Generating referrals is a key part of the real estate business. Of all the social media sites currently available, LinkedIn has evolved into the site of choice for generating testimonials and referrals. If you’re not already capitalizing on this powerful tool to build your referral database, the time to get on board is now.
The National Association of Realtors just released its 2012 Profile of Home Buyers and Sellers. The profile contained a variety of very surprising facts, especially when it comes to how consumers are locating their real estate agent.
Seventy-four percent of the consumers would use their real estate agent again or recommend their agent to others, NAR found. Another 15 percent would probably recommend them. That’s a whopping 89 percent of the consumers who would use their agent again.
Here’s what’s astounding: Only 16 percent of the repeat buyers and 23 percent of the repeat sellers actually used their previous agent on their most recent real estate transaction. Putting it a little differently, 73 percent of all repeat buyers and 66 percent of all repeat sellers who would use their agent again end up working with someone else.
This huge decline in business is due to one simple fact: Agents fail to stay in contact with their past clients. So how do most consumers find their next agent? The answer: "referrals."
Here’s how the numbers break down. For repeat buyers, 34 percent were referred by a friend, neighbor or relative; 6 percent were referred by another real estate agent or broker; and 5 percent were referred through their employer or a relocation company.
For first-time buyers, 49 percent were referred by a friend, neighbor or relative; 5 percent were referred by another real estate agent or broker; and 2 percent were referred by their employer or a relocation company. In other words, 45 percent of all repeat buyers and 56 percent of all first-time buyers relied on a referral to locate their agent.
As these numbers illustrate, creating and maintaining a strong referral database is critical for success in today’s highly competitive real estate sales environment. Old-fashioned mailing programs are expensive and can take years before they yield a return.
Furthermore, phrases such as "I’m never too busy for your referral" or "Oh, by the way, if you know of someone who is thinking about buying or selling a home, I definitely would appreciate your referral" have been so overused that they are not particularly effective.
Today, there is a much better way to generate referrals and to do so almost effortlessly. If you haven’t joined LinkedIn.com, this is one of the quickest ways to expand your referral database. Their motto at LinkedIn is "Relationships matter." This site is an excellent business-to-business way to connect on the Web. Currently there are more than 100 million experienced professionals in the LinkedIn network.
If you haven’t already joined LinkedIn, you begin the process by creating an online profile that summarizes your educational and professional accomplishments. Your profile helps you locate others as well as helping them to locate you.
For example, once you post your profile, the system notifies you of other people who share the same associations that you do. This is a quick and easy way to locate old classmates and former colleagues, as well as to expand your current referral network. Rather than having to search for them manually like you do on Facebook, LinkedIn does the heavy lifting for you and finds them automatically.
To use LinkedIn to build your referral database, invite the people you know to become members. As you meet new buyers and sellers, invite them to become members, too. Once they join, you then have access to the people who belong to their LinkedIn network as well.
LinkedIn also has a place for recommendations. This means that anyone who is in your network can view testimonials posted on your behalf. This is a great way to build online credibility, as well as to expand your referral database.
For example, ask past clients to join and to post a recommendation on your behalf. When your past client posts the recommendation, it appears on both your profile and your client’s profile. Thus, if a friend of your past client is looking for a real estate agent and sees the recommendation, there’s a high probability that you will receive that referral with little or no effort on your part.
LinkedIn has just launched a new tool that makes creating and exchanging recommendations even easier. Here’s how to capitalize on this system: First, be sure to fill out your LinkedIn profile as completely as possible. Pay special attention to the area that asks for your "Skills and Expertise." Fill this out with as many real estate-related specialties as possible.
Once this is complete, other members of your LinkedIn network can endorse you for your various real estate specialties (as well as any other skills and expertise that you may have).
The next step is to go into your current LinkedIn database and review other profiles. Go to the "Profile" tab in the tool bar and click on "Recommendations" in the drop-down menu. Scroll down to the "Make a Recommendation" section and endorse their skills and expertise. The system will notify the recipient, and in most cases, they will endorse you as well.
This is a simple way to build social capital on LinkedIn as well as increase the probability of receiving a referral from the people who are in your LinkedIn network.
If you’re not linking up your clients on LinkedIn, make this one of your top priorities on your "to-do" list for 2013.