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
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