In my previous business we helped over 50,000 small businesses launch websites, from restaurants and plumbers to landscapers, real estate agents, retailers, and travel operators. We've been offering technology to real estate pros for many years now (we power the official Website builder for some of the largest brands in real estate). I've also bought and sold several homes using agents. I've always asked friends/family for a recommendation choosing an agent mostly because I didn't know what else to trust (some of those recommendations were good, some turned out very bad).
I spend a lot of time now thinking about how agents could become more successful. By success I mean how they could save time and sell more.
I believe the costliest mistake most agents make is that they don't collect enough feedback from past clients and they don't properly promote these endorsements. I grew that last business on the back of word of mouth referrals and by promoting the testimonials we’d received. I think Agents can do the same.
By collecting feedback you can discover your own behavior that customers did not like and change them. More importantly, if you're a great agent the feedback will likely come in the form of a great endorsement. This endorsement is the strongest marketing material you can create because it will sell for you.
An endorsement speaks directly to your best prospects - those who are actively looking for an agent. As long as you are doing marketing that reaches them, and you can get (credible) endorsements in front of them, you can increase your lead volume and your lead-to-close rates. Your cost to acquire a new customer can fall dramatically.
I was talking to an agent who helped me sell my last home. He said that he spends $200,000 per year marketing. He said that in the good old days he used to list and close 150-200 properties per year. Today his marketing budget is the same, yet he’ll close just 60-70. His minimum cost to acquire a customer has gone from $1,300 to $3,333. I asked him if he was planning to pull back on the marketing to bring his costs down and he said no. He feared that if he did he'd lose market share and his flow would drop considerably lower than 60/year. He does not currently collect feedback and hence can't use them in his marketing -- but I bet if he did he'd lower his acquisition costs and he’d be much more profitable.
I asked him why he doesn’t use endorsements in his business. He said:
- It's time consuming. Once he’s completed a sale, he focuses very hard on getting the next one – he can’t afford to lose time. Chasing past clients down for an endorsement can consume a lot of time and he doesn’t want his marketing assistant spending all her time doing this.
- He thought that it might reduce his reputation if it looked like he was begging for a good testimonial.
- He thought endorsements look too 'canned' - they're not credible enough because prospects have no way to verify that they're real.
- He also didn’t know where he’d promote them once he got them.
- He didn’t say this directly, but I also think he feared receiving negative feedback. He talked a little about how things can slip when handling 10-15 escrows at a time – so he didn’t want to take his eye off the ball.
All good thoughts, but I believe real testimonials from real people can help agents and consumers. Honest reviews can help consumers know more about an agent before reaching out to them and it can dramatically reduce the amount of ‘salesmanship’ agents must do to close business.
Have any of you used endorsements to fuel your business? Please share.
Our new application, ReachFactor.com, aims to help great agents enhance their reputation and credibility and make them more discoverable by prospects. We do this a number of ways, but our automated Survey tool is a big part of it. In its current form the Survey tool puts the process of collecting verified endorsements on auto-pilot. We'll add much more around promoting endorsements for you in the coming weeks. If you'd like a little help, our Survey tool for real estate agents is 100% free right now and you don't need to give us a credit card to sign up.
In the meantime, I’m going to give my old agent a call and see if we can help him get more profitable. I'll share results when we get them.
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