Not a day goes by that I don’t read an article about how big data websites are the new wave of real estate business.
Sites like Zillow, Trulia, Redfin and realtor.com provide tons of data, but more importantly, they are a retail outlet for leads. More and more agents are using the high-tech environment as a tool for growing their business. What does that mean for referral business?
Before I founded SkySlope, I was a top-producing agent and Realtor Magazine 30 under 30 alumnus. I averaged 30 to 35 referrals every month by establishing and nurturing my sphere of influence and executing like a champ. It wasn’t long before I was selling over 300 homes a year — 100 percent by referral!
So while I’m hearing all this chatter about online lead generation, I don’t hear a lot about the tried-and-true tactic that I — and many others — used to become a top producer.
Old school vs. new school
Perhaps I’m an anomaly — caught somewhere between the old-school and new-school philosophies. But if you know anything about me, you know I’m an early adopter (and creator) of technology.
In the same breath, I believe there is value to many traditional business methods. We can’t be so hasty to forget that we are in the people business. It’s so much more important to earn the trust and loyalty of established contacts rather than pay for leads.
Cold lead vs. warm referral
The question I keep asking is: Would you rather contact a cold lead or receive a warm referral?
(Spoiler alert: warm referral!)
I understand that there are options beyond buying leads or working by referral. There are a lot of other ways to get clients (door-knocking, direct mailing and advertising, to name a few). But let’s take a look at some National Association of Realtors (NAR) statistics regarding how buyers found their agents.
Where buyers found their agents: NAR 2016 Home Buyer And Seller Generation Trends survey
The biggest takeaway from these statistics? The majority of buyers are warm referrals. I circled the information that drives my point home — relationships bring in business.
Money vs. time
With the boom in Web-based real estate, it’s safe to assume that more and more people are finding their agent on the Internet.
Why? The answer is easy: Web portals provide easy access and instant gratification for buyers and sellers.
In turn, many agents think that buying leads is quicker and easier, and they are walking away from or neglecting their hard earned clients.
But what if you were on the front of your client or prospect’s mind? What if you cultivated and nurtured relationships with your sphere of influence?
If you invest your time in the people who know and trust you, your return on investment will be so much greater than paying for leads.
I’m shocked that agents are resorting to the instant gratification of buying leads when there is a much more affordable and reliable way to earn money. You can either drop a bunch of money upfront to buy leads, or you can save your money and invest your time in people.
I’m not going to lie to you, investing your time — well, takes time (duh!), but it does not have to be painful. You can implement routines to help you grow an incredible sphere of influence and maintain a phenomenal book of business.
Putting systems in place is the equivalent of hitting cruise control; your business will drive itself, and you won’t have to resort to buying leads.
It’s alive!
Not sure you believe me? There is a ton of information out there that demonstrates the benefit of getting leads from referrals.
I particularly like this video from Hello Agent TV. Of course, you could also read the reports from NAR.
Not sure where to start? Websites and blogs are fantastic resources for various methods of building a referral-based business. Coaches are great at holding you accountable (shout-out to Brian Buffini!).
So is the referral business dead? Absolutely not. Marketing is an incredibly powerful tool, and Web-based outlets want you to believe that you can buy quick success.
I love so many things about technology, but the traditional methods of building trusting relationships are the most reliable way to grow your business and ensure that our beloved profession continues to thrive.
Tyler Smith is founder and CEO of SkySlope. You can follow him on Twitter or on his blog.
