In June 2008, four Baylor University researchers discovered that referrals and IVR (Interactive Voice Response) technology rank as the top two most productive lead generation activities in real estate.
Researchers Pullig, Indergard, Blake and Simpson focused on lead generation as a three-step process:
• Lead generation. This step identified potentinal clients through efforts like direct contact, print advertising, list acquisition or referrals.
• Conversion of the lead to an appointment. This step established an appointment.
• Closure of the appointment to a transaction. The final step involved a listing with a seller or the buying of a property with the buyer.
What Real Estate Lead Generation Activities Really Worked
In addition to referrals and IVR technology, real estate agents in the survey rated seven other lead generation activites as significantly productive–that is, they had a higher return on investment than other activities.
• Repeat Business
• Open Houses
• FSBO Expired Leads
Television, print advertising and direct mail were all rated as not productive in terms of how much money was spent on these activities. However, it’s been proven, print and direct mail advertising can be improved using IVR technology.
Where Do Agents Spend Their Money When Creating Leads?
The Baylor researchers identified 18 different sources that real estate agents invested their lead generation dollars into. The top nine sources for lead generation spending were:
• Direct Mail (23%)
• Internet/Website (17%)
• Print Advertising (14%)
• Referrals (10%)
• Signage (9%)
• Repeat Business (6%)
• Open Houses (5%)
• Interactive Voice Response (IVR) Technology (4.5%)
• Promotional Items (4.2%)
Notice how spending has no effect on performance? More on that later.
What Kinds of Leads and How Do Real Estate Agents Handle Them?
Real estate agents who responded to the survey said 58% of the leads they generated were buyers while 42% were sellers.
They also reported that, on average, 50% of the leads converted into appointments while 48% of appointments converted into transactions.
Nearly 64% of real estate agents said they followed up with 4 hours of generating a lead. Eighty-seven percent said they follow up within 8 hours.
Only 39% of real estate agents in the survey said leads outpaced what they could handle. In that case, many followed up on the most recent leads while others cherry-picked–a strategy we highly recommend.
Five Characteristics of Successful Lead Generating Real Estate Agents
The Baylor researchers also discovered two things about those real estate agents who reported doing better or much better in their market. These real estate agents also reported:
• Significantly higher lead conversion rates to appointments
• Higher conversion rates from appointments to a transaction when compared to those who say they are not doing as well
Real estate agents who reported doing much better in their market tended to:
• Have higher lead and appointment conversion rates
• Spend less on open houses as a percentage of their total spending
• Spend less on promotional items as a percentage of their total spending
• Are more productive when using open houses
• Are more seeker oriented in their lead generation activities
Seeker-oriented real estate agents typically invested in the proactive strategies like networking, referrals and IVR technology versus attract strategies.
Attract-oriented strategies tend to be activities like print advertising or signage where the real estate agent puts out the ad or the sign and then waits for leads to come in.
The Not-So-Surprising Results of Faster Lead Conversion Follow Up
As might be expected, real estate agents who reported greater success in their market on average respond to leads more quickly.
However, there is no real difference between a lead followed up within four hours versus eight hours. But, conversion rates drop drastically when the lead isn’t followed up until after eight hours.
Characteristics of Successful Agents in Tough Markets
Perhaps one of the more useful pieces of data found in the survey are the traits of those agents who reported doing better or much better in a sluggish market.
These agents tended to have:
• Higher lead and appointment conversion rates
• Greater spending on Internet/Website as a percentage of total spending
• Greater spending on IVR Technology as a percentage of total spending
• Less spending on signage as a perentage of total spending
• Less spedning on open houses as a percentage of total spending
• More seek-oriented in their lead generation activities
In contrast, real estate agents in a healthy market tended to lean on attract-oriented lead generation strategies while agents in stable markets use a balance of both seek and attract-oriented activities.
What to Do Next
One way to approach this information is to use it as a baseline for your own lead generation investment.
Are you spending your lead generation dollars in the right places? More importantly, are you tracking, measuring and testing your lead generation activities?
Without question, IVR technology is the perfect tool for tracking and measuring the effectiveness of your lead generation activities. In fact, IVR technology can slach your advertising costs by 30% while raising the amount of leads you generate.
Second, determine which type of market you are in. Then, adopt one of the strategies pointed out above: seeker-oriented, attract-oriented or seeker/attract-oriented.
Third, develop an effective referral-generating system. Service-For-Life is a great, inexpensive tool.
Finally, if you are stumped on how to close more appointments into listings and more listings into transactions, seek help. Training by coaches like Bob Corcoran is priceless.
Did you find this article useful? If so, leave a comment. And if you like what you read, subscribe to the Real Estate Marketing Blog.