Presented as a great way to generate business, internet leads can keep real estate agents from building a lasting healthy business. Many agents eagerly fork over thousands of dollars to get internet leads from a variety of lead aggregators. It is “money” delivered to their email or text. Or is it? According to NAR the conversion rate is 0.4% to 1.2%! That is a dismal return on an agents’ money and, most importantly, their time.
Once the agent “claims” the lead, the time-suck begins. Often it takes many calls/texts/emails/videos to get the consumer on the phone and engaged. Often, they don’t know why they are being contacted, they already have an agent, they were just a curious neighbor or they don’t qualify to purchase. The ones that are “hot” have no loyalty to the agent. Yes, many do close. Yes, real money is made. What is often never determined is the actual ROI. ROI of not only the dollars earned/spent, but of time spent and opportunity costs.
Agents can justify this by claiming that they are adding clients to their SOI for future referrals and business. The challenge in that thinking is that the agents are spending so much time chasing internet leads, that they are not giving enough attention and value to their SOI to garner a solid referral business.
To build a lasting business, agents should go deep with their SOI. If you don’t have a large enough SOI, build it. Intentionally meet people to whom you want to be associated and add value to their world and they in turn will add value to yours. It is not easy. It takes time. The results are well worth it.
A simple SOI campaign can garner a 10% return on the number of people in your SOI; for every 100 people you should get 10 referrals a year. Go deeper and you can get a much higher return. I’ve seen a team averaging 36%. So with a solid SOI of 200 people they are getting 72 referrals a year.
Some of the other advantages are loyalty, better close ratio(3:2 according to NAR), better ROI and a more pleasant experience for all. Ultimately it is a more efficient and sustainable business model that could lead to a better work-life balance.