Editor’s note: This is the first of a two-part guest perspective series focusing on online lead generation. Part 1 explores the difference between a contact and a lead, and Part 2 discusses how to implement a long-term strategy for Internet-generated contacts and leads.
The Internet has influenced a structural shift in most real estate professionals’ marketing mix. Whether you work for an independent or branded residential agency, it is becoming increasingly difficult — and painful — to ignore marketing your firm or yourself on the Web. From personal Web sites to sophisticated search-engine marketing programs, the sourcing of new business and clients is increasingly an online proposition.
What events are influencing this structural marketing shift?
Fueled by the average American’s thirst for information and scarcity of time, the Internet is where the action is today — in real time.
According to “Search Engine Marketing, Inc.,” by Moran & Hunt, total Web users surpassed the 300 million mark in 2004, with paid placement advertising generating nearly $3 billion in 2005 and expected to grow to $5.5 billion by 2009. Naturally, real estate professionals are among those turning to the Web as a source of new business in the form of “lead generation.”
Besides this volume of both bodies and dollars orbiting the Web, consider further that, according to the National Association of Realtors, more than 70 percent of those initiating the sale or purchase of a home begin doing so online. As of 2006, 72 percent of all Internet users in the United States have the use of broadband to access the Internet, according to Neilsen/NetRatings — that’s 103 million Americans able to quickly view and download large graphics files such as photos and virtual tours available in more than 930 multiple listing service databases across the country.
With the maturity of the Internet and the genesis of third-party “lead generation” Web sites, many agents and brokers are in a quandary as to which, if any, such vendors they should engage to increase their online marketing exposure.
That is not surprising. A recent Google search for “real estate lead generation Web site” yielded 9.3 million results. A vast labyrinth of Web sites and vendors await an agent’s search in cyberspace. Eager to enroll real estate agents into their program for a fee with promises of “robust,” “qualified” and “exclusive” leads, many of these vendors fall short of agent expectations for a variety of reasons — not all of which are the vendors’ fault.
So, what is an Internet or e-commerce lead anyway?
Well, let’s consider what a “lead” is in the first place. According to the Merriam-Webster online dictionary, a lead or “prospect” is “a potential buyer or customer.”
Chad Pinson, managing director of contact referral Web site HomePoint.com, states, “a ‘qualified’ real estate lead is a consumer who:
- is likely to retain professional assistance from a real estate agent;
- is qualified to consummate a real estate transaction because the consumer is:
Ready — Will make a purchase or sale decision within 12 months of initial contact
Willing — Either wants to, is compelled to, or must do the transaction
Able — Has the legal and financial capacity to consummate the transaction.”
With regard to the Internet and e-commerce then, what is a lead?
Many agents who enroll in online referral programs such as HomeGain.com, RealEstate.com, HouseValues.com, HomePoint.com and others are under the impression — rightly or wrongly, depending on the vendor’s sales force — that every referral from such programs is a qualified lead. This is not necessarily so. Some programs offer pre-screened, qualified leads, but many do not. For instance, Lead2Realty.com prescreens subscribers’ leads and charges between $30 and $70 per lead, depending on whether the lead is a buyer, seller or combined buyer and seller.
More often, such referral programs generate “potential” leads in the form of “contacts.” A contact exists when a person searches real estate topics such as “sell a house in Green Bay” or “buy a home in Denver” at a search engine or portal like Google, Yahoo, AOL and MSN. A potential client (the searcher) then identifies and visits a Web site included among the search results to screen properties and consider real estate agents to list a home for sale or to assist in the purchase of a home. Typically, these sites require the searcher to enter contact information to gain access to the MLS database available through the given vendor’s site. The operative term here is “contact information,” not “lead information.”
While it may seem a matter of semantics, the difference between “contact” and “lead” information significantly affects the value of the referral. A “contact” does not become a lead until some reliable system or some knowledgeable party “qualifies” the lead as described above. This is where many referral program Web sites disappoint their subscriber agents. They call contacts “leads,” which sets an unrealistic or false expectation for the subscriber agent. So, when the agent subscriber responds to an e-mail “lead” referral and follows up with the potential client, only to have the person advise them that they just wanted to see what homes are selling for in their neighborhood and are not presently in the market, the agent subscriber is disappointed and often perceives the referral service as a poor resource for new lead generation.
Most such Web sites also generate their fair share of “bogus” leads that occasionally slip through quality-control screening. Some are creative and humorous. For example, one service recently received a home seller request for assistance from a “Hugh Afner” of Lake Shore Drive in Chicago. A customer service representative called the contact’s phone number in Chicago and was directed to Hugh Hefner’s personal assistant at the Playboy Mansion in Los Angeles. Needless to say, Mr. Hefner had not inquired about listing his property for sale on the referral site. When such bogus leads reach an agent, they further diminish the perceived overall value of all online real estate referral programs.
Two key agent issues are presented by the “contact” versus “lead” scenario described above. First, how to overcome the disappointment associated with the “lead,” not “contact,” expectation. Second, the dilemma of what the agent should do with a given contact. Is this person a waste of an agent’s time or is he or she a potentially premature “lead” in need of nurturing and/or a source of additional referral business?
Let’s address the “lead” expectation issue first. As any savvy real estate agent knows, the sales industry is a numbers game. Performance is a function of arduous farming, direct marketing, networking efforts and an agent’s hustle and intelligence. Based on these painstaking and enduring efforts, top agents consistently outperform their peers because they know they need to engage “X” number of client “suspects” to convert them to “Y” client “prospects” to convert them to “Z” “clients” to convert them to revenue-generating transactions. Given this funnel, it may seem that “contacts” would be a reasonable starting point for generating leads. Does it make sense for agents to view all the people they meet in person as contacts and/or potential leads and clients?
Most agents don’t strongly believe that everyone they meet or who crosses their path will become a client, but most good agents treat everyone as though they might become a client. This is often true whether that person has articulated a real estate need or not. As such, wouldn’t the contact that searched a given Web site’s property database have expressed a known curiosity about real estate activity in a given neighborhood? And if that given neighborhood is in a subscriber agent’s primary trade area, shouldn’t they be entered into that agent’s customer relationship management (CRM) database so that the agent can further engage them? By so doing, a savvy agent can expand their contact base by adding a client suspect who has knowingly expressed an interest in that agent’s trade area. By adding a qualified “suspect” to the CRM database, agents have increased the pool of possible future clients.
Bonnie Cox, a 28-year industry veteran and a broker with RE/MAX Masters in Denver, notes the importance of staying in contact with as large a group of consumers as possible. Her contact system has helped her close more than 80 transactions in the last two years. Bonnie explains that, “When you (agent) receive an Internet lead, consider it the beginning of a long-term relationship … while most buyers appreciate a brief contact during the initial relationship building period, they will almost certainly want to do much of the property research on their own.” Following the initial Internet contact and follow up, Bonnie “immediately enrolls the prospective buyer in her newsletter and monthly drip marketing program.” According to Bonnie, that prospect will now have two monthly automated contacts in the form of the newsletter and drip e-mail marketing campaign.
Tomorrow: Agent focus in a new market.
Kyle Cascioli is an adjunct professor of real estate in the Burns School of Real Estate, part of the Daniels College of Business at the University of Denver. He is also manager of Real Estate Services at HomePoint.com, which provides vendor, marketing and agent-referral services in selected markets across the United States. Cascioli is also the broker-owner of Barrett Associates.