Before I show you how to avoid becoming the agent that is forgotten about by your friends and family, we have to go over a few things first. Let’s dive into describing what your database is.
This is one of the most simple concepts to understand that gets WAY overthunk (if that’s a word) by agents all over the place. They say:
I don’t have a database…
I don’t know that many people…
I don’t want to bother my friends…
People know what I do for a living…
I don’t know how to build a database…
How am I going to get that many people’s information?
This is simple DO NOT MAKE IT COMPLICATED. Your “Database” is nothing more than a collection of people you know or know of you. This includes the following:
YOUR BEST FRIENDS (yes they don’t know what you do for a living or remember it well enough to refer you business)
Your kid’s friends parents (if you have kids)
Your past clients
Your Facebook’s friends
Any social media connections
I think you get the point. This is anyone who you know and they know you. There must also be a mutual respect or liking for one another. This is your database. This collection of people is the #1 source for your referral and repeat business whether you like it or not. You will not get referrals from people who do not know you.
Let’s look at it like this:
Do all of the people in any of the circles I mentioned above live somewhere? Assuming they do not live in a tree or a box, they are all future clients. More importantly they also have the ability to refer you to people they know who may need your services.
Would you expect someone you had a relationship with to use you as their agent if they were buying, selling, renting, or investing in real estate? Wouldn’t you expect that same person to also refer you to their friends and family?
The day you find out that someone you know bought or sold a house without you will be the day you might rethink your referral marketing systems. It truly is a kick in the pants when that happens. If you would expect them to use you for any real estate service then they should be part of your database. However, they can only use you or refer you business when they remember what you do for a living! Comprehending the value of your relationships and/or putting these people into organized lists is the most important step in learning how to build a database.
When you market this database consistently, aka referral marketing, they will become your audience. Your audience is what sends you referrals and repeat business.
Build An Audience & Business Will Come To You
Real estate agents very often confuse the understanding of an Audience is. An Audience is what any business strives to create so they can build a solid customer base, which therefore drives sales. A Realtor’s audience is their “Database”.
OK, I get it, nobody likes to market their database and its not very sexy is it?
But it’s the most profitable and important type of marketing you will ever implement in your career. And if you want a long career in real estate, it’s a necessity! Using Facebook and video nowadays has actually made referral marketing fun for real estate agents!
Don’t Expect Referrals From Strangers
A concept so many agents fail to understand is that you need to create your audience with qualified relationships. You need people you personally know and like and they must feel the same way about you. We are not farming a strange community, but we are farming your relationships. It’s all about the quality of your relationships within your audience. It’s not about buying a list of names and numbers to market to. If you do that, I am telling you right now, this is not going to work for you. We are marketing to our relationships, not farming strangers. Remember what needs to take place. These relationships have to like you to refer you. If they don’t know you, how can they like you?
Determining if you have a relationship worth marketing to comes down to a very simple test. If you were at the grocery store and came across someone you know, you would stop and say hi to this person with a smile. If that’s the type of relationship you have with them then they definitely need to go on direct mail list. If you were at the same grocery store and saw someone you recognized and turned around and walked the other way so you did not have to say hi to them then you certainly do not need that person on any of your “lists”. It’s not about the quantity, it’s all about the quality.
Here are four questions I want you to think about referral marketing in real estate:
Did you know that roughly 46% of all real estate agent business is generated from referrals?
Do you have marketing systems in place that encourage referrals for your business?
How much of your marketing budget do you spend on referral marketing?
How much time do you spend on referral marketing?
If you answered no to the first two questions and none to the last two questions then YOU MUST CONTINUE READING because this might be a game changer for your business.
A real estate agent’s business revolves around consistent lead generation. Marketing systems based on referral creation are ESSENTIAL for being successful. Did you know that an additional 23% of real estate agent business is based on repeat business? Referral marketing also creates repeat business for you. In order to understand why you should invest in referral marketing you must first understand what it is.
NOTE:Referral marketing is NOT the only marketing system you should have in place for your business, but it is the most important. The principles of referral marketing in real estate will appear again in other marketing activities.
HERE’S WHY YOU NEED TO UNDERSTAND THE VALUE OF EACH PERSON IN YOUR DATABASE
How much is each person you have a relationship with worth to you?
The average person will buy 3-5 properties in their lifetime. If each person you know buys 3 houses at an average sales price of $250,000 that equates to roughly $18,750.00 in total potential commissions just from a single relationship. What is the average time someone remains in their house before they move in your market?
Referral marketing is about building an audience out of your current connections and keeping your name in front of that audience so that you are thought of when real estate comes to mind. If you market your audience consistently, you will be more likely to get their business and referrals when the opportunity comes. This is not rocket science. It really is that simple.
2 Types Of Sales Created From Marketing Your Audience
Referrral Marketing creates two types of clients. The first type of client will be someone within your audience who needs to lease, buy, or sell a property. They contacted you because you were the first person they thought of when they needed a Realtor. If you stay in front of someone long enough you will be more than likely to become their natural choice for a real estate agent when the time comes. It is inevitable that they will eventually move. You are essentially farming your relationships so that when the “move time” comes, you are NOT FORGOTTEN.
The second type of client you will receive from marketing your audience is someone who is referred to you. Imagine all of the possible referrals that take place amongst your audience on a daily basis. How many opportunities do they come across to possibly refer you business? You will learn shortly that your audience WANTS TO REFER you business. Real estate agents solve problems for people looking to buy or sell homes. The key is becoming the “known real estate problem solver” amongst your audience. This is how you build a long lasting business!
As you can see from the chart above, referrals and repeat business account for roughly 61% of all agent business. Do you think you might want to do something now about your referral marketing? The best part about referral marketing is that once you set up systems within your practice to market your business, you can streamline the workload so it’s done with little time out of your work week and you will receive a steady stream of clients.
You Already Have An Audience
Your audience already exists and is right in front of you. You already know them. This is why every successful real estate guru, trainer, or big shot has always pushed “Database Marketing” concept on you that most agents dread. This is one of the few businesses that you can start with a built in audience. If you were to open up a pizza shop, you would have to work to build a customer base since they don’t know how your pizza tastes yet.
In real estate all you need is a personality and a brain, because PEOPLE DO BUSINESS WITH AND REFER BUSINESS TO AGENTS THEY LIKE & TRUST.
Our product, real estate, is not a service people use frequently. Our audience may need our services every 5-7 years, but that does not mean lose touch with them and only pop up when they are in the market. Our audience will use our services when they need them If we are remembered. Consistently marketing our audience will make it less likely to be forgotten. More importantly, marketing to our audience will encourage referrals for our services to their friends and family members. This is fundamentally the most important concept to grasp for a real estate agent if you want your business to run on referrals and repeat business. Facebook, Linked In, email, direct mail, and any other medium/platform you can think of serve as channels that allow us to communicate with our AUDIENCE consistently and stay on top of mind.
Real estate agents who embrace this concept and market their audience or relationships will develop a consistent stream of business. Do you think if you systematically marketed your audience 50-80 times a year that you would get more business? I’m telling you that YES YOU WILL.
Understanding Why People WANT To Refer You Business
When people refer others to you, it is almost always because there is an ongoing conversation about real estate. Suddenly, someone jumps in and says, “Hey, I know an agent, you have to call him/her. They are great!” Then, a referral is born. The question everyone wants to know is: why did someone refer the client to that agent?
Referral marketing is all about training your audience to remember you when they are going to be needing assistance for a home or sharing your name with others they notice talking about real estate.
We as humans are genetically programmed to refer our friends, co-workers, and family to things we like. Why do you think that is? Everyone always “has a guy”. Everyone always wants you to use “their guy”. You can make a post on Facebook right now and ask for any type of service provider and people will respond with several of their “guys”, but the question is why do they care? What’s in it for them? People refer others when the following three things are present:
1. They have to like the agent they are referring them to;
2. They have to like the person that is asking or suggesting for a referral for an agent; and
3. The person referring the agent has to notice that an ongoing conversation is taking place (about real estate) and they have to THINK OF YOU (this is the key).
Referral Marketing Tips Recap
The general public puts all agents into the same category. Most consumers do not understand the difference between a good agent or a bad agent. Therefore, many times, they do not do the extra research to find the most competent agent in their marketplace with the most sales or local expertise. Instead they tend to find the first agent they KNOW or are referred to. All statistics show this. 61% of agent business is directly attributed to referrals and repeat business. Although there is a paradigm shift occurring in our industry right now and consumers are beginning to seek out expert Realtors, the majority of them still go to the person they know first.
Real estate is a belly-to-belly business and consumers tend to hire agents they know personally or are referred to. Buying or selling real estate is a big decision for someone and consumers want someone they trust and LIKE!
Your goal should be to let as many people you know, and know of you, know what you do for a living. If you can accomplish this, you will set up a consistent real estate business fueled by referrals and eventually repeat business. Knowing how to build a database and then implementing a referral marketing system in place is ESSENTIAL if you are in this for the long haul. If you are an agent who wants to just sell a house or two here and there then this is NOT for you. If you are an agent who wants to have a career in this business and avoid peaks and valleys then take action! Make sure you set up multiple ways to communicate to your audience.
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How Do You Find More Clients?
Creating a better system to remind people what you do for a living is one of the things you can be doing to increase referral business, but it’s not everything.
Would you be interested in learning more about adapting a several marketing systems that work simultaneously in your business to create multiple lead sources? Do you want to run a business instead of being run by one? Do you hate cold calling or cold prospecting?
If you answered yes to any of the above questions you might want to check our system out…