This first post sets the context for my subsequent posts. Coming from a technology background, I keenly follow how emerging technologies are transforming the way business is done. Of particular interest is Real Estate, ever since I came across these articles (two years ago) on whether real estate is a relationship business (Chris Smith's post - No, it isn't & Rob Hahn's post - What else could it be + service or skill business) -- these articles & its comments are a fascinating read. While articles are great sources of information, there is nothing like a first hand information, by speaking directly with people in real estate.
Over the last few weeks, while working on a new product, I had the opportunity to meet with a few realtors in the Bay Area and speak with them about the business of real estate and the use of technology in real estate. This blog post is a summary of the discussion and my views on it.
It's a relationship business, but…
Almost every realtor I spoke with started off the discussion by saying that real estate is a relationship business. Considering that, of the 25+ realtors (agents & brokers) I spoke with, there were realtors who leveraged social media and online lead generation options for scaling the business and realtors who relied only on referrals, can this be true? Only after speaking with them in detail, did I understand that the term "relationship" has a broader reference.
Every business, by nature of having customers, has a service component. It could be answering customers' inquiries during the sales process or providing support to customers after sales. The ability of a business to provide prompt service, delight their customers and manage their customer relationships determines whether they are able to get new customers and more referrals. Yes, the assumption is the product or the service (skill) being offered is also exceptional. Real estate is no different -- agents need to have the local knowledge/expertise about the areas they serve; marketing, sales, negotiation and project management skills to market themselves and the property; but due to the nature of transaction involved (both financial and personal) in real estate for the customer, the emphasis is even greater on service.
Simply put, relationship is an outcome of your service and it determines whether your customers become your brand ambassadors.
The process, skills, expertise, technology...
Online listings have made it easier for buyers to search for the property and get started very early during the buying process. It has also provided the buyers with the ability to get their inquiries answered through email & contact forms, without having to make direct contact with an agent or share their contact number. Unlike in an offline world, where agents were able to meet with prospective buyers and build relationships, the anonymity of online world makes it harder to do so. The online leads need additional work as against the leads generated through referrals.
Referrals are considered the best source of leads as they have the highest conversion rates. One in every three referral turns into a sale within 3-6 months. Hence, the focus is on building relationships, closing a sale, delighting the customers, getting referrals and expanding the sphere of influence. Now, with the opportunity to reach out to a larger audience through online marketing, a good percentage of the realtors also invest in generating leads online, even though such leads have a low conversion rate.
Relationship and technology is not a zero-sum game. The problem with low conversion rate is due to over reliance on technology and no relationship. This makes us view the business in full offline mode and not preferring technology. The truth is, for scaling any relationship you need the help of technology. For example, Facebook made it easier to get in touch with old classmates and friends in the past. Same is true for real estate. Technology should enable deeper relationship and should get out of the way that it almost seems invisible.
Offline Vs Online
Is it possible that the difficulty of building a relationship with a customer who has only shared his email be the reason for low conversion rate of leads generated online? or is it because you cannot put a personality to a name in the online world? Are those even leads or just casual inquiries?
Email Vs Phone
What is your response times for email inquiries? Do you search for the email address to find out the details about the inquirer before responding to the inquiry?
I always [use rapportive to] do that and every time I just get reminded of the dialogue from the movie Phone Booth -- "Isn't it funny? You hear a phone ring and it could be anybody. But ringing phone has to be answered, doesn't it? And you reply, Hello!" Shouldn't this be the case with email?
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