off the shoulders of the referral agents, alllowing them to focus on getting deals done. We become a trusted publisher of good information and create loyalty among the prospects, and the referral agent is there, ready to get the deal done when the prospect is ready.
- Leverage the lenders: Typically, realtors have a somewhat strained relationship with most lenders. A realtor usually has two or three preferred lenders, who are invaluable, and then there’s “everyone else”. But because of RESPA regulations, it’s very difficult for lenders to add value to realtors, other than just being good at what they do. For the first time, this system will give lenders a way to be a more integral part of the process. When a lead comes through to us, we give that lead the opportunity to tell us if they want to be contacted by a lender. In fact, not only do we offer this opportunity, but we tell our leads that if they work with one of our preferred lenders, they’ll get a special discount for having a lender qualify them. Wachovia and First Savings Mortgage Corporation have already signed up to participate. They’re agreeing to give a discount (valued at around $500 per closed loan) to anyone that we refer them. This gives the end buyer/seller an incentive to have the lenders contact them. But here’s where the really valuable part comes in – we give the lenders access to our CRM system, so they can qualify the prospect quickly and take notes in the system that the realtor has access to. Suddenly, the lender is providing tremendous value to the realtor, and they can “tag team” to help each other out. Rental leads are another area where the lender really adds value to the process. About 20% to 30% of our leads are rental leads. Rental leads aren’t very valuable to a realtor because there’s very little commission revenue in the deal (on the order of $500 or $1,000 for rentals vs. $15,000 to $30,000 for purchases/sales). So, the ability of the lender to qualify rental leads, talk to the prospects and see if they can be home buyers instead of renters is tremendously valuable.
I’d love to get your thoughts & feedback on this system. We have it built out through point #3 right now, with point #4 coming in the next 30 days. We’ll know for sure how well it’s working within 6 to 12 months, but initial reports are very promising. We’ve already had a handful of referral agents close deals based on this approach, which is a very encouraging sign. Our plan is to expand this to other metro areas once we get everything running smoothly. We’re currently in the VA/MD/DC markets.