In the 19th century, the Luddites were a group of workers who refused to accept the introduction of machinery into the process of textiles. So threatened did they feel by the mechanical looms that they often resorted to violence and destruction. At worst, they burned entire factories; at best, they resisted every advance of the industrial revolution with marches, pamphlets and the passage of restrictive laws. Eventually, however, the Luddites came to learn an important lesson:

Resistance is futile.

A new report from Baylor University’s research department was released this week. Researchers asked 50,000 agents what they did to generate new business (leads), convert the consumer’s interest into an appointment and then turn appointments into deals. You can read the report for yourself, but to save you some time, let me give you some analytical observations:

• The report seems to have found mostly “optimistic” agents – which is good news. About 68% of the respondents said the market was better-to-somewhat-better than the national average. The question remains, how did the respondents really come to that conclusion – other than intuition – but at least it gives some perspective on their attitudes.
• The report also found that on average, the respondents reported about a 10% list-to-sale deviation in all markets. In other words, REALTORS are consistently overpricing properties by about 10% of what they ultimately sell for. On a $300,000 home, that’s a $30,000 price deviation.
• The REALTORS who replied said they kept good records of their lead generation efforts. 70% of them claimed they kept detailed lead generation records. No way. Just can’t believe that – considering 50% of the NAR respondents (a larger sample) said they used software like contact management, document management and CMS tools only a “few times a week”. Sounds like the respondents to Baylor were too embarrassed to be honest.

But here are the goodies:

• The largest lead-generating activities performed by the REALTORS was Direct Mail (23% of spending)
• Print advertising followed closely with 14% of their spending. This means 37% of their marketing budgets went to paper, print, postage.
• “Internet activity” only accounted for 17% of their lead generating activity.
• Less than 10% of budget went to generating referrals. And only 6% to repeat business.
• Under 5% of budgets was spent on promoting Open Houses.

So, why does any of this matter? Because it’s an example of Luddite mentality. Forget the new machinery of the real estate business. We’ve been doing it this way for decades and we’re not about to stop now!

Ironically, the very SAME respondents told the researchers:

• The two most productive sources of leads were REFERRALS and REPEAT business
• The two least productive sources of leads were Direct Mail and Print Media

The activities they spent the MOST amount of budget on created the LEAST amount of new business; the activities that they spent the LEAST amount of budget on created the MOST amount of new business.

Can you now see why the industry is a mess?

The question becomes, not what to do about it, but WHO is responsible for doing something about it. You already KNOW what to do about it – stop doing mailings and print ads and start spending every dollar getting referrals and repeat business. There isn’t a knowledge problem here. There’s a DOING problem.

The only person who can solve this is the Manager/Broker. Agents aren’t going to do it on their own, because it would require too much resistance. Too much work would be involved in convincing sellers why print ads don’t work or having to follow up with past clients rather than doing blind mass-mailings to mailboxes (not people) in the neighborhood. In an industry that is basically adverse to both conflict (known as properly advising clients or walking away from bad deals) and prospecting (known as picking up the phone or emailing, IM’ing and social networking with past clients), nothing is going to change until the Manager steps into the game.

During the industrial revolution, it wasn’t the workers who invented the machinery. They didn’t look at the work and say, let’s do this better, faster, cheaper. It was the owners of the factory. The bosses. The managers. Workers were very happy doing what they always did, and getting what they always got. It was managers who said, more can be done, better, faster, easier. And in the ultimate test of their convictions, workers salaries and standards of living only started to rise after the introduction of modern equipment. As factories could produce more, cheaper goods, more consumers could purchase them and that brought in more sales. More revenue. Higher wages. Better lives for the workers.

If you’re wondering why REALTORS are leaving the industry so fast – and always have, at a rate of 90% attrition every 5 years – if you’re wondering why 75% of all agents made UNDER $45,000 last year, with no benefits, vacation, health insurance or retirement plans – if you’re wondering why it’s BEEN THIS WAY for decades, even though more technology, more marketing, more tools have been available than ever, ask yourself this:

When will you decide that resistance is futile?