What can you do to create more repeat and referral business in 2014? Peter Knight, managing director of the U.K.'s Property Academy, had some great answers at the National Association of Realtors' convention in San Francisco.
Knight's session highlighted a major theme that was present throughout a number of last year's sessions at NAR: "people, not property." Knight's "people first" approach not only turns the traditional sales funnel upside down, but it skewers a number of real estate's sacred cows as well.
Theater image via Shutterstock.
The typical real estate sales funnel begins with leads that filter down into appointments. Appointments filter into signed business, which ultimately become closed deals. Knight believes that old sales funnel is "completely outdated" since it fails to address what happens to those clients once their transaction closes.
Knight asked a thought-provoking question: "What if you could keep those past clients in your current funnel?"
Each of your past clients knows approximately 250 people. If you have 100 past clients, you could potentially have upwards of 25,000 people from which to draw as potential future clients.
Knight recommended that agents prospect both ends of the funnel. You should continue to generate new business through prospecting, but make prospecting your past client list your highest priority.
While these recommendations seem obvious, the truth of the matter is that the industry does a poor job in this area. Previous studies have shown that the typical agent loses 20 percent of his current database each year by failing to stay in contact with his past clients.
NAR's 2013 Profile of Home Buyers and Sellers confirms that the industry is continuing to fall short in the area of retaining past clients: "Forty-two percent of buyers found their agent through a referral from a friend or family member, and 12 percent used an agent they had used before to buy or sell a home."
In terms of sellers: "Among recent sellers who used an agent, 84 percent reported they would definitely (65 percent) or probably (19 percent) use that agent again or recommend to others."
"Thirty-nine percent of sellers who used a real estate agent found their agents through a referral by friends or family, and 25 percent used the agent they worked with previously to buy or sell a home."
In other words, 59 percent of the industry's past sellers ultimately list their home with a different agent even though they would have hired the agent who represented them on their previous sale. While there can be numerous explanations as to why this is the case, the most likely one is that the agent failed to stay in regular contact with the client.
Knight made the following recommendations about how you can avoid having this happen to you in your business.
1. Use your database to stay in touch
As mentioned above, focus on both ends of your sales funnel: first by prospecting for new business, as well as focusing on client retention and generating referrals from them.
The most important tool in this process is your database. If you're still relying on your email program and address book to prospect your database, make 2014 the year that you upgrade to Top Producer, Salesforce or one of the other real estate databases that allow you to create lists. You can also do this through Facebook. The goal is to have your top 50 to 100 clients in a list that you use to contact regularly.
2. Personally contact your clients at least once every 90 days
Knight's suggestion was to personally contact each of your past clients at least once every 90 days. You can do this via email or social media, but Knight argues that the two best ways to do this are either through video or by calling them on the phone. In fact, he recommends that you spend 45 minutes each day calling your past clients.
3. Supplement calls with video
Knight also emphasized the importance of using video in your communications. Video is now the primary way that most people prefer to get information. In fact, video emails have much higher open and response rates, especially as compared to direct mail pieces. To illustrate this point, The Direct Marketing Association reports that 82 percent of the direct marketing mail pieces go into the recycle bin or trash unopened.
Knight believes that one of the reasons video is so powerful is that it allows you to build trust. Potential clients research agents online. Video allows these leads to feel like they have actually met you face to face. Written materials simply can't compete in this arena.
Video allows your viewers to experience what type of person you are, how professional and knowledgeable you sound, and help them determine whether they would feel comfortable doing business with you.
Bernice Ross, CEO of RealEstateCoach.com, is a national speaker, trainer and author of the National Association of Realtors' No. 1 best-seller, "Real Estate Dough: Your Recipe for Real Estate Success." Hear Bernice's five-minute daily real estate show, just named "new and notable" by iTunes, at www.RealEstateCoachRadio.com.