Sphere of Influence

The Secret to Real Estate Advertising

Real Estate AdvertisingAs a real estate agent, it can feel like there’s a plethora of marketing & advertising channels available. Mail outs, Google Adwords, Zillow, Yellowpages.com, Facebook, billboards…. the possibilities are endless.

The only problem? As consumers are hit with more and more ads – it becomes easier to ignore them. The media landscape has become so crowded, that getting your voice heard above the noise is increasingly difficult. Not to mention, managing advertisements across so many different platforms can be a headache for any agent.

There’s no magic bullet advertising solution that guarantees success. No Facebook ad, Zillow profile or billboard can catapult your business. While they’re all great tools to have in your arsenal – in real estate we grow our business through relationships. And our connections with past clients and professional contacts is how we grow our client list  in a sustainable, scalable way.

So, what’s an agent to do?

Stay Connected with Past Clients

For agents in business 16 plus years, 41% of their business comes from repeat clients while another 20% comes from referrals. Moral of the story? By staying in touch with past clients, you can save money on advertising and create a self-replicating sales funnel. 

Add Value After Closing

Staying in touch isn’t enough though. As a REALTOR – your expertise includes the entire real estate cycle and not just getting to the closing table. Add value after closing by sharing home maintenance tips, market updates or by recommending your list of trades professionals to help clients with their home.

Strengthen Relationships with Professional Contacts

Your professional network – like lawyers, mortgage brokers, home stagers & trades professionals are all so important for showing clients your position in the market and showcasing your reputation.

Engage in Referral Reciprocity

With a strong professional network, these individuals are strategic partners for growing your business. By referring clients to lawyers, mortgage specialists, contractors and other contacts, you’ll benefit from referral reciprocity and have them send referrals.

 

At the end of the day, research has proven that the most trusted form of advertising is recommendations from people you know. So by focusing on your sphere of influence, you can feel confident that your advertising time & money is well spent. 

Net Promoter Score, Your Clients & You

Net Promoter Score
Any real estate agent knows their business is based on referrals. Success is built on relationships – and our ability to make lasting ones is what creates a steady stream of referrals from past clients, business partners and our network of professional contacts.

But how do you actually measure the power of your sphere of influence?

One of the most recognized metrics is the Net Promoter Score developed by Satmetrix and published in Harvard Business Review  in 2004. Simply put – a company’s Net Promoter score sets out to measure how likely its clients are to refer them, and uses this score to determine future success. While customer feedback surveys can be lengthy and cumbersome, the Net Promoter Score only asks one question:

How likely are you to recommend me to your friends & colleagues?

Simple, easy to understand, and extremely powerful. Clients are asked to answer the question using a 0 -10 rating scale, with 10 being extremely likely to recommend and 0 being not likely to recommend. Everyone answering between 0-6 is classified as a Detractor, 7-8s are Passives, and 9-10s are Promoters.

Detractors are people that are unhappy with your business. Not only will they be unlikely to return or send you referrals, but they can also harm your reputation by writing bad reviews on Zillow or Yelp.

While Passives are happy with the service you provide – they’re unlikely to promote you or send you referrals. They’d be willing to switch to one of your competitors, and while satisfied with you as a real estate agent – they aren’t overly loyal and they aren’t helping your business grow.

And finally – your Promoters. These are clients that rate you as a 9 or 10. They’re repeat clients, they tell others about how great you are, and they actively send referrals your way.

Net Promoter Score Your Net Promoter score is the percentage of your clients that are Promoters minus the percentage of Detractors. So the number could range from -100 if all of your clients were Detractors to +100 if all of your clients answered 9 or 10.

What’s key here is that to grow your business – you need Promoters.

Imagine you have 2 clients: John & Jane. You helped John find his first home. He thought you did a great job, and loved that you found him the perfect bachelor pad with a great yard for entertaining. Then there’s Jane – a recent retiree looking to downsize. You help sell her family home at a price that gives her lots of flexibility for retirement.  

John posts an album of his new home on Facebook – tagging you as his REALTOR® and thanking you for doing such an awesome job. Turns out he has a lot of friends who are also looking to buy their first home, and he refers them your way.  While Jane felt you did a good job – she’s moving cities and quickly gets caught up in packing and finding her new home. She doesn’t bother leaving you an online review or sending any referrals – she knows there’s lots of great agents out there. 

Moral of the story? John is a Promoter – he’s championing your business and helping you grow by sending referrals your way. While Jane was happy with your work as her seller’s agent, her value as a client was singular whereas John’s value snowballed with each referral he sent. 
Whether or not you calculate your Net Promoter Score, it’s an important concept for understanding the power of referrals and how you create create your own self-perpetuating sales funnel. How do you ensure clients become your Promoters??

Building Referrals from Your Professional Network

Building Your Referral NetworkDo you have a vendor network? A list of business professionals that you refer clients to and that send referrals your way?

For most top producing agents, their professional network of trusted service providers is the most lucrative referral source. So, if you aren’t actively growing & strengthening your professional network – here’s how to do it.

Why Does it Matter?

Business owners understand the importance of referrals. They know referrals are the backbone of any successful business,  and they’re willing AND wanting to find referral partners. Better still, they understand the difference between a qualified and unqualified lead – and will send you  more profitable, easy-to-close referrals than referrals from past clients.

How to Get Started

To get referrals from professional service providers, start by making a list of industries. Don’t limit yourself to ones you already have contacts in – think outside of who you already know and do business with.  And don’t just stick to industries that are directly involved in the real estate transaction. Plumbers, contractors, florists, car dealers, even local restaurants can all be great partners. Remember – the point is to expand your network to find potential clients that you otherwise wouldn’t meet.

Find Partners

Now, in each industry – list a potential business owner/contact that could be your referral partner. Don’t know anyone in the industry? Ask clients who they currently use and trust, ask over social media, or do a quick search on Yelp for a highly rated business in the category.

Make Contact

Call up these potential partners and introduce yourself (if you don’t already know them). Explain that as a real estate agent, you’re often asked by clients for referrals for great businesses and that your building out your list of recommendations. Ask if you can meet to discuss potential opportunities and learn more about their business.

Build Rapport, Build Relationships

Remember, real estate is about relationship. Build rapport with these service providers & business owners – learn about what they do, their business history, who they work with. By understanding their business, you can send better referrals their way and they’ll send better referrals to you. If you want to build a lasting relationship where they’re actively referring their clients t0 you – it isn’t just about exchanging a business card.

Track

Just like all of your leads, you should track your referrals. Keep a tally of the referrals you receive, who sent them, time to close, and the purchase price. This way you can evaluate who your best referral sources are, and how you can better foster these relationships.

Don’t Let it Slide

Building and fostering relationships with trusted service providers & local businesses is not a one time thing. Follow up with your contacts on the referrals you’ve exchanged, invite them to your client appreciation events, send a holiday card, go for lunch. Looking to find new referral partners?? Call up the landscaper your last client was raving about or the new florist that opened down the street.

Have you built out your network of service providers? Who are your most trusted referral partners? 

Strengthening Your Professional Network

Any successful real estate agent knows that their job goes beyond processing a transaction – it’s guiding clients through the entire buying & selling cycle. A real estate agent must answer complicated legal questions, give advice on schools, ensure clients get pre-approved, arrange home appraisals, bring in contractors and even make move in day stress free. This long list of responsibilities impacts a client’s experience, and ultimately an agent’s success rate.

 

The truth is that buying or selling a home is a team effort. Real estate agents have an intricate web of business connections that they work with – like lawyers, mortgage brokers, appraisers and moving companies.  Ultimately, the value of these service providers impacts client satisfaction and gets agents to the closing table. The real estate agent is the connection between each service provider and the client – they’re the center of the relationship and the driving force that ensures buyers and sellers are successful.

 

For real estate agents, this means that strengthening your professional referral network is critical for becoming a top producer.

 

Now, imagine you’re a buyers agent. You’ve just met Jenny & Jon – a recently married couple looking to buy their first home.

 

First things first – they haven’t been pre-approved for a mortgage. You refer them to Ben – your trusted mortgage broker that specializes in working with first-time buyers. Before you can even start to help Jenny & Jon find a home, your referral to Ben ensures your clients can afford a home and that you’re looking in the right price range.

 

Ben gets back to you – they’ve been pre-approved. Great! The first house you show them is a modern 4 bedroom. It mainly fits their wish list, but Jon & Jenny don’t love the location. Next, you tour a house that’s in their desired area but needs significant work. To get a better idea of the reno costs, you recommend touring the house with your trusted contractor.  After he discusses the work that’s needed, Jenny & Jon decide it’s too much.

 

You then find a home that you think might be just right for Jenny & Jon – it has good commuter routes and only needs a few small repairs. Jenny & Jon love it. Time to make an offer! You refer Jenny & Jon to your home inspector and put them in touch with a real estate lawyer. The house passes the inspection and Jenny & Jon’s offer is accepted! With the stress of buying a home, they really appreciate you guiding them every step of the way. Turns out, they hire the contractor that you introduced them to to renovate the basement on their new home.

 

 

As the story of Jenny & Jon shows, a strong professional network enhances any client’s experience and supports your job as a real estate agent. It’s these relationships that get you to the closing table, ensure every aspect of the real estate transaction is taken care of and leads to more referrals. How do you manage referrals with your vendor network??

 

Referrals Found to Be the Most Valued Lead Source for Real Estate Agents

business deal shaking handsJohn Wanamaker famously said “I know half my advertising dollars are wasted… I just don’t know which half.”  Now, even though Wanamaker lived over 100 years ago, the same saying still runs true for real estate agents today.

A recent study published on Inman News showed that many real estate executives see little to no value in the marketing channels agents use. Executives were asked to rate the quality or ROI of lead sources. The executives interviewed were all leaders of real estate firms that accounted for ⅓ of home sales participating.

The results of the study were pretty blaring, showing that by far the best lead source is an agent’s Sphere of Influence. 86% of those interviewed said that referrals from agents’ Sphere of Influence had exceptional value, whereas less than 10% agreed that MLS/Associations, Zillow, Realtor.com and Trulia had exceptional value. Worse yet, more than 50% said  that MLS/Associations, Realtor.com, Trulia and Homes.com had little to no value.

 

 

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What’s even more surprising is that these executives were only asked to rate lead sources that their agents use! So, the over 50% of executives that said MLS/Associations, Realtor.com Trulia and Homes.com had little to no value are spending time and money using these sources to generate leads.

Looking at the results, it seems obvious that real estate agents should be spending more effort growing their Sphere of Influence and engaging with these referral sources instead of spending money on third-party websites. An agent’s contacts can send qualified leads that know how great the agent is and are ready to buy or sell, whereas third-party sites may be sending you the data on people that were curious about how much their co-worker spent or already have a real estate agent.

So, if you’re ready to start spending more time on referral leads and less on third-party sites, it might be time to shift your marketing efforts. To grow and engage your network, you can:

  • Participate in community associations
  • Network with other business professionals – like mortgage brokers and lenders
  • Send email newsletters to past clients with home advice and info on community events
  • Develop an editorial schedule for your blog and social media – remember that it isn’t just about selling!
  • Send personalized holiday cards or notes to past clients

If you’re sick of spending money and time on marketing efforts that don’t seem very valuable, maybe it’s time to start leverage your Sphere of Influence. How do you engage with your past clients?

 

How to Grow Your Referral Network: The Real Estate Edition

Any real estate agent has likely heard of their Sphere of Influence. Your Sphere of Influence is also your Referral Network – the personal and business connections that send you referrals and connect you with new clients ready to buy or sell. It’s the most powerful tool for decreasing advertising costs and minimizing your time to close –  the golden ticket for new agents to get their feet on the ground and veterans to stay competitive.

So, if you’re a Real Estate agent looking to increase your SOI and grow referrals, think about the following groups.

 

Family, Friends & Personal Connections
Your personal connections are usually the simplest place to start. Your friends and family should know you’re a Realtor (pretty obvious), but make sure they also know your brokerage/brand, specialties, clientele, closing rates, community outreach, etc. This is especially important for new agents – let personal connections know that you’ve made a career change and why you’re passionate about real estate.

Current Clients
Current real estate clients are an easy source of referrals. While you may feel awkward asking clients you’re actively working with, it’s actually relatively easy. The clients you’re representing have real estate on their mind – they’re discussing real estate with friends and family, and I guarantee your name has come up in these conversations.

Past Clients
Your past clients understand your specialties and the excellent customer service you provide. Your most recent clients provide the best opportunities because they’re still buzzing about how great you are, but make sure to foster these referral sources with follow up after the sale.

Community Connections
Are you active in your PTA? Running Club? Church group? Local charity? These groups are sources for new clients and referrals. Being active in community organizations is a simple way to connect with your clientele. For example, if you sell family homes in residential areas,  participating in your children’s school fundraisers is a great way to grow your network while giving back to the community.

Business Connections
Do you work with mortgage brokers, contractors, home decorators, property managers, lawyers, landscapers? Of course you do -as a real estate agent you have an intricate web of business connections that can connect you with qualified leads. For business connections, the best way to drive referrals is to be generous. (No I’m not saying to reduce your commission). Send referrals to your trusted service providers, and watch the favor be returned.

 

While this list might sound daunting, getting high quality referrals from your SOI is much easier than cold calls. And knowing that customers trust recommendations from family and friends more than any form of advertising, growing your referral network should be a top priority for any agent.