The single most cost and time effective way to grow your business is through real estate referrals. The latest studies show that real estate referrals are eight times (800%) more cost effective than other lead sources, i.e. cold calling, sign calls, duty, internet, and print advertising. According to the National Association of Realtors® Profile of Home Buyers and Sellers 2013 report, 80% of home buyers and 84% of sellers indicated they would recommend their agent to others. That same report also found that 42% of home buyers and 39% of sellers found their agent through referrals.
Why are referrals so powerful you may ask? The answer is simple. People trust recommendations from friends or family. This is substantiated by a recent Nielsen study that found 84% of consumers trust recommendations from friends above all other forms of advertising. Naturally, when a prospect comes to you with a pre-established level of trust, your potential to convert them into a client rises exponentially.
So why do people refer? First and foremost, because they trust who or what they are referring is not going to embarrass them by not living up to expectations. This level of trust is developed or earned through:
- Consistency of performance
- Demonstration of proficiency
- An overall great past experience
Second, people refer real estate agents because they genuinely want to help the person they are giving the referral to.
So, who are potential referral sources? Just about anyone is a referral source waiting to be tapped. These are a few to consider:
- Current/Past Clients
- Friends, Family, Acquaintances
- Business Partners
- Loan Officers
- Home Inspectors
- Pest Inspectors
- Advertising Representatives
- Settlement Agents
- Attorneys (Elder Law)
- Financial Planners/Accountants
The million dollar question is how do you get more real estate referrals? The first step is to develop a list of referral sources and place them into a contact database. Your next step is to ASK for them. Let’s face it, people in today’s society are very busy. Even if they subconsciously trust you and believe that you are the best agent in the world, they forget about you if you don’t stay in their presence of mind. One of the most effective systems to stay in contact with your referral sources is the Keller Williams 33 Touch System. It’s widely popular, even with non Keller Williams agents, and many real estate database systems have an iteration of the system pre-built within them. Ultimately, the easier (KISS) you can make your contact system, the more likely you are to use it and follow its guidelines for success.
With the growing popularity of social media, friending, following, and connecting with your referral sources can go a long way in helping you stay in connected with them. At a minimum, you should have a personal Facebook page that you use in a professional capacity. I advocate using a personal page rather than a business page because your Facebook friends will likely see more of your posts for free. The latest changes to Facebook business pages have reduced their reach by more than 80% unless you pay to promote your post. In addition to Facebook, you should consider having Twitter, Google+, and LinkedIn accounts, too.
Like any endeavor that increases your business, being consistently persistent and taking action is the foundation for success.