Screw consumers… Let’s use internet tools to do what REALTORS do best!

I gave a presentation last week in Portland where I asked the audience of about 300 REALTORS two questions:

  1. Do you drive most of your business from referrals… friends, family, past clients, other agents, etc.?
  2. Do you drive most of your business by reaching out directly to consumers… ads, online home search, etc.?

A little over half the audience raised their hand to the first question, while under 10% raised their hand to the second, which didn’t really surprise me because I asked a similar (but more convoluted) question in an online poll about a month ago and got similar results (i.e. 58% said referrals).

I think it’s extremely safe to say that in terms of generating business, most real estate agents (and most professionals for that matter), are better at reaching into their network of friends (and friends of friends) to drive business than reaching consumers directly.  And yet, almost all online tools, commentary and critiques of social media within real estate focus on the inability to of the tools to directly reach consumers.  (One of the more eloquent critiques was written by Marc Davison).

Let’s break down the skills and tools that an agent needs to successfully run online campaign that directly targets consumers:

  1. Project management. Hire someone with web design, marketing and coding skills (or sometimes a team of people with these skills) and make sure the site actually gets built!
  2. Writing. Either need to write content, or at least advising and managing the person creating the content.
  3. Online promotion. Either need to optimize your landing pages and drive lots of inbound links to your site (so that you can get free traffic from the search engines) or buy traffic through online ads
  4. Conversion optimization. Optimize your site to get consumers to register (probably through a IDX/home search tool, which also has to be integrated into your site)
  5. Prospecting. Prospect the database of users (assuming your IDX allows for this) and ask them for your business. Otherwise, wait for the consumers to contact you (probably when they “request a showing”).

None of these skills are particularly hard, and I’ve seen agents with almost zero internet experience pick them up and start generating business in less than half a year. However, I’ve seen way more agents get frustrated at the lack of results afte they “master” only one or two of these skills…

For example, I’ve seen agents spend two years just trying to get a good site built (project management #fail)… or they get a beautiful site built for them, but never add any content (writing #fail)… or they write well, but don’t know how to get anyone to link to their content (promotion #fail)… or they get people to their site, but don’t give users a logical way to register (conversion #fail)… or they get people in their database, but aren’t setting appointments (prospecting #fail).  In other words, none of the skills are all that hard, but they aren’t necessarily intuitive to everyone either.

Now, let’s compare that to the skills and tools used for a referral campaign that’s the bread and butter for most agents:

  1. Networking. Make a connection with friends, family, past clients, other professionals, etc. (could be through events, organizations, or outreach via postcards, etc.)
  2. Sales. Ask them for your business (or more likely, if they know of any business they can send your way)

If it’s not obvious, the skills that drive the bulk of real estate business today (i.e. referral business), are vastly different than the skills needed to convert consumers into clients on the internet… so no wonder most agents get frustrated when their initial internet activities don’t effectively reach online consumers.    It’s a completely different set of skills.

    Instead, if you’re an agent that does most of your business from referrals, you should be thinking “how can I use internet tools to reach and build my referral network?”

    And the answer to that question is definitely something I’m going to continue exploring in the near future.   My opinion is that the tools currently marketed to real estate agents do really crappy job of building up a sphere because they almost inevitably focus on helping REALTORS reach consumers directly.  When I searched for a referral networking tool last month to feature in this article: Getting Serious about Lead Management, I couldn’t find one that I liked well enough to mention.

    However, I’m going to write a post in the next day or so on a new favorite tool of mine: Gist.   It’s the best sphere building tool I’ve used, because of the way it let’s me filter through people within my network based on criteria that I set… a feature simply not available on tools like Facebook, Twitter, Google Buzz, Seesmic, TweetDeck, etc.

    I’m going to be presenting the general idea mentioned in this post at lots of conferences in the next few months (Chicago, Atlanta, Las Vegas, Toronto, etc.) and more than your agreement, I would really love to hear your critiques…

    Where are the holes in my argument?   Am I screwed up thinking agents should forget focusing on reaching consumers directly and instead focus on building up their referral networking?

    My first real internet spat was when…

    …I convinced Anna to hit publish on this article about Redfin.

    I’m reminded of this today because Marlow just picked up on the fact that the founder of Redfin just started a new site with information/resources for people with mental health problemsMindSite.

    The connection between these stories is that despite the fact that David Eraker left Redfin two years ago, that original spat is still the #1 result on a Google search on his name. I would feel guilty over that fact (I’ve met him a few times and he’s not a bad guy), but the reality is that unless we’re active using the internet to build up our own brand online, there’s always a danger that other people will define our brand for us.

    No one is talking about trying to attract irrelevant traffic…

    …and I’m surprised that Greg has such a lowly view of Google’s algorithms. I’ve found that the traffic that comes to RCG from search terms like [moving to seattle] and [agent recommendations] is highly relevant and RCG contributors get more than a few clients out of search terms like these each month. Having talked with many people who do lead conversion for large brokerages (including being on a panel at an Inman with a group of these people), I can confidently say that the conversion rate from leads to RCG blows away what any big company is doing today.  I attribute much of our success at converting leads to the fact that the users who contact us are highly relevant and seeking out exactly what we offer.

    In terms of people who transact with us, there are two types of people (Note it is “people” not “traffic”):

    • Type 1: Those people who did a couple of searches on google, came up with are now looking for someone who can help them find a home.
    • Type 2: Those people who are soaking up all the local real estate information they can get and they contact one of the contributors when they are ready to transact. Google Analytics trending shows that in the past month RCG has had over 2000 people who have visited the site more than 200 times… Often when I gets emails from these people, they appreciate and feel like they know everything about the site.

    Type 1 tends to be home buyers while Type 2 tends to be home sellers.

    To reach the first type, you really need to do well in search engines (or by buy the traffic) because these users aren’t doing a lot of long-term research and are often making their agent selection in a matter of minutes (no kidding…. you get 10 minutes to get back to the potential internet buyer or they move on to someone else they find in a Google search).

    So, I’ve always assumed that Greg’s “local” site is really a play after the second type of person… i.e. home sellers who generally do a bit more research before contacting an agent. To create real estate content that will inspire these people to return day after day (or better yet, subscribe to your feed) takes a tremendous amount of time. It could very well be worth it, but there’s no free cake here in terms of time.

    There is a third option in that I’ve heard some people talk about being the local online newspaper for an area (i.e. reach everyone in a local farming area).  This appeals to a lot of agents (Blogging Systems has tried to made an entire business around this idea!) who haven’t tried it because it would be somewhat powerful to “own” the site that attracted a large swath of your local community.    However, if that means you’ll need to start answering questions about when the next community council meeting is, when little league start-ups are or what the best coffee shop in an area is, then we’re talking about hugely irrelevant questions to the process of transacting.   With that said, Marlow has done something similar to this in the Capitol Hill area of Seattle, so she’d be in a much better place to talk about this type of site.  But even if she said it was successful, Marlow is no ordinary blogger and could easily be the exception that proves the rule.

    Overall, I always recommend that agents create a place on their blog that is a great resource for the Type 1 person (i.e. buyers who are moving to an area).  While this may not be a majority of the people who transact in any given area, I’d argue it is the majority of people who are looking to the internet to help them make decisions before they contact an agent.   It should be no surprise that the best way to get in front of the Type 1 people is to rank really well in the search engines, which means you’ll want to seek out any and all quality links you can get to your domain.

    The Type 2 person is tricky…   My guess (and I’ve seen data but don’t have it in front of me) is that most users will not bookmark a site (or subscribe) on the first visit.  It takes multiple visits before someone decides that a resource is really useful.   The most obvious way to get in front of someone who is interested in local real estate content multiple times is to show up well in the search engines when they are doing their searches related to local real estate.  There are many cases where word-of-mouth has been enough to spread a good site, but you’d better be one hell of a writer if you are going to get others to share your local real estate site with their friends/family/co-workers.  Again, it should be no surprise that the best way to get in front of the Type 2 people is to rank really well in the search engines, which means you’ll want to seek out any and all quality links you can get to your domain.

    Either way, it would be a huge mistake to discount the value of people that Google can send your way just because there are a ton of them!   Google sends very relevant traffic from people who are looking to transact with a real estate professional each and every day.