Working Internet Leads (Revisited)...

The following article was originally published in Broker Agent News on May 22, 2006. While non-commercial use of this copyrighted material is encouraged, unauthorized, commercial use is strictly prohibited.

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During the past four years our industry has been going through a tremendous revolution - a major upheaval in the way business is done, in the way customers search for properties, and in the way that we as Real Estate Professionals attract and capture those customers.

Four years ago the best available data suggested that the number of Internet shoppers was in the 30% range. A short year later, it was in the mid-50% range. Then a year later it was in the high 70s, and recent information suggests that it's now over 90%! What an alarming race to the Net! Those agents who don't learn how to attract business from the Internet are finding themselves working harder and harder for less and less business.

As the president of an Internet technology company that helps agents with lead capture, and as a Real Estate Professional and broker with a large real estate firm, I'm on the front lines of Internet lead capture and, more importantly, of the transformation of those Internet customers into real business. When we solved the lead-scarcity problem that was plaguing so many of our fellow agents, we soon discovered that there was an even more critical problem looming directly over the horizon: now that we had captured the Internet real estate customer, how were we to bring that customer all the way to a closing?

Last year I wrote an article on this very subject, and since then we've received hundreds of letters from frustrated agents with questions about how to turn Internet customers into transaction dollars.

• "Why can't I seem to engage this new online buyer?"
• "What am I doing wrong? You seem to be able to convert Internet buyers to business, but I find them to be nearly impossible to work with."
• "All my online leads are either bogus or bad."
• "My website customers aren't really serious buyers. What should I do differently?"
• "Is it possible to really have a steady flow of Internet business?"

It seems that most of the top agents have attempted to reach out to the Internet, many of them investing large amounts of money, hoping to capture this new type of business. There's a growing frustration in agents who've spent time and money, gone through training, yet still, for the most part, been unable to do any real online business. Many are at the point of giving up on the online shopper. If you're one of these frustrated agents, though, don't throw in the towel just yet. I'm here to tell you that there's hope! I believe it's very likely that, with a few small changes, you too can be doing a large Internet business.

First, let's talk about the online home buyer and seller. I know it's tempting to dismiss website leads as being of poor quality because they're not "now business," but current data suggests that Internet customers are actually better in virtually every measurable category - by as much as 15%! They have higher incomes, they're better educated, they have a shorter search time, they view fewer homes, and they're more likely to use a Real Estate Professional than are their off-line counterparts. Calling website leads "poor quality" is the ultimate in sour grapes and is little more than an excuse for avoiding the real problem, which is that these leads require us as agents to learn a new skill in handling them, and we mostly don't want to do that.

Here's what I mean. Most veteran agents have problems working web leads because they approach Internet customers as if they were typical customers coming from other traditional marketing (i.e. sign calls, referrals, calls from farming, duty-desk calls). And that's why they have problems: web leads are much different - not different in the sense that they're not buying or selling homes, but different in the sense that they're coming at a much earlier point in the real estate buying cycle. And this difference is why our brand new agents are much more successful in working our Internet customers than are our seasoned veterans. The leads are different, and most veteran agents are reluctant to learn a new way of working customers.

The Real Estate Buying Cycle

In order for you to understand what I mean, let me explain the real estate buying cycle in some detail. Understanding the buying cycle is the key to maximizing website business; and, by the same token, misunderstanding the buying cycle is probably the most significant reason that many agents fail to generate any real business from the Internet.

Okay, let's pretend you're back in school. I want you to imagine a typical bell-shaped curve above a straight horizontal line, or axis. That axis is a time-line running from about 12-13 weeks at the left to zero on the far right. At the high point of the curve, there's a vertical line running straight down through the middle. This line is the 50%, or center, line, and it represents the mean or average timeframe of a real estate customer. This center line is six weeks prior to having an accepted contract. The point where you have an accepted contract is the vertical zero line, which is at the far right end of the axis.

Now imagine two more vertical lines about halfway from either end. These points represent one standard deviation from the mean (the center line), both to the right and to the left. The left line is at 16%, and the right line is at 84%. The 16% line is at roughly 10 weeks, and the 84% line is at approximately 2 weeks from an accepted contract. And it's at this point (84%, or the 2-week line) where most real estate shoppers begin to look for an agent to help them gain access to homes. And when the customer moves from wanting to do it himself to wanting our help (normally around this 2-week point), he moves from Phase 1 to Phase 2 of the buying cycle.

This is what makes Internet leads tricky to work: the last two weeks (Phase 2, or the Search Phase of the buying cycle) is where all of our traditional marketing once attracted and captured customers. And because they've crossed over to that psychological place where they want to work with an agent, they're more open to the direct "come on down to the office, and I'll help you" approach - the approach that we've all used for years. But if we try to use that approach before they cross that psychological line, we'll inevitably alienate them and chase them away. Of course, most (84%) of all our leads will be coming to us in Phase 1, not Phase 2.

Statistically speaking, over two-thirds of all Internet real estate customers will be captured within that big part of the bell curve - the area between the 16% line on the left and the 84% line on the right. What that means is that a full 84% of all Internet shoppers, will be in Phase 1 when they first make contact with an agent. Statistically, 50% of all Internet leads will be 6 weeks or less from buying when they first enter our radar screen, and 99% (nearly all Internet shoppers) will be within 22 weeks of writing an offer. That's great news!

Now, I understand that many of those who sell leads want us to believe that Internet leads are anywhere from six months to two years out when they start searching, but the actual data simply does not support that claim. The fact is that virtually all Internet shoppers are less than six months from their purchase.

So What Should We Do To Capture This Business?

As the broker of a company that does over half of our business from the Internet, I would like to offer three simple tips that we've learned as we've grown. If you remember them and incorporate them in what you do, you'll begin to close business over the Internet.

1. Internet customers are good customers. When agents - often experienced agents - have trouble engaging Internet customers, the temptation is to assume that there's something wrong with the online lead. However, in our company we've learned that online leads are actually better leads. They're more loyal, they tend to have better credit, they buy more expensive houses, they're better educated, and they typically have a shorter search time. In fact, they're just like you and me. We don't like feeling pushed. When we shop, we don't want help until we've done our initial information-gathering. We want help, but definitely not pressure. We know how it feels to be over-sold in our culture.

2. Offer service and friendship to win the business. Our company has learned that, when we first call online leads, we're most effective when using a customer-service approach. In other words, we don't try to personify the "super-agent" Real Estate Professional. We've found that, when we act like salesmen, we get a salesman's response. We're much more effective when we call from a customer-service perspective. Here's an example of what I might say when calling a new online lead.

"Ms. Smith? Hi. This is Matt with FavoriteAgent.com. I've noticed that you've visited our website while looking at houses online, and I'm just doing a customer service follow-up call to make sure that you were able to find everything you were looking for. [Pause for a response, which is normally a little cool.] I wanted to let you know that I'm not calling to try to sell you anything. [A noticeable breath of fresh air here.] Actually, I'm calling because many of our visitors have a hard time working the MLS search, so I wanted to make sure that you weren't having trouble. Oh, by the way, you're going to love Fayetteville. We have a really great city - lots to do, lots of shopping, great schools. So what part of the country are you coming from?"

The purpose is to begin finding common ground and building a new friendship. As your lead warms up, you'll notice a change in receptivity. At no time do we try to set up an appointment, show houses, get a mortgage lined up, or in any way make a traditional sales call. We're simply building a relationship on this call. That's our sole purpose. We allow the customer to set the pace, choose the topics, etc. When the conversation begins to run out of gas, we resume.

"Oh! I almost forgot. We've just started offering this new service. We can take the basic features you're looking for and put them into our computer. Then, whenever a house comes on the market that meets your criteria, we can send you the listing by email, before most of the Real Estate Professionals even know it's on the market. This'll give you a jump on the other people who are shopping right now, and it may help you find a deal before anyone else knows it's out there. The service is free, and I can set it up in no time."

The customer almost universally wants this service. The reason for offering listings by email is that they give you a good excuse to call back and strengthen the relationship.

"Okay, great! I'll check back with you in a few days to make sure you're getting the listings by email and to see if we need to change any of the search criteria."

3. Staying in touch is crucial. Did you know that 76% of all buyers and 74% of all sellers work with the first Real Estate Professional they talk to? How cool is that? In other words, if you don't make the customer mad at you (by being a pushy salesman), then you have 3:1 odds that you'll earn the business and a commission. But this is where most people drop the ball. Unlike the traditional leads that require under two weeks of follow-up, Internet leads involve a follow-up system that will carry them for as long as 10 weeks. At FavoriteAgent.com we try to touch Phase 1 customers twice a week and Phase 2 customers once a day. We try to mix it up between phone and email. We always start with the phone, and then use email to solidify what we've built. During Phase 1 we want to be available without smothering, since the leads aren't yet ready to work with agents. Once a lead moves into Phase 2, though, we want to be there continually because we know he's beyond that scaring-off stage and ready to work with an agent.

We use a database to manage the follow-up, so as not to drop the ball. We don't recommend using drip campaigns. Instead, we teach our agents to set themselves reminders to call, and then to send out short (under 50 words) emails that are personal. We're trying to build relationships, not manage them. We all know when we're being managed with impersonal drip campaigns, and we feel a sense of betrayal when that happens. Instead of strengthening a relationship, the drip campaign actually erodes it. So when you send emails, send short, personal emails. Be friendly. Don't try to sell anybody. If you become your customer's friend, you'll get his business. It's really that simple.

Putting It All Together

Before you give up on the Internet as a source of business, let me offer you some hope. Over the last four years our industry has moved from having very few Internet customers to today's reality, where the large majority of all real estate customers shop online first. If you commit to learning how to do Internet business, you'll participate in one of the largest and most significant real estate booms in the history of our nation. You don't have to be a geek - I promise! You just have to be willing to serve your customers, asking nothing in return. When it comes to Internet business, the Golden Rule prevails: do unto others as you would have them do unto you. If you simply befriend them and serve them, you'll have more business than you can imagine. Why don't you try this approach the next time you have an Internet customer?

About the Author: Matt Jones, REALTOR ®, Broker, President and CEO of FavoriteAgent.com, began as a brand new real estate agent in June of 2002. In his first year in real estate, he developed a technology that he uses to generate thousands of inbound leads every month.  Since that time, his original single agent practice has now become the largest brokerage in his local market, with over 70 agents, and FavoriteAgent.com has added nearly 1000 national technology partners in over 700 markets across the US and Canada.