Commentary by John L. Heithaus
Any salesperson worth their Rolodex will recognize this classic refrain from “Glengarry Glen Ross,” the Pulitzer Prize-winning and highly expressive behind-the-scenes tale about the underbelly of real estate sales. Mired in the uphill battle of lead conversion, Shelley “the Machine” Levene (Jack Lemmon) exclaims this retort after the VP from “downtown,” Blake (Alec Baldwin), announces: “These are the new leads. And to you, they’re gold, and you don’t get them. Why? Because to give them to you would be throwing them away. They’re for closers.”
Fast forward to 2014. Real estate agents of all stripes and competencies flock to lead generation and lead management tools that are designed to attract viable prospects and convert them into closed customers. According to the SEC filings, agents spend millions each year to buy leads coming from zip codes, Web inquiries and drive-by comments (in addition to viable prospects, of course) connected to listings.
In the end, they produce conversion rates so low that Blake would surely fire these agents if they worked on the Glengarry team. That’s because what we used to call leads are now just “touches” and “impressions” that seem more like a vestige from Web 1.0 than a modern approach. In the final analysis, Shelley is certainly correct: The leads are weak.
Blake continues: “…only one thing counts in this world: Get them to sign on the line which is dotted.”
Let’s do some dotted-line math. Some consumer real estate websites report in excess of 50 million visits each month; yet we know that approximately 440,000 closings occur in that time period, per NAR stats. That’s a whopping .0088 visit/sale conversion rate if all touches came from one site, so the real stats are even lower. Since NAR’s 2013 research shows that consumers drift from website to website, and that nearly 84 percent of buyers found the home they bought on the Internet before they contacted an agent, this potentially dilutes agent control of the customer conversion process.
Many innovative forces in the industry are focused on this problem, yet the solution evades us for a very simple reason: Property-centric leads are quickly nearing the end of their usefulness as a business generator. There are more than 900 consumer property websites today (and thousands of agent sites) and, as a result, consumer research shows there’s little, if any, idea of whom to trust. The broker? The MLS? Or the consumer website?
Outdated and inaccurate information, an issue du jour, leads to a massive GIGO (garbage in, garbage out) problem. Accordingly, agents waste millions of business hours chasing down, qualifying and vainly trying to identify transaction-ready buyers.
Salespeople can track and report all the “deadbeats” (in Shelley’s lingo) assigned to them, but it will rarely, if ever, turn into real business opportunities. So what’s a true closer to do? Instead of using the property as the sole means to attract prospects, find the agents that already have the buyers, then work the deal.
To move beyond “touches,” envision a system where buyers can search for property (as they do today), but with big improvements. Once they’re captured in the lead funnel, smart qualification tools leverage the massive power of the network to filter out the “gold” leads and enable buyers to be found by listing agents with coming-soon, private and public listings to add another dimension to search as we know it.
Among the many twists and turns in the Glengarry script, the salespeople break into the office to steal the leads and get to the buyers. The irony here is the brokerage already has the buyers; they just don’t know it. A centralized, anonymous and searchable database of truly willing, ready and able buyers is the most logical evolutionary step for the industry.
Buyers represent the basis for the real MLS of the future, not property listings. It’s time to monetize an asset you already own and enable every agent to become a true closer!
John L. Heithaus is the chief strategy officer for BuyerMLS. For more information, please visit www.buyermls.com.