RISMEDIA, January 13, 2011—In last month’s article, we reviewed the importance of referrals in shaping the long-term success of your real estate business. A number of key, yet simple, things you can do and keep in mind can make a huge difference in this effort.
Compensation for Referrals
Compensation will vary based upon the type and quality of the referral. When a referral comes from a non-licensee, such as a past satisfied customer, no compensation is necessary, but a nice gift thanking them for sending the business your way is appropriate.
Compensation to unlicensed persons is a violation of real estate license law in most states. A dinner gift certificate or a gift of nominal value is fine.
Referral fees to other REALTORS® who refer business to you are negotiable, but a range of 20% to 30% of the commission you receive (agent’s split) is not at all out of the ordinary and you may, when structuring a formal referral program, ask if your broker is willing to participate. Speaking of your broker, referral fees are paid from your broker to the broker of the referring REALTOR®, and not directly from you to the REALTOR® who made the referral. Once again, it is good practice and a sign of professionalism to keep the referring party informed of the status of any referral.
Online Lead Generation Companies
Companies, including Internet-based organizations, do not send you referrals but rather leads…and leads of varying quality. These companies have training information about the best ways to take advantage of their leads and if you are going to use one or more of these programs, take advantage of the training and materials offered. Learn how to work online leads if you are going to pay third parties for them so you increase your chance that your investment in such programs bears results.
Develop a Referral Mentality and Marketing Plan
While referrals can just “happen,” to create a rich source of continuing referral business, you need to develop an aggressive referral program. You must plan and dedicate resources to it, just as you would any marketing program. You must develop a referral mentality.
If you do nothing more than ask for referrals at every opportunity, it will have an impact on your business and your career.
“Have I done everything I can to earn your referral business?” should be your mantra. Ask it often, at every opportunity. Let people know how important referrals are to you, and don’t be shy. Remind yourself by:
1. Setting reminders in your contact manager software that appear seven days a week.
2. Place a sign in your work space in clear view so you see it often, and so your clients and customers see it…“Have I done everything I can do to earn your referral business?”
3. Place a sign on your refrigerator door…“Have I done everything I can do to earn your referral business?”
In addition to the above,
1. Create a direct mail campaign aimed at your customer base, with a referral theme to it, and do it four times a year.
2. To your e-mail signature, add the line “Have I done everything I can do to earn your referral business?”
3. Implement an e-mail referral marketing campaign four times each year.
Creating sales opportunities in the real estate business requires constant client contact and actively seeking and asking for the business. Doing any of the above consistently will be key to more business.
Your intention must be to develop a solid referral business. If you focus on your intention, you will be amazed by the results.
Saul Klein is senior vice president, Point2, author of MLS 5.0 – The MLS of the Future Whitepaper, a licensed real estate broker in California for the past 32 years and 1993 President of the San Diego Association of REALTORS®. Klein created NAR’s ePRO Technology Certification Program in 2001 and NAR’s Web 2.0 & Social Media Course in 2009. Klein has been providing strategic planning and leadership programs to the Industry since 1994 and is a 1972 graduate of the United States Naval Academy at Annapolis.