Gail Lyons & Don Harlan are the authors of Buyer Agency Today: Keeping Your Competitive Edge in Real Estate, published by Dearborn Real Estate Education.
4 Steps to More Referrals
Referrals and repeat business are always the best sources of business. But few agents ask for referrals frequently enough, usually from fear of rejection.
September 1, 2007
This is excerpted from Buyer Agency Today: Keeping Your Competitive Edge in Real Estate. This excerpt comes from Chapter 7: Prospecting for Buyer Clients.
Prospecting must be done continually, as results certainly don’t happen overnight. A 2004 research project commissioned by HouseValues, Inc. found that buyers began thinking that they should buy a home up to four years before actually doing so. A motivating factor such as wanting/needing a larger home, financial advantages of buying instead of renting, family reasons, and job relocation had to happen before buyers began the homebuying process.
HouseValues’ research found that on average, the homebuying process itself took 16.4 months, split into three phases:
- Thinking about buying: 7.1 months
- Researching a purchase: 5.3 months
- Actively looking for a home: 4.1 months
“Interesting,” you say, “but how long did it take for them to choose an agent?” The results were a real eye-opener — 61.8 percent of the buyers selected their agent in just one to three days.
Referrals and repeat business are always the best sources of business because prospective clients come with either a recommendation from a trusted acquaintance or a memory of superior service. As a result, you spend less time selling the value of your service and more time actually providing service.
Referrals and repeat business, however, must be cultivated through periodic reminders that you are still active in business and concerned about your clients’ welfare and happiness. This can most easily be accomplished by contacting every past client and past referral source on a quarterly basis.
At a minimum, one of these contracts should be in person or by phone, the others can be by personal letter, greeting card, flyer, or newsletter. The effectiveness of such contacts is substantially increased by the degree to which they are personal: a visit is better than a phone call; a personal note is better than a flyer; a newsletter with a personal note written across its face is better than the newsletter alone.
Two techniques that increase the effectiveness of such contacts are:
- Saying “thank you” for past business
- Mentioning that your success depends on referrals and repeat business and asking your contacts if they know of anyone currently interested in purchasing real estate. For a variety of reasons, most people feel good when they help someone else, especially if it is someone (you) whom they like and trust. Make it your goal to give them the opportunity to feel good!
Few agents ask for referrals frequently enough, usually from fear of rejection. You’ll find it easier if, rather than thinking of the request for a business referral as an event, you consider it a process. The following is a four-step procedure developed by Stephen Canale, a highly respected speaker, trainer, and author:
Step 1. Plant the seed.
In your next buyer counseling session, make sure you emphasize that you prefer to do business on a referral basis. If the prospect has come to you through a referral of some kind, then reinforce that the reason you’re willing to work with them is because of the referral from the mutual acquaintance. If the customer came to you from some other source, an incoming call for instance, then point out your willingness to work with them as a special exception.
Step 2. Obtain a commitment for a future event.
Say something like “If I agree to go to work for you now, and can successfully handle this transaction to your satisfaction, would you be willing to refer business to me in the future?” There’s no pressure or immediate need to act and their obligation is contingent upon your doing a good job for them, which of course is something they want.
Step 3. Reinforcement.
When your immediate business with the client is complete, remind them of their agreement to refer business to you whenever the opportunity arises. Say, “It’s been a pleasure working with you and I hope we can work together again in the future. By the way, when you know of someone who needs to buy or sell, after giving out my name and number, please call or e-mail me directly to let me know that you’ve referred them. As I told you when we first met, I generally only work on a referral basis, and I’d hate to have your friends leave me a message and not realize that they were referred by you. If you can let me know to expect their call ahead of time, I would appreciate it. And, I’ll make sure I do my very best for them.”
Step 4. Make it worth their while.
Reward the referral action by immediately thanking the person who sent you the referral, while reaffirming that you’ll provide the best possible service to the friend, neighbor, or relative; by keeping the person who sent the referral apprised of the status as much as is appropriate, such as when the transaction has been successfully closed; and sending a personal gift, gift certificate, or gift basket with a handwritten “thank you” card.
A special set of people that you should cultivate as sources of referrals is composed of other professionals: lawyer, accountant, banker, doctor, financial planner, and anyone else who provides you with professional-level services.
Recommendations from these sources carry great weight for many people and are thus more likely to be followed. Most of these professionals act as fiduciaries and place a high value on your ability to represent the referees (often their own clients) they send to you. Remember, too, that not only are these professionals excellent referral sources but also they themselves are potential clients!
Annual client appreciation events, although major undertakings, are one of the most effective ways of staying in touch with your referral base.