(This is Part 1 of a two-part series. See Part 2.)
Is your business built exclusively on referrals? If so, you may soon be struggling with your production and wondering why.
A couple of years ago I had a conversation with an owner of a major firm who coaches his agents who do at least $20 million in production each year. We were discussing which business models were the most effective. He told me that his experience was that those agents who relied exclusively on prospecting without developing future referrals worked two to three times as hard as those who used the “by referral” model to generate new business. On the other hand, when there is a market slowdown, agents who exclusively use the referral model often lost up to 80 percent of their business. The reason for this is that the referral model relies on a third party to generate leads for the agent. In other words, the agent does not have direct control of whether he/she receives leads. The agents who had the strongest, most consistent businesses, however, were those who integrated traditional and Web lead generation strategies along with a strong referral database.
Any agent who wants a successful, sustainable real estate business must incorporate some system of referrals into his/her business model. The challenge for our industry is how to create new sources of referrals during a time where there may be fewer transactions being conducted. Traditional marketing strategies that focus on the agent are falling by the wayside. Today’s consumer only cares about “What’s in it for me?” Personal brochures, postcards with your pictures on them and other marketing materials that focus on your success cause today’s consumer to look elsewhere for representation. More than anything else, clients want their agent to care about what matters to them and to their family.
All successful referral businesses are based upon personal connection. The most widely practiced referral approach is to hand out your business card. You are then supposed to ask if the individual is interested in doing business with you or if they know someone who is thinking about buying or selling a home. This approach puts the cart before the horse. Today’s consumers expect you to provide them with service before they trust you enough to handle their most important asset — the sale or purchase of their home.
To build this trust, you must be able to build strong connections. In fact, even when you receive a referral, it’s still up to you to motivate the buyer or seller to do business with you. You can build a strong connection with referral leads by following the steps below:
Our society engages in competitive talking. We are so busy trying to get others to hear us that we interrupt each other incessantly. If you want to convert more leads into closed business, the first step is to put aside the need to share your story. Instead, be curious about each person you meet. Ask leads how they got started in their careers. Ask about what they like to do for fun. Discovering what matters to others and truly listening will dramatically increase your conversion rate.
If you want others to think of you as a brilliant communicator, listening is the secret. Instead of rambling on about your accomplishments, when you say, “Tell me more” or “What happened next?” your willingness to hear them will distinguish you from virtually every one else that they meet. When you paraphrase what they say or write it down, you send a strong message that you care about them and value their opinion.
Attraction is based upon commonality. The moment you say, “I’ve done that” or “I have eaten there,” your shared experience or commonality forms the basis for building connection. In coaching, the principle of attraction says, “Like attracts like.” People are attracted to work with others who share similarities.
Being “congruent” means walking your talk, doing what you say you will do, and being consistent. Congruency creates trust. On the other hand, being incongruent, (promising what you don’t deliver, being unreliable, or misrepresenting or hiding facts) is the quickest way to destroy trust.
Ultimately, when these four “C’s” are present, connection, rapport and trust result. If any of these four factors is missing, however, the referral may go elsewhere.
While these factors are critical in working with someone who is a referral, how can you generate your own referrals without depending on someone else to do it? To learn more, read next week’s column.