Leads Are for Closers

These are the new leads. These are the Glengarry 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. – GlenGarry Glen Ross

Glengarry Glen Ross

Glengarry Glen Ross (Image via RottenTomatoes.com)

People all over the country are talking about syndication and IDX, and who does what for the data , when the core issue that doesn’t get talked about as much is who gets to contact the consumer first – something that is often referred to as lead generation.

Using the term lead, by the way, does not mean that I (or anyone) does not care about the consumer, or is not prepared to do what is needed to establish meaningful business relationships. Using the term doesn’t mean that I do not value consumers as human beings. I use the term because we need a term to describe the process of obtaining contact information that a consumer trades for online information every day – on every website from Facebook to Google and back again.

When markets contract, customers become crucial. In the real estate business we are always seeking new customers and clients because our repeat sales cycle (the time between purchases) is measured in years. But that causes us to wonder – whose job is it to generate those opportunities?

Traditionally, real estate companies were the source of potential business for their agents, and agents affiliated with companies that they perceived as having strong sources of business.

Core business was generated by the organization and individual agents worked their own network of family and friends to develop additional sources of business. As new business models developed the company was not concerned financially with the success of the agent, and therefore did not spend time or money in generating business opportunities. In these models,  agent compensation was increased by decreasing company services and support. As a result, their  agents began to bear the effort and expense of developing new business sources. This has led to a wide variety of business models being developed arround agent compensation with varying levels of support, and therefore varying levels of responsiblity for finding sales opportunities.

With the advent of IDX and the syndication of property data, third-party companies sprang up to place themselves between the consumer and the supplier of service adding cost without service to the real estate transaction.Yes, I know that they have slick interfaces that consumers like, but that adds facility, not value in the financial sense for the consumer.

From banner ads, to enhanced listings, to the direct sales of customer contact information, a new industry was created by people who usurped the role of the real estate agent and company, seeking to be the first point of contact for the consumer, which they would enable them to sell either advertising of consumer information to the real estate professional necessary to the transaction itself. Some of these models failed when the market receded, but the third-party aggregator – a company that acquires listing information from real estate professionals and organizations, is alive and well and aggressively pursuing the same consumer the real estate professional is pursuing.

So in today’s market, where property information is ubiquitous and 1,000s of copies of every listed property  competes with each other on all three of these levels for a finite number of consumer eyeballs, we need to answer three question; Who should be generating leads? Why should they be involved in that process? Who benefits from their lead generating efforts?

Let’s look at some possible answers;

Agents , to succeed,  need new business. Therefore, on some level they should always be involved in creating new business opportunities. Call it prospecting or lead generation, it boils down to the same thing – contacting people to determine if they need your services. In today’s electronic world, much of that needs to come from your personal sphere of influence. The people that view you as a trusted advisor. For agents, I believe it is more effective to build relationships than to compete with companies, franchises and aggregators for consumer eyeballs.  This is not to say that individual agents cannot compete with well written blog sites, Web sites that exploit long tail SEO strategies, and focused niche marketing, it is only  to point out that they are outnumbered by the competition, and are generally at a disadvantage if they do not do those things.

Companies, to attract agents, benefit from having the ability to provide a “leads rich environment” – companies with RELO departments for example, typically use that source of business to attract new and experienced agents. Ziprealty and Redfin were, in their original iterations, based on the concept that really successful lead generation (or consumer attraction) would, by itself generate business. They both found that having well-trained and motivated agents are important to execute against the opportunities provided by their excellent technology. In addition, providing opportunities to agents generally allows companies to retain more of the gross commission dollar, providing a stable infrastructure, as ell as the resources needed to execute a strong lead generation program.

Third party sources of these opportunities come in several flavors – websites that attract consumers and then sell us placement as an indirect way to obtain leads, or direct lead sales.  But all of them are in it for the same reason – to interpose themselves between the consumer looking for services or products, and the individuals and companies that provide those services or sell those products.  Oddly enough, they have become our most  vicious competitors online because we have given them the currency to do so in the form of listing property information.  The question of how good a strategy that is won’t be discussed here – that’s another story for another day.

The Future? A fourth contact point for the consumer was brought to my attention by Matt Case, a Michigan REALTOR who, in a thread in a Facebook group discussed plans by a local association to create a public facing web site. Some MLSs (most notably HAR – the Houston Association of REALTORS) have created terrific public facing web sites that create consumer contact opportunities for their members. While some might argue that the job of the MLS or the Association is not to “level the playing field” between its competing members, I see them as a much more benign third-party than the For Profit aggregators.

Given the importance of effective lead generation to the survival of companies and the individual careers of their agents, more and more effort is being focused on that task by those that have weathered the economic storm of the past several years. Probably the most effective solution for the real estate industry and its members is when there is a combination of company and agent generated business opportunities. Companies and agents need to be symbiotic once more as they were in the past. Companies and agents should not abdicate the job of generating business to third parties. It increases costs, makes them work harder to woo the consumer and retain consumer loyalty when they have no previous relationship with us. And direct contact with the consumer makes their success safe from the vagaries of third parties , allowing agents and firms to succeed or fail as a result of their own efforts.

Look, in the final analysis, generating all the contacts in the world won’t help if you don’t have the skill and knowledge to help the consumer. But any sales organization needs new contacts regularly – Who do you think should be responsible for generating them?

Get out there – you got the prospects coming in. You think they came in to get out of the rain? A guy don’t walk on the lot lest he wants to buy.  – GlenGarry Glen Ross

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10 comments for “Leads Are for Closers

  1. April 8, 2012 at 11:37 am

    MLS of Long Island also has a very good public site like HAR’s. In a perfect world, agents would generate their own clientele from their own efforts, but many-especially newer ones- have to rely on their firm for support. As a broker, I see this. Brokers need to adapt to this reality. BUT- after some period of time- a year, 6 months, some finite period, agents should make their own rain. If they don’t, it should be reflected in the split. 

    Not all agents want to grow a practice, and those agents are happy to work what the company provides. We should have room for that, but their compensation should not be the same as the agents who take prospecting on themselves. 

    As for the 3rd parties, many of my colleagues view them as poachers. I would be far more charitable  if I didn’t have to pay for the honor of being the contact on my own listings, and if the data were more reliable, but even then I find the quality of the inquiries I generate myself to be superior to that of the 3rd party sites. 

    This piece, Bill, was a pleasure to read.

  2. April 9, 2012 at 8:07 am

    Thanks for the kind words. The point you make about third parties seems to be echoed throughout the real estate space, but frankly, since they are for profit endeavors, they need us to pay them – what they add to the transaction other than cost… that vote is still out.
    I agree with you about the difference in compensation an agent should expect on their own business and company generated business, but there is some difficulty in determining where business originates and that can lead to conflict between the agent and the company.

  3. April 9, 2012 at 7:58 pm

    Bill, thanks for the mention, and for understanding the context of my original comment. While I do have some concerns over an activist minded association inserting itself in the brokers quest for competitive advantage, I recognize that a good public facing web site can be a powerful aspect of an association value proposition.

    I’m wondering, however if any association has undertaken a policy with revenue generating or premium placement models that distribute leads separate from listing “ownership”. The model which I understood was being discussed included a rotating lead distribution system- at least that’s how I understood it.

    In my selling career, I always found myself more than capable of generating ample leads- often more than I could service. I never got the mentality of buying leads. Years ago we respectfully declined when LendingTree sought to “promote” our inventory, farm for mortgage leads with it, and then referred the buyers back to us, yet there are plenty of adaptations of that model in the mainstream now.

    And now I’m going to find out where I can watch GlenGarry Glen Ross on my IPad.

  4. April 10, 2012 at 6:30 am

    Matt, Thanks for the comment. I agree with you that a professional (like you and Alec Baldwin) is comfortable generating their own leads. And I believe (as I think you do) that such skills are core to our job. 
    I think the idea of premium placements in an association site might be a conflict with its operation as a membership driven organization – then again, sometimes membership organizations will have programs or events that are sponsored by various members – its a possibility, but I think it might be a minefield for the organization. 
    Let me know when you watch the movie BTW, I’m a huge Mamet fan, so I hope you enjoy it. Interestingly, it was originally a play, and the Alec Baldwin scene was written specifically for him and for the movie – its an amazing scene! 🙂

  5. April 10, 2012 at 8:52 am

    Bill, I’ve watched GGR in bits and pieces on TV over the years- Probably have seen the whole thing (much as I had The Graduate) but it’s time for an uninterrupted screening.  I’ll let you know when I watch it- seems like about the right length for my May flight to DC, where we can discuss in person.

  6. April 10, 2012 at 1:17 pm

    I think it’s everybody’s responsibility.  IMO, whether you call them leads or not  is a way to divert the conversation from the important issue.  The issue is that those consumers keep all of us employed; the agent, the brokerage, the associations, etc.  If we all want to keep food on the table, we’d better be generating leads. 

  7. April 10, 2012 at 4:23 pm

    Sounds Great Matt!

    Bill Lublin
    Managing Member
    Social Media Marketing Institute
    “Be Transparent, Be Genuine, Be Consistent”
    One of Inman’s 100 Most Influential Online 2011
    One of Inman’s 100 Most Influential Online 2010
    One of the AgentGenius30 2010
    One of Inman’s 50 Most Influential Online 2009
    One of 4Realz’s 50 Most Influential Real Estate People on Twitter
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  8. May 1, 2012 at 7:55 am

    Building a business where you do not control the source of your leads is a very risky long term strategy! You are at the mercy of third parties.

    To use a real estate metaphor it’s like renting and paying off someone else’s mortgage, might make sense short term for your situation, but long term when you stop paying you are left with nothing.

    Over the past few years we have seen the rise of strong online lead team environments, where the brokers systems generate the leads online, inside sales agents book appointments and motivated agents close them. I think teams will continue to become more important as competition continues to rise online.

    Another trend I have noticed is agents are far to focused on the front end of where they are getting leads and not enough on the actual conversion of those leads into transactions (mainly due to the low close rate of online leads and lack of systems I think).

  9. May 1, 2012 at 9:31 am

    I agree that we need to convert Dan, and that we (the real estate professionals) need to be the source of our lead generation – Hope you enjoyed the post! 🙂

  10. May 1, 2012 at 9:31 am

    Absolutely Vicki – if we aren’t constantly continuing to build our business we are just allowing it to atrophy! 

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