In 2008, an insightful survey from Baylor University found REALTORS were still spending money on totally ineffective lead generation techniques. That was then. What about today?
In June of 2008, the Keller Center at Baylor Report on Lead Generation that asked 50,000 REALTORS how they generated new business. Essentially, they asked two questions:
- Where do you spend the most money trying to generate new leads?
- Which lead generation sources produced the most leads?
Sounds pretty simple, right? Follow the money, and measure it’s results. Marketing 101.
The results were, to say the least, predictable. They were also discouraging. They can be summarized with two charts:
Now, there were some conclusions (or data, if you like) in the report that didn’t quite make sense. For example, while the respondents indicated slightly more buyers (58%) than seller (42%) leads were generated, the report indicated that 50% of all leads were converted into appointments and 48% of appointments were converted into transactions. It’s easy to believe the former, hard the latter.
Still, the charts speak entirely for themselves. As of 2008, most REALTORS were throwing money into direct mail and newspapers, nearly twice that spent on internet lead generation. Only about $15 in 100 were spent on activities targeting referrals and repeat business. It’s ironic – almost a case-study in insanity – considering the same group reported most of their business came from those areas.
In 2008, the lead generation activities REALTORS spent the most money on returned negative results.
Most REALTORS will admit – wink, wink – they spend money on advertising listings in print solely to mollify sellers who “demand” it. It begs the question of how much money they could save (or reduce in commissions charged) if they simply asked the sellers to produce the newspapers they were using to find their next home.
Oh, right: In 2008, 95% of buyers said they used the internet to search for homes. Less than 1% said they found the home they bought in the newspaper. We can only assume some of those buyers were also those sellers who “demanded” newspaper ads.
But that was then. What about now? Are REALTORS smarter, faster, better? Do they have excess money to throw away mollifying consumers suggesting bad standards of performance?
To that answer, we refer to the National Association of REALTORS Annual survey of its members for 2010. While not an exact parallel study, some of the data is suggestive of where REALTORS stand today:
- Email (73%) and telephone (67%) were the preferred tools used to communicate with potential clients.
- Postal mail (38%) was the third most common tool to prospect potential clients.
- About 38% of REALTORS generated “some business” from open houses.
- The average REALTOR generated 18% of their business from past clients and customers. One in four REALTORS actually generated 50% of their business from past clients.
- The typical REALTOR generated 4 leads (the survey called them “inquiries”) and 3 percent of their business from their website.
- REALTORS spent a median of $220 to maintain a website.
And perhaps most interesting: only 51% of REALTORS actively use social networking websites for professional activities. Social media wasn’t even on the chart in the 2008 Baylor study.
Unfortunately, the NAR study didn’t ask the single most important question: How much money are REALTORS spending on print advertising. Anecdotally, REALTORS love to point out how they have “cut newspaper spending” over the past few years. But is it true? For some companies, it’s clearly is: We wrote how ShoreWest REALTORS had killed their newspaper ads as early as December 2008. For others, it’s mostly bluster: In April of 2010, we noted that some companies were not only still buying full color, full page newspaper ads, they were scanning them and posting them to their social media sites.
Earlier this year, a Homegain survey indicated that postcard mailers still ranked 4th in 10 top marketing activities, and print ads ranked 3.6 out of 10 for effectiveness. That’s still quite strong, considering print ads were ranked equal to using social media sites to generate new business.
Of course, we can’t say that companies buying newspaper ads aren’t creating positive returns, or a postcard mailer won’t deliver a purchasing buyer for a new agent who highly values their first sale. They might. Yet it seems hard to believe that in the two years since the Baylor study – two years of further newspaper subscription declines, of smartphone and internet tablet use growth, in which YouTube started serving 2 billion videos per day – that we’re still trying to generate leads in newspaper ads, mailing pieces and trying to get next generation buyers to pick up a telemarketing call on their web-enabled smartphones.