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The Anatomy of a Lead: Turning Leads into Closed Sales
Posted By beth On July 3, 2007 @ 10:40 AM In Business Development,Business Development & Best Practices,Today's Top Story | Comments Disabled
By Desiree French
RISMEDIA, Oct. 27, 2007—With the proliferation of lead generation firms, particularly in the online community, brokers and agents have access to an untold number of vendors. Thus, the dilemma today is not how to obtain leads, but rather how to convert them into customers and, ultimately, closed transactions.
KnowledgeStorm, a leader in business technology search, reports experts believe the percentage of leads “falling through the cracks” ranges from 40-80%. In conjunction with the Artemis Group, a full-service Internet solutions agency, it found poor processes for handling leads and assessing their value to be a key culprit.
So, having found a way to capture leads, brokers and agents now must find effective ways to turn those leads into real dollars. Which begs the question, “What really works?”
Gregg Larson, president and CEO of Clareity Consulting, insists “strategies that work today are the same that worked years ago. It’s all about systems. People who have fine-tuned these systems and who are patient are finding that leads are coming to fruition months, even years, later.”
The Time Factor
Experience has shown that the process of culminating leads into closed deals stand a better chance when the leads are responded to quickly, customers are qualified, and the personal touch is increased.
Take a recent report by the California Association of Realtors, Internet versus Traditional Buyer Study. It stresses the need to move quickly to capture Internet home buyers. When asked, for example, about the importance of the agent’s response time in the selection process, 86% of Internet buyers said it was “extremely important” or “very important.” This compares with 63% of traditional home buyers.
According to the report, generational differences are also telling. It found 16% of Generation Xers expect their agent to respond instantly, versus 0% of Baby Boomers. Moreover, 33% of Generation Xers expect to receive a response from their agent within one hour; only 16% of Baby Boomers expect such a speedy response.
In reality, “most people won’t remember what form they filled out three days ago,” according to Glenn Houck, co-founder of LeadQual, which helps companies generate, qualify, and close leads. The average Internet lead visits five sites and fills out three different forms, he says, therefore making no lead exclusive.
Because speed is of the utmost importance, LeadQual’s average response time following up on leads for clients is 2-1/2 to 3 minutes, Houck maintains. Conversion rates can climb up to 5%. As for determining which leads are worthwhile and which aren’t, “you can’t tell from looking,” he says. “You have to make contact. It’s like trying to find a needle in a haystack. You have to put effort against all of them until you can pluck your needle out.”
Investing in Leads
Ed Krafchow, president and co-owner of Prudential CA/NV/TX Realty, pays about two dozen different sources—including Lending Tree and Yahoo—to refer leads to his company. Several thousand leads arrive monthly. Their conversion rates can range from 1% up to 20%, if highly screened. Yet, hovering at an average conversion rate of “6 percent is a place where we would like to be; but we’re not there yet,” he concedes.
Each lead goes through an Internet group, a division of Prudential’s relocation company. For leads pulled directly from the company’s own Web site, agents have 15 minutes to contact the consumer. “It used to be okay to get back to the consumer in a day or so. Now, the expectation is getting higher and higher,” he says. “At the end of the day, it’s that agent relationship and ability to connect to people” that will determine whether the lead becomes a customer.
Similar sentiments exist at Prudential Alliance Realtors in St. Louis, where Internet leads contribute annually to the brokerage firm’s growth. The company has two account managers who handle all leads. With a conversion rate of 3-5%, although some accounts close at 15-17%, “our target is to get our conversion rate up to 20%,” says Andrea Lawrence, co-owner and president. “Agent accountability is imperative.”
At Reply!, a company that generates consumer demand for real estate services, the expectation is 50% of consumers registering at its site will return an agent’s call. About 20% of them will actually meet with the agent; and 5-10% will complete a deal.
Payam Zamani, chairman and CEO, admits, however, that impatient agents sometimes cancel the service within two weeks if they receive fewer than five leads.
“We recommend agents call leads five times over five days. If they reach the leads, then they can judge if they’re someone who should be in their pipeline,” he says.
Investing in People to Manage Leads
Nearly 33% of real estate firms have agreements with a lead generation company to receive customer contact information in exchange for a fee, according to the 2005 Profile of Referral and Relocation Activity. The survey, conducted by the National Association of Realtors and Worldwide ERC, notes the conversion rate for leads is generally higher at company Web sites than other Internet sources.
Larson contends agent service centers operated by progressive brokerage firms can make a big difference. Besides generating leads from their own Web sites and those of lead generation companies, they also qualify the leads, incubate them, and then forward them to agents, usually for a fee. This way, they constantly fill the funnel with new leads in a way that’s manageable for agents.
John L. Scott Score in Medford, Oregon, forsook fee-based companies last summer, after the market turned. Broker-owner Lori Hawkins says the process didn’t prove to be cost effective because the fee-based companies generated an insufficient number of leads to impact the bottom line.
Instead, her company, with six offices spread across southern and central Oregon, now takes leads directly from its own Web site. Many are generated by search engines such as Google. Furthermore, each agent now has a page on the company Web site. They’re being taught how to enhance their profiles and use search engine optimization to attract consumers to their pages and respond quickly to requests.
Despite these strategies, Hawkins cautions “agents must understand that about 18 out of 20 leads coming to the company’s Web site are just for information gathering.”
As such, “agents should know how to nurture and incubate them,” she adds. “Today, agents get leads and blow them off because they’ve been trained to make a sale within 45 to 60 days. We’ve all been trained to do this. But the agent has to learn not to throw ‘the fish’ back into the pond. If they do, [potential] customers will eventually fall into someone else’s net.”
Keeping Up with Leads
If your efforts to convert leads into closed sales are not working and agents seem to be giving their all, then it’s time to stop flushing money down the drain. When you first sign on with a lead generation company, here’s what you need to do:
- Track all leads
- Conduct a controlled test with each lead generation company you employ to determine the effectiveness of their service and the quality of their leads
- Assess how the companies stack up filtering out leads that have inaccurate phone numbers, names, e-mail addresses and, in certain cases, unqualified buyers
- Measure conversion rates
- In the end, remember a proactive approach undertaken by brokers and agents also plays an important role in the conversion of leads to closed deals
A Different View
The way Gregg Larson sees it, many brokers are stuck in Web 101.
“They do search engine optimizations, spend a lot of money on leads, et cetera. But what we’re seeing in Web statistics is that brokers are getting killed by lead generation companies,” he offers. “There’s never a local broker in the Top 10, rarely in the Top 20, when it comes to real estate eyeballs, the number of consumers looking at their sites. But there’s proof that a strong local/regional portal can be in the Top 10.”
He points to the Houston Association of Realtors (HAR). As a service to its 26,000 members, HAR, through its Web site, www.har.com , delivered 550,000 e-mail and telephone leads to its members last year—for free.
While the association has no mechanism in place for tracking how many leads are actually converted into closed business, Bob Hale, president and CEO, says a monthly report sent to each member lets them know how many leads they received from the association and how often their sites were visited.
HAR’s Web site nabs 38% of all eyeballs from people conducting a search for Houston real estate. In one month, the site gets 920,000 unique visits, people who visit it more than once. It received more than 1 billion hits in April and visitors viewed Realtor listings 11 million times in March.
“A lot of large brokers are in denial, blissfully unaware that they and all of their competitors together have less than 10% of eyeballs in their market,” Larson claims. “As long as leads are trending upward, they think everything’s okay. But, individually, they may only get 2% of traffic in their market. Brokers can improve the quality of their leads by funding a local/regional online portal—and then get leads for free.”
“Ultimately,” he adds, “it’s a very level playing field. Consumers love not having advertising thrown in their faces and being forced to register for more information; and it reflects well on Realtors. The leads would come in free to Realtors, but it would be up to brokers how they would go about incubating them.”
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