Capture the Leads

In this introductory column from real estate coach Dirk Zeller, he explains why lead generation is critical in a challenging market and how you can start building more leads for your business.

July 1, 2009

First, a little introduction:

My name is Dirk Zeller, and I have been in real estate for nearly 20 years as an agent, investor, coach, and speaker. I am excited about this new column for REALTOR® magazine, which I’m branding “Build Your Own Business,” or BYOB for short. My goal with this series is to coach you on strategies, tactics, skills, and disciplines that have helped my clients succeed.

Now let's get down to business.

What we are experiencing right now, both in the real estate marketplace and economically is unprecedented. We certainly are not alone in this respect. I have been the featured speaker of sales conferences in Australia, New Zealand, China, Canada, Mexico, and Dubai since the market started its shift, and serious challenges exist in all of those places and beyond.

There is one glaring, universal challenge facing real estate pros, both in the United States and overseas, and it’s not what you think.

The primary problem is not sellers, buyers, foreclosures, negative equity, short sales, the media, or other practitioners. Those are all the symptoms, not the disease. The disease is an imbalance in lead-generation strategies.

Following the Leads

Here is one interesting fact: Last year in the United States more than 4.9 million transactions took place—that, according to the National Association of REALTORS®, is the 11th best year on record!

Let me share a few more numbers.

According to NAR, 43 percent of the buyers came from a referral, and 11 percent were repeat clients. While only 38 percent of the sellers came from referral, 26 percent came from repeat business.

Whenever I share those stats with real estate pros, most of them miss the real importance of the numbers. They say, “Fifty-four percent of the buyers came from repeat or referral…that’s great!”

But my response is always, “That means 46 percent, or almost half the potential buyers are available for any agent to work with in the marketplace. What are you proactively doing to tap into this group?”

In this marketplace, we have to create more leads and expand our lead sources. Yet most real estate pros are too reliant on past clients and referrals, and have little lead generation beyond that resource.

Now, before you think I’m anti-referral, I want to say that referrals and repeats are the most important part of your business. My belief is that it shouldn’t be the only segment of your business, though, as some claim. While the all-referral concept sounds appealing, it’s a poor business strategy.

In today’s environment—with reduced transactions and fewer opportunities for repeat business—can you afford to hook your wagon to referrals alone? No.

A strong business does not sell its products and services to one entity or group. It has a broad line of products, services or customers.

Start a Lead Triad

In my book, The Champion Real Estate Agent (McGraw-Hill, 2006), I coined the term “lead triad", which refers to having three sources of leads that generate a minimum of 15 percent of your commission revenue. Any lead generation source could qualify: You could have open houses, Web prospects, expireds, FSBOs, orphan clients, REOs, farming, or past client/sphere of influence categories—the list really is endless.

Let’s say you’re generating 60 percent of your revenue from past clients/sphere of influence, 22 percent from farming, and 18 percent from open houses. You would have a stable lead triad and a stable business.

By following this model, you can establish a system to create leads that is systematic, proven, and replicable. If one of your sources is negatively affected by a major marketplace change, you can focus more on another source quickly, efficiently, and effectively to maintain and increase business. You won’t have to try out new strategies, attacking the steepest part of the learning curve through trial and error.

I urge you to review your transaction sources in the last 12 months. Look at the breakdown of your business. Do you have a lead triad?

If you don’t, resolve to add one source—and only one source—to your business mix in the next six months. It will take that long to monitor, test, and adjust your strategy and tactics and determine the return on investment. And make sure this new source is one that you will be willing to work over an extended period of time, rather than just during a lead crisis or market change.

Diversify Your Business

To build your own business, you must look at numbers, odds, conversion ratios, lead volume, sources, and strategies to build a long-term sustainable model of success for yourself. Part of that involves creating a broader lead-generation plan to ensure that you don’t have all of your eggs in one basket.

 Dirk Zeller is a speaker, author and CEO of Real Estate Champions. His company trains more than 350,000 real estate professionals each year through live events, online training, self-study programs and newsletters. He's written several articles and books, including Your First Year in Real Estate, Success as a Real Estate Agent for Dummies and Telephone Sales for Dummies. To learn more, visit