Stop Relying on Paid Leads and Start Providing a Service To Get You an Endless Supply of Referrals

Welcome back to another episode of Real Estate Team Builders. This is Lars Hedinburg, founder of Real Estate B School. And this is actually a follow up episode coming off of Chris Snow chatting about his business. He has mastered the art of home search, lead generation, conversion and management. So he went really deep on that one lead source. And I think 208 sales, 95 million or so, 6, 7 times ROI on a paid home search lead source. And this is going to be a little counter to that. So if you're going to pay for leads and you're going to compete in Google pay per click or realtor.com or Zillow, you need to make sure that it's not just about generating the lead. Right. Paying money to someone else to generate a lead for you or paying Google to put a squeeze page home search, you know, squeeze page, a forced registration in front of a buyer. That is the easy part of it. It's really a lead conversion and more so a lead management conversation. You know, if you think about 5, maybe 10% of leads that give you accurate information in that forced registration or even Zillow, realtor.com leads are ready to transact and most of them aren't. So it's lead management. How much effort and how long are you willing to play that game and keep in touch with folks? Chris gave an example of a client that had just closed that registered like three or four years prior. Right. So it's, it's very much a pipeline, that mentality to compete in that world. Today I'm going to go a different angle with you and I want to talk about what would it look like to upgrade your referral marketing? And this is the question I have for you guys today. How am I thinking about my business in terms of my ability to scale solely by getting referrals based on the service my team provides and the people I know. And so almost the opposite of the conversation we had with Chris. So that works. He's proven it. We've got members doing one of our business coaches, a guy on my team, Dan Jones, he used to be on my team. He launched his own team. He'll do about 300 transactions this year in my market just north of Charlotte. He gets 13 times return on realtor.com and 11 times return on pay per click. So it certainly can be done. It's just a different model. So my question is though, what would it look like to not be able to pay for any leads and you can only make money on the, on the service you provide to clients and the kind things they say about you and the people in your database. So a really different conversation. And if I think about what's going on in small business, you know, there's really sort of this perfect storm where, you know, I don't think real estate is fundamentally going to change, but surely technology and economic uncertainty or even just the seasonality of real estate or changing consumer, the way consumers work and the way real estate has been slow to change. Right. It's been hard for major disruptors. I mean, I'm on the EXP platform that is certainly majorly disrupting the industry. But from a consumer interaction standpoint, it's been, that's more on the brokerage side. From a consumer disruption standpoint, really hasn't happened all that much. I mean, Zillow's for sure cracked the code a little bit, getting in between the agent and the consumer. So there's this, this perfect storm going on. And for the most part, as an industry, our service sucks. So most agents, having contemplated what is like the white glove service that I could provide a buyer or the white glove service that I could provide a seller, now I was challenged early on in my real estate journey. What would it look like, Lars, if you didn't get paid a co broke and you had to sit down with a buyer and present your services, services to them and they got to decide how much they paid you. And that's going to happen pretty soon. That's already happened in some states. Right. So generally we don't consider our services and, or our service level and we don't have any friends. And what I mean by that is that we think that like Zillow, Flex or, you know, it's great, it's free now, it's 35% free. Right. And these companies that are coming into our industry and marketing to us, they're not looking to be our friends, you know, they're looking to extract as much of our commissions as they possibly can. And I don't mean that in like an evil, like Zillow is the evil monster. Right. I love business. I think it's great that Zillow is a multi gazillion dollar company and they've got a stack of cash and they've figured out how to, you know, in their own way disrupt our industry. But just know that when you're giving money to someone else to generate a lead for you, you're just basically admitting that you, you can't do it yourself. You can't provide a service level that's worthy of getting multiple referrals from every client and you don't have a database where marketing platform that works very well. And so at some point you have to. And we got to this point in our journey where I think when I started I never spent more than 5,000amonth with Zillow. And that was before any lender helped out. Been out of the paid home search lead racket for like four years now and got to a point where like Zillow was charging about 40 bucks for like 35, 40 bucks lead. And I was like, I could still make money on that even with decent lead management and follow up processes in place and systems and agents that actually followed the systems. But when it went to like 80 and 120 and 160 and then 200, it's like what is going on? So finally you have to get to a point where you have to make a commitment as to where you see your business going forward. And it's almost a little bit like, I don't know if you guys have read the book or I don't follow or appreciate everything that Gary Vee, which Gary Vaynerchuk says, but he wrote a book, it was called, I think it was the thank you Economy. I'm going to read a quote from it. It says, I believe we are living through the early days of a dramatic culture shift that is bringing us back full circle and that the world we live and work in now operates in a way that is surprisingly similar to the one our great grandparents knew. Social media has transformed our world into one great big small town dominated as all vibrant towns used to be, by the strength of relationships, the currency of caring and the power of word of mouth. And so if you're on this transaction treadmill or this lead generation, like constant, like almost like an addiction to the paid lead, I think you're gonna, you're gonna, you're gonna miss out. And you have to make a decision if you're gonna pivot your business into being a business that provides a level of service, that has a virtuous cycle, that the only byproduct of what you do, the natural byproduct, is for buyers and sellers and past clients to refer people into your world. I had an experience recently that's actually wasn't recently, it was pre pandemic. But I have a tendency to really study what's going on with like businesses. And you know, when I get served at a level that is, is uncommon, I take notice of it. And so my wife and I, I forget where we flew to, but this was in September 2019. So, so six months pre Covid we're flying first class, which was awesome. And we, we get a handwritten note from the, from the stewardess or the flight attendant. And Mr. And Mrs. Hedinburg, thank you for flying with us today and for being gold and Platinum Advantage members. Have a wonderful evening. And then wrote his, the flight number and, and the date and their name. And then as I was walking off the plane. Flip up the phone. Flip up phone. It's not a flip phone, it's an iPhone. Turn on my email. And I got an email from American Airlines with a survey essentially asking me. It had the date and the flight and it was a net promoter score survey. So essentially this is the question. So based on this trip, how likely are you to recommend American Airlines to a friend or colleague? 10 is extremely likely and 0 equals extremely unlikely. So we need to start as an industry. And especially if you want to scale your business, we need to start thinking about our business in this way. And if you're not simply asking your clients what they think of your service and you're not employing something like as simple as a net promoter score, you're going to lose the game of business, I promise you. If you're not paying attention to how your clients feel when they're interacting with you, especially you can even give a question, a survey like that at different points in the transaction, when they go under, when they go under contract, when they close, when they sign a listing agreement. Just think about the different touch points and emotions that run high in a transaction. And have you really contemplated what your customer care level, you know, is it really on a scale of one is not world class at all. It's like you barely get through a transaction haphazard, and they feel no love and care to 10. It's like the most amazing service they've ever experienced in any industry, any hotel, any restaurant, any vacation, anything you want to make sure you're up in that 9, 10 range. And we got to talk about the funnel. You know, there's different ways to generate leads. And no matter how you generate leads, the point is that you have to engage in some kind of conversation with these folks and you have to get face to face with them and you have to pre sell them on your services. And then when you meet with them, they're going to be more likely to use your services. They're going to sign up as loyal buyers, they're going to sign up for you to list and sell their home, and you're going to get them under contract. And you're going to get them to closing in a way where you do that at a high enough level. And the natural byproduct is going to be a referral. That is what we want. That's the virtuous cycle that we want to employ. There's a quote from Ken Blanchard from a book called Raving Fans. And I believe this was written about real estate. I don't think it really was, but I believe it was. Your customers are only satisfied because their expectations are so low and because no one else is doing better. Just having satisfied customers isn't good enough anymore. If you really want a booming business, you have to create Raving Fans. And this is where business I think gets, gets fun. And the byproduct is a, you know, is word of mouth in the form of social proof. So we have systems in place on our real estate team where we would do a phenomenal job. We'd capture that social proof in the form of a online testimonial and then we would work that back into our marketing. So that's where this virtuous cycle comes in. I had an experience with a dentist of mine and it was one of those businesses where you could tell it was sort of a different experience level. They gave you a tour of the office when they came in the different departments. And when I checked out, the lady that checked me out, she asked me, you know, have you given us a five star review yet? And I said, no, I haven't. And she made me get out my phone and you know, she told me to pull up a browser search for Valentine center for Dentistry. She said, click there, click there, click there. And then so two, two seconds late, probably 30 seconds later, I left him a five star review and I said, hey, listen, why do you think your owners, the owners of this dentist's office, have you do that and do you get paid anything to get that? And she said, yeah, I get a little bonus by doing that. And they told us that, you know, paid lead traffic and mass media isn't working anymore. She didn't know that I had started on the radio, the same stations as this dentist back in the day. And I had seen the same thing year over year, decline in mass media. We eventually got out of mass media. So we're able to sell hundreds and hundreds of homes every year without any paid home search leads, without any mass media. Right. So, so think of, think of that. And so now I find myself, you know, going to Google and using the companies I found my eye doctor that way we went from 60 Google reviews to 14, 1500 Google reviews in a few years just by focusing on the social proof that would fuel everything in our business. Google, Google local service ads are very inexpensive. That has added fuel to that social proof fire. And so that is my sort of plea here today is to think about your business in a way that you're systematically providing a level of service that nobody in your market, nobody in the country can touch the level of care you're providing to clients. And sometimes it involves like deconstructing the sales process and deconstructing those first few hours when you sign a listing agreement. What happens are brownies being delivered? Is someone calling right away from your admit your admin team and saying welcome to the, to the family. We're so happy to get your home sold. I'm going to be, I'm going to take you to the next step. Right. Are you coordinating all that when it goes under contract or the photos that happen, you know, is it all coordinated in a way where the client is feeling like this is amazing? I've sold three homes before and it's never been anything like this. That's what you want. And you have to have scripts and systems. We run the business on Trello. So it's all checklist driven. It has to be really coordinated. There's a quote which is one of my favorite quotes and one of my favorite books honestly. It's by James Clear Atomic Habits. He says you do not rise to the level of your goals and you fall to the level of your systems. So all of this has to be a system, right? So just think about, you know, that, that funnel that I said lead gen, meaningful conversations. You've got to meet with folks, you've got to convince them to do business with you or sign an agreement, get them under contract and do it in a way where they're going to be a client for life and rave sing from the rooftop about you and your service level. So if this strikes a chord and you're like man, I am on the crack that is paid search leads and I can't figure out a way to get off of it. Or it's just this never ending treadmill of paid leads and you're working them and you're never able to really lift your head up or you don't have lead management or lead, you know, lead management systems replace and you're not getting, you know, 6, 8, 10, 12 times. Even if you are doing paid leads, if you're just finding that you, you are like wanting more. Actually, I would go to realestatebusinessgrowth.com I put together a 15 page, essentially a paper. What do you call it? It's like a briefing. It's a report, a 15 page report that details the six stages that you'll navigate to go from zero GCI to 100 to 250 to 500 to a million. Every question you should be asking yourselves, the tools and systems you should be employing. So go to realestatebusinessgrowth.com I mean I do this podcast. This is my final sentiment here. I do this podcast because it's anti what the industry is wanting us to do. The industry wants us to be loose on our lead management. They want us to spend money on The Zillow, the realtor.com, the Google, the Google. That's what my mom says. I Google it. Google wants us to spend money on pay per click, right? That is like, I think it's some crazy. It's 90% of Google's revenue is ad revenue. Right? So we're doing things that everyone else wants us to do and you need to make the decision that you're going to run your business differently. That's all I've got for you. We'll see you in the next episode. Be good.