Lead Conversion is Really The King
For years the conversation in real estate sales has been centered on lead generation. It comes from good old fashioned sales theory, which is that you need leads in order to generate sales. This is still as true today as it was then, however it is the method by which we gain new leads that now determines the manner of approach.
Since lead generation is largely targeted towards the internet, it is important to understand that while generating leads is important – converting them to clients and sales is more important. So important, in fact, I call it “king.” All leads should be treated as internet leads, as there is a distinct difference between how an internet lead should be handled and a referral from a friend, for instance.
The Sheer Numbers of Internet Leads
According to Move, Inc. there were 2.9 million internet leads generated for real estate sales in 2011. In just a few short years, that number had increased to 40.6 million leads in 2014. To put that into perspective, there were only 5.1 million real estate sales in 2014! Which means there were about 8 leads generated for every 1 closed sale. Since the internet space is noisy, and there are tons of leads available and being generated daily, what top real estate agents need to understand is that converting those leads and closing sales is the real key to success in real estate. If you are not at the point in your career where you can simply live off referrals and reputation, you better have a lead conversion strategy in your arsenal that works!
According to Move, Inc. there were 40.6 million internet leads generated in 2014 as opposed to only 5.1 million real estate sales
The Importance of a System
If you are a real estate broker, then having a defined system in place on how internet leads are not only generated – but converted – is going to determine important metrics that measure success. All anyone talks about anymore is how to generate more leads, but if the leads are not converting into clients and into transactions what does it matter? Quality leads, converted into transactions, that’s what really matters in real estate.
For instance, how fast will someone in your organization respond to an internet lead? By what manner will that lead be contacted? Is there a follow-up plan in place in order to nurture those leads over time? How will agents be delivered these leads, and how will their success be tracked? There are so many questions a broker needs to ask herself, and generating more leads may not simply be the answer. A few options that brokers may wish to consider in order to convert more of those precious internet leads could be the following:
- An inside sales agent or conversion specialist
- Utilization of an outside sales agent service
- Assigning leads directly to real estate salespeople in the firm
Speed Kills on the Highway and in Lead Conversion
Nick Saban, who is one of the most decorated college football coaches of all time, has a phrase where he says “speed kills on the highway and on the football field.” I have heard him say this many times, all the way back to his days with my Alma Mater LSU. Of course, he is referring to the types of players he wants to recruit for his program and how speed is as important in football as any particular trait.
This mantra plays very well into lead conversion too. Speed, above all else, is the most important metric which should be tracked. Consider the internet lead, and think in terms of where they may have come from and how they became a lead in the first place. Many times this lead was generated by their searching for a particular property on a search portal (such as REALTOR.com, Zillow.com, Yahoohomes.com, etc.) and you receive information about a potential buyer. This buyer is likely driving through the neighborhood right at that moment, is on their cell phone, and has never heard of you or your brokerage. So what really matters here? First one in usually wins. I will say that again, first one in usually wins! Speed trumps all else when it comes to online lead conversion.
In fact, the more time that goes by (the older that lead becomes) the less likely you are to convert that lead. Consider the following:
So how do you respond to leads faster? It all goes back to what I mentioned earlier in this post, which is that having a system becomes paramount in this ever increasing competitive landscape. For instance, do you use a real estate CRM in your business? If so make sure that you are using the right CRM for your real estate business. For instance, if converting internet leads is crucial to your business model then it would be crazy to have a CRM without automatic responders as a part of the system.
As you look at the statistics above and you consider how speed trumps all else in lead conversion, it also bears considering that none of us can be available 24/7. It is literally impossible – you have to sleep! Therefore, having a CRM to be on top of things for you and respond to leads effectively and quickly can make all the difference in the world. If a buyer lead is generated online at 3am, your CRM can send an automatic message letting that lead know that you received their request and cannot wait to speak with them. That way, even if you are not actually awake at the time of the generated lead at least you responded quickly. And if you are managing your time effectively, then first thing the next business day you would be right on top of converting that lead.
I plan to post much more on this topic very soon, as with the emphasis on lead generation in the marketplace I want to also make sure that those leads you worked hard to generate are actually converting – which is where the real staying power is in real estate.