Mariwyn Evans writes about commercial real estate for REALTOR® Magazine. You can reach her at firstname.lastname@example.org.
Command and Control
Practitioners take disciplined approach to turning internet leads into the real deal.
May 1, 2006
They may represent a second front to some practitioners, but for many, buyers and sellers found over the Internet are becoming the category to conquer.
According to the NATIONAL ASSOCIATION OF REALTORS® 2005 Profile of Referral and Relocation Activity, 28 percent of residential brokerage companies use third-party lead generation Web sites. And if consumers who start their search at those sites aren’t as close to making a real estate decision as those who, say, walk into a real estate office, that doesn’t mean Internet leads aren’t real prospects. Multiple studies by Real IQ Inc., a Los Angeles company that provides lead analytics and consulting to the real estate and mortgage industries, have found that of the 3 million consumers who submit leads to a third-party site (that’s any site other than a practitioner’s trying to attract real estate consumers), 20 percent to 25 percent buy homes within one year. Real IQ’s Stephen Bedikian is quick to point out this conversion doesn’t mean those consumers bought using a practitioner they found on the Internet.
Whether you’re generating leads through your own online marketing efforts or buying them from a third party (see “Real estate lead-generation companies,” below), these days, the conversation is less about how legitimate the leads are and more about how to take command and marshal those clicks into sales.
In some ways, the techniques differ little from those of traditional offline prospecting. Personal contact, good follow-up, and adding value through knowledge are the cornerstone of Internet marketing. But the paradigm of customers who demand instant responses yet take longer to move from initial search to sale has created the need for a new approach to lead management.
“One must distinguish between consumers who want to transact presently, those who command immediate attention from sales associates, and those in need of protracted relationship development and servicing,” says REALTOR.com President and CEO Allan Dalton. Dalton also suggests the industry consider a definitional shift. “Terms such as scrubbing, cleansing, incubating, and drip marketing should be reevaluated if not scrubbed and cleansed themselves,” he says. “This terminology evokes images of mail being sorted at the post office, which might send the wrong message both internally and externally.”
The need for speed
If there’s one factor that sets Internet lead cultivation apart, it’s the imperative of a rapid response. According to the CALIFORNIA ASSOCIATION OF REALTORS® 2005 Internet vs. Traditional Buyer Study, 21 percent of Internet buyers expect a real estate sales associate to respond instantly to an inquiry. Another 23 percent expect a response in 30 minutes or less. Yet a mystery shopper survey of practitioners commissioned by REALTOR.com in August 2004 found that only 27 percent of practitioners responded within eight hours to an inquiry at REALTOR.com. A whopping 46 percent of inquiries received no response at all.
“You have to call prospects as soon as they register. Otherwise, they’re just like a fish—they lose their freshness,” says Myron Zimmerman, broker with Verynicehomes.com in Denver. Zimmerman says the five-year-old company got 97 percent of its 250 sales in 2005 from Internet leads.
“There’s definitely a disconnect between what real estate practitioners are doing and what consumers expect,” says Dalton. He notes, however, that this lack of response doesn’t mean sales associates aren’t providing good service. They’re out showing homes and negotiating deals, he says. As a result, brokerages or sales team members need to become the first point of contact with Internet leads.
“We recognized early on that the brand sites were generating leads, and we were looking for ways to beat the industry’s slow response rate,” says Alex Perriello, president and CEO of Cendant’s Real Estate Franchise Group, which operates the Century 21, Coldwell Banker, ERA, and Sotheby’s brands. Perriello cites the REALTOR.com study, which set the average real estate practitioner’s response time for Internet inquiries at 54 hours.
The answer for Cendant was LeadRouter, a proprietary system that uses software to immediately convert consumers’ e-mail inquiries into voice messages that go directly to an associate’s cell phone. Each brokerage can set its business rules and time parameters using the system. At Coldwell Banker New Jersey in Paramus, sales associates have 15 minutes to accept a lead and four hours to respond to the consumer before the system forwards the lead to the next associate in the support chain, says Ronnie Laiken, president and chief operating officer. The lead goes first to the listing agent, then to another associate chosen partly by geographic proximity and partly by rotation (similar to floor time).
“When you get a voice or text message with LeadRouter, all you have to do is press 1 to accept the lead,” says Sam Grogan, a sales associate who’s active in the E-Homes division at Coldwell Banker United, REALTORS®, a brokerage in Charlotte, N.C. Grogan says more than 30 percent of his $15 million in 2005 sales came from Internet leads. He likes that LeadRouter shows him where a lead is coming from and prompts him to keep contacts updated.
Perriello is pleased with LeadRouter’s success, noting that almost 20 percent of Internet inquiries receive a response in less than one hour. Nearly 3,000 offices and 83,000 associates—about a third of all Cendant-affiliated associates—now use the software.
Another option for practitioners looking for quick lead notification is Messenger, developed by NAR’s Center for REALTOR® Technology. Messenger is a free hardware and software combination that uses a private branch exchange called Asterisk to translate an e-mail into a voice or text message sent to the salesperson’s cell phone or other electronic device, says CRT Vice President Mark Lesswing. Calls can be routed to specific associates according to preset criteria.
For individual practitioners, rapid response is mostly a matter of refocusing your routine. “I never shut off my computer, and whenever I go by, I check my e-mail,” says Tom Scaglione, ABR®, e-PRO®, who recently purchased the Avalar Realty franchise in Tampa Bay, Fla. Last year, Scaglione sold a $2 million home to an out-of-state buyer after the listing associate for the property never responded to an e-mail query.
To help ensure a timely response, some companies are centralizing initial contacts. At Baird & Warner in Chicago, leads from the company’s Web site are automatically entered into a contact management program. A seven-person e-business call center, which operates seven days a week, qualifies each lead within 30 minutes. The licensed “Client Care” employees check contact information and key factors, such as whether a prospect is prequalified for a loan. Only about 20 percent of the leads are qualified to work with a sales associate, says Chief Information Officer Charles Melidosian. The rest are put into an automated drip-marketing system by call center staff. Conversion rates are approximately 20 percent for qualified leads, compared with 6 percent for unqualified Internet leads, says Melidosian.
For Jerry Ricordati, an associate broker working in a Baird & Warner office in downtown Chicago, the time and effort he saves using qualified Internet leads is well worth the referral fee he pays his brokerage. Although he further qualifies the four or five leads he averages each month, he feels that “the amount of information I receive on a prospect helps me quickly establish a rapport and usually culminates in a new client.”
The need for patience
Perhaps one of the most frustrating aspects of working with Internet buyers and sellers is lead times that can drag a home search out for months or even years. According to a study by third-party lead site HouseValues.com, it takes an average of 9.3 months for sellers to sell and 16.7 months for buyers to buy after they initiate their first search.
“One of our biggest challenges is convincing our sales associate customers to change their work habits and work with customers for longer periods, says Ian Morris, CEO of HouseValues.
“At least 25 percent of the buyers who use our system to buy their homes have been registered at least a year prior to closing,” says Russ Capper, vice president of e-commerce for Prudential Real Estate and Relocation Services. That’s why the system focuses not only on capturing leads but also on facilitating collaboration between the prospect and the company, says Capper. After a prospect registers on the Prudential site, the system allows a sales professional to monitor the activities to learn about preferences. A sales associate can be assigned either when the registration is initially completed or when a pattern of use, such as a request to tour a property, indicates a readiness to buy, says Capper.
Sven Andersen, ABR®, of Coldwell Banker Residential Brokerage in Winchester, Mass., has created a similar system that combines high tech and personal contact. The former Internet security consultant requires prospects he acquires through paid keyword searches on Google to register before they can view listings on his IDX site (www.theandersenteam.com). Andersen uses MLS Assistant (www.mlsassistant.com)to automatically respond to leads via e-mail and to track which properties a consumer views, as well as when and for how long visits are made. When a prospect spends time looking at a specific listing, Andersen’s virtual assistant, Jeri Winkler, follows up 15 minutes later with an e-mail commenting on the specifics of the buyer’s search criteria. “The idea is not to haunt the person but to seem knowledgeable and interested,” Andersen says.
Within 48 hours of the initial contact, Winkler sets up new users in one of Andersen’s 40-plus drip-marketing campaigns from Sharper Agent(www.sharperagent.com). Winkler also puts the prospect into Top Producer 7i, which Andersen uses for online customer relationship management. A week later, Andersen follows up with a phone call and tries to set an appointment. “You can begin building a relationship on the Web,” he says, “but you make a sale by meeting a client face-to-face.”
Third-party lead generation companies have recognized that helping their users cultivate leads effectively is good for business. At HouseValues, the company’s 16,000 users get prospect contact information automatically entered into one of the company’s free drip marketing campaigns. The system, called MarketLeader, sends regular updates of new listings, marketing tips, and recent sales. It also allows sales associates to customize the system so that they receive an e-mail or text message whenever a prospect takes an action such as visiting a Web site or responding to an e-mail.
Other major Internet lead sites are offering marketing assistance, too. REALTOR.com put on more than 40 free Real Estate Marketing Expos, attracting 20,000 attendees, in 2005. Each of HomeGain’s 10,000 users is assigned a personal coach and receives access to weekly “webinars” to learn the skills that turn e-mail leads into buyers and sellers, says HomeGain’s President Richard Sommer. Users of the company’s Source4Sellers lead program can also take advantage of a free drip marketing campaign. RealEstate.com’s Agent Success provides monthly best practices tips from successful users to its 7,000 customers, says Andrew Taylor, general manager of AgentNetwork. At Reply Inc., scripts give clients specific strategies on how to turn a lead into a customer, says Sean Fox, executive vice president for real estate.
The need to give value
If half of Internet success is just showing up, getting beyond the initial query takes a different strategy. Content, as well as contact, is critical to converting Internet leads, says Tim Johnson, formerly executive vice president of Z57 Inc., an Internet marketing company focused on real estate. “You don’t want to spend six months e-mailing them recipes and holiday cards. Tell them about market activity, homes that sold, and economic data,” he suggests.
Because he sells in the resort and retirement market of Taos, N.M., Jim Kimmons says his 700-person contact list includes as many as 25 percent of prospects who are a year or more from buying. Yet he doesn’t believe in sending e-mails “unless the e-mails have a reason to exist.” Instead of a drip campaign, Kimmons, ABR®, e-PRO®, with Gallery Realty of Taos, uses InterSend from Birdview Technologies to do large-scale e-mails of his “statistical e-book.” This annual report, which takes him two weeks each year to prepare, breaks down sales statistics by more than 40 MLS areas in Taos County and tracks price appreciation over several years. He also sends out quarterly market updates and creates custom listing searches using the FNIS system.
Charlie Winfree, GRI, a sales associate with Coldwell Banker Home Town Realty in Keyser, W. Va., uses 42 different e-mail lists so that he can customize regular e-mail to prospects’ interests. (Customers can be on more than one list.) “I have lists for mountain homes on 20 acres, waterfront property, even lists for a specific property that buyers want to know about if it comes up for sale again,” says Winfree. He shifts prospects—now numbering about 1,000 total—to new databases as he learns more about them. Winfree also focuses his e-mail messages on new listings, property information, and market data. “I try never to waste their time; [there’s] none of that ‘just to say hi’ stuff,” he says. Working solo, he closed 55 transaction sides in 2005, all from the Internet.
For Myron Zimmerman at Verynicehomes.com, providing value is less about pushing out information to prospects than creating a comprehensive Web site that will catch and hold their interest. Zimmerman’s site includes approximately 30,000 listings sorted by city and price range. At the site, there’s a prominently displayed phone number labeled “live help.” This technique, along with extensive training for his 19 associates, nets an 8 percent conversion rate on leads he gets from Google’s paid search. Again, the principles of prospecting are classic; only the medium is different.
The need for high touch
Although technology makes it possible to scout out prospects from the comfort of a keyboard, the personal touch is still an important aspect of cultivating long-term Internet leads, just as it is with any other prospecting, says Johnson. “What many people find challenging today is mixing traditional sales methods with technology. But you can’t ignore the personal touch.”
Todd Ernst, a sales associate with Keller Williams in Grand Rapids, Mich., puts the personal spin on his technology strategy by quickly researching a seller prospect before responding. Ernst first sends an autoresponder message; he then checks tax records for the home’s taxable value to help calculate a starting price, checks to see if a domain name featuring the address may be available, and registers it if it is so that he can point the domain name to that particular listing on his Web site.
In what may be the ultimate marriage of high and low tech, Doug Lofstrom, an associate with Windermere Real Estate in Edmonds, Wash., follows up an e-mail with a personal visit. He drives to the home within 24 hours of e-mailing the CMA a prospect has requested on the HouseValues site and knocks on the door. Although some prospects are initially taken aback, “it takes about 30 seconds to break down the barriers,” says Lofstrom. This technique allowed him to convert about 5 percent of the 114 leads he got last year. Now he gets about 60 leads a month and has hired an assistant.
The need to evaluate
The final step in a successful Internet lead management process is determining how cost effective each lead is. “You need to develop a predictive return on investment for every lead. Each will have a different value based on initial cost, quality, and time and effort spent to convert a lead to closed business,” says Charles Melidosian. Even though Baird & Warner charges a referral fee for Internet leads, as do most brokerages that qualify leads for sales associates, you still have to watch costs closely, he says. He uses an Excel spreadsheet tied to stored electronic data to track performance and ROI.
Andersen uses a Web-based tracking program to track how people reach his site. To ensure he doesn’t overpay, he uses an outside vendor to recheck the tracking figures he receives as part of his pay-per-click campaigns with Google. The statistics show him where visitors came from and what pages they viewed. He concentrates less on hits and more on those people who took the time to complete his form. He also uses statistics to add new content if he sees a specific part of the site attracting visitors.
“By tracking the path of the lead—where it comes from and how long ago the original contact was made—you’re able to get a sense of which marketing dollars are actually generating traffic,” notes Joel MacIntosh, CEO of Web and technology vendor WolfNet Technologies (www.wolfnettech.com). WolfNet also offers a Web analytic product, Lead Tracker, which allows users to determine the source of all Internet leads coming to a Web site that uses WolfNet’s IDX solution. Another option for analyzing the flow of leads to your Web site is WebTrends (www.webtrends.com), which starts at $895 for the small-business version.
And while tracking results is important, it’s also critical not to get too bogged down in analysis, especially for a smaller company or individual practitioner, says Andrew Goodman, author of Winning Results with Google AdWords (McGraw-Hill, 2005) and founder of Page Zero Media, a company that consults on Internet search marketing. “It’s a sort of ‘ready, fire, aim’ approach,” admits Goodman. “But if the amount you’re spending is small, it may be better to experiment and adjust than overplan and do nothing.”
The drive to make Internet leads pay takes time and patience. But companies active with Internet referrals were able to convert a median of 15 percent of leads from third-party companies and 32 percent of leads from their own Web sites in 2004, according to the NAR relocation study. Isn’t it time you took command of Internet prospecting and joined the battle for Web users’ hearts and minds?
7 TIPS FOR ATTRACING LEADS
Although the leads swirling around the Internet seem limitless, it takes skill and persistence to turn them into customers. Here are strategies that are reaping returns.
- Add more photos to your listing. A study by REALTOR.com found that a home listing with six photos got 300 percent more views than a property with one or no photos, says REALTOR.com President and CEO Allan Dalton.
- Improve the content portion of your Web site, even if you use a pay-per-click model, says Justin McCarthy, Google Inc.’s business development manager for real estate. This top search engine determines search rankings half on what you’re willing to pay and half on the depth and quality of your site’s information.
- Make your site sticky—with deep content and free offers—and visitors will stay. Because he sells second homes and retirement properties in a rural area, Charlie Winfree’s site (www.mtnhome4u.com)includes not only listings and maps but also a “You’re in the Country Now” section that tells city dwellers how to test well water and septic tanks and cope with other mysteries of rural living. The results are more than 400 unique visitors a day and first-page positions on top search engines for the sales associate at Coldwell Banker Home Town Realty in Keyser, W. Va.
- Offer high-quality information—such as listings— and then ask visitors to fill out a form for more in-depth data or other benefits, says Joel MacIntosh, CEO of Web and technology vendor WolfNet Technologies (www.wolfnettech.com). Require only a name and e-mail address, but give visitors the option of completing other fields. A surprising number will provide additional information.
- Multiply your chances of being found online by developing Web sites targeted for various niches. Thomas Cowan III, CRS®, e-PRO®, of RE/MAX Professionals in Atlanta, has Web sites geared to renters, foreclosure investors, lease-purchase buyers, and traditional buyers. Together, they net him 7,000 to 8,000 unique visitors each month. With the help of three assistants and an average monthly Web site investment of $3,000, he converted that traffic into 200 sales in 2005. Cowan estimates the Web consumes 90 percent of his marketing budget.
- Lower your keyword costs for paid searches by focusing on a niche where there won’t be so many bidders, suggests Veronica Hicks of Condos Etc. in Irvine, Calif. The broker, who used to be a marketing director at Coca-Cola Co., found that 90 percent of her sales last year came from Internet leads. After spending “a ton of money” using words targeting renters, Hicks says, she now chooses the names of particular condo communities in her area.
- Blog it. The almost daily updates of real estate news and sales data at Dewita Soeharjono’s blog on urban living in Washington, D.C. (metrodcliving.com)has netted her free placements as high as fourth in Google searches and about 25 percent of her business (see “Blog World,”).
REAL ESTATE LEAD-GENERATION COMPANIES: THE LEADERS
With millions of people trolling the Internet for real estate information, several companies are vying to be your source for online leads. Here are some contenders.
Homestore Inc. (dba Move Inc.) 30700 Russell Ranch Road, Westlake Village, Calif. 91362; 800/220-1338
Snapshot: REALTOR.com is the NATIONAL ASSOCIATION OF REALTORS® Web site. It accounts for 82 percent of time spent searching on real estate aggregation sites and gets 6.7 million unique users per month on average.
Products & Pricing: All REALTORS® receive free basic listings. Enhancement services can be purchased for a subscription starting at $160 per year (www.resource.REALTOR.com). Products aren’t sold on a price-per-lead basis.
Agent Network: All REALTORS® in the country from participating MLSs
HomeGain.com Inc. 1250 45th St., Suite 200, Emeryville, Calif. 94608; 888/542-0800
Snapshot: Founded in 1999 and acquired in July 2005 by Classified Ventures, a consortium of the nation’s leading newspapers. HomeGain’s heavily trafficked Web site receives more than 4.5 million unique monthly visitors.
Products & Pricing
- Agent Evaluator. Associates submit proposals to buyers and sellers, who can then choose to make contact. $29.95 per month plus 30 percent referral fee if transaction closes.
- Source4Sellers. Exclusive seller leads for a territory. Prices range from $79 per month to $1,200 per month depending on volume and property values.
- BuyerLink. Delivers buyers to associates’ Web sites to view homes for sale in their target market. Cost per click; can be purchased in increments of $250 and above.
Agent Network: Approx. 13,000 agents
HouseValues Inc. 11332 NE 122nd Way, Kirkland, Wash. 98034; 866/224-9425
Snapshot: Launched in 1999 and became a publicly traded company in December 2004. Ads on late-night TV promote free home valuations.
Products & Pricing: Pricing for each territory starts at $199 per month and is based on several factors, including market conditions, population in the territory, and number of leads the salesperson wants to receive each month.
Agent Network: Approx. 16,000 agents
Source: Real IQ Inc.
REAL ESTATE LEAD-GENERATION COMPANIES: THE CHALLENGERS
RealEstate.com: 11115 Rushmore Drive, Charlotte, N.C. 28277; 800/732-5378
Snapshot: Barry Diller’s IAC acquired RealEstate.com in 2003 and ServiceMagic in 2004 to build its real estate lead-generation business. RealEstate.com leverages off well-known sister division LendingTree to generate leads.
Products & Pricing: Monthly subscription price includes a bundled set of leads in salesperson’s selected area.
Agent Network: Not available
e-Agent: 1889 Preston White Drive, Suite 100, Reston, Va. 20191; 866/324-3687
Snapshot: Provides participating salespeople and brokers with a free Web site and directs consumer traffic to those local Web sites.
Products & Pricing: Exclusive geographic territories with monthly subscription prices varying from as little as $80 to more than $1,000 based on property prices in the area. Effective per-lead prices range from $10–$16 or more for large markets.
Agent Network: Approx. 800 agents
House.com: 1800 Camden Road, Suite 107, Charlotte, N.C. 28203; 800/724-6873
Snapshot: Founded in 2003. Relies on domain name and aggressive marketing program to generate leads for associates and brokers.
Products & Pricing: Exclusive leads from ZIP codes on a six-month subscription basis. Subscription costs average $350 per month but can be several thousand dollars in areas with large lead volume and high house prices.
Agent Network: Approx. 2,000 agents
RealtyTracker LLC: 5055 Wilshire Blvd., Suite 800, Los Angeles, Calif. 90036; 866/936-3066
Snapshot: A newer entry into the market, RealtyTracker focuses on higher-end consumers.
Products & Pricing: Lead prices range from $29.95 for buyer leads to $49.95 for seller leads. All leads are called by RealtyTracker before they’re provided to sales associates.
Agent Network: 4,000 agents
Reply Inc.: 1350 Treat Blvd., Suite 350, Walnut Creek, Calif. 94597; 925/947-2166
Snapshot: Reply leverages expertise across multiple industries, including mortgage, insurance, autos, and real estate.
Products & Pricing: Prices start at $29.95 per month plus a fee per lead. $44.95 per buyer lead; $59.95 per seller lead; $79.95 per lead from a customer who’s buying and selling. Through another Reply service, realtynow.com, practitioners pay for nonexclusive leads.
Agent Network: Approx. 13,000 agents
Source: Real IQ Inc.