There’s a myth about experienced real estate agents: they all have several hundred, if not thousands, of clients. Here’s a fact: most of the time, real estate agents have zero clients.
Where does this discrepancy come from? How can real estate agents know they have so many clients when in reality they do not? The truth comes from knowing how to master the lead lifecycle.
Why is it important to know about the stages of the lead lifecycle?
Every stage of the transaction requires a different set of skills, whether sales or operations. Classifying each of your leads into different categories allows you to focus your sales or operational protocols properly.
When you first begin working with clients, they really aren’t clients at all. They are just leads. But, they can be classified into a particular type of lead.
There are five different stages of the lead lifecycle where your lead can be found: suspect, prospect, pending, client and retention.
The suspect, prospect and retention stages all require your sales skills. Your pending and client stages require your operational skills.
The conversations usually are brief, and they exchange general bits of knowledge about the transaction process — their needs and wants for a new place, budget and time frame. Your suspect list is going to be the longest of all of your database lists.
After your suspect starts to get into specific details about their real estate needs, your suspect becomes a prospect. Prospects are the buyers or renters whom you have shown property to. Prospects are the sellers or landlords with whom you have given a listing presentation.
Once your prospect has placed an offer to purchase a home, filled out a rental application or signed a listing agreement, your prospect has evolved into the pending stage of the lead lifecycle.
Your lead has gone from being on the sales side of the transaction to the operations side of the transaction.
After a pending client executes all of the duties in the contract and you receive your compensation, that pending lead becomes a client.
Here is the critical point to note about clients: your leads are only clients for one day of the year. That day is the day of closing. If today you have zero closings, you then have zero clients. If you have three closings in one day, you will have three clients that day.
Every other day of the year, your leads are not clients. Clients are customers who pay you for your services. Because you only get paid once, typically, on a single transaction, your leads are not clients the other 364 days of the year.
Finally, the last stage in the lead lifecycle is the retention phase. Any client you wish to keep, stay in touch with and pursue for future deals and referrals should be put into the retention phase as quickly as the day after closing.
The next time someone asks you how many clients you have or the next time you hear another real estate agent say they have hundreds of clients, think about the lead lifecycle.
Knowing the difference between suspects, prospects, pending leads, clients and retention leads will better prepare you to handle the sales and operations portions of your business.