Insurance

Loans

Mortgage

Attorney


Insurance

Loans

Mortgage

Attorney

How to Improve Your Referral Network for Pennies

Monday, August 16, 2010

Everyone knows that referral customers are as good as cash. A 2005 study released by the NAR reported that over 80% of referrals result in a closed transaction.  Nearly half of all real estate firms have a business development department offering relocation services or a full relocation department, in an effort bring in referral business and to reciprocate to other firms.

Many agents, and companies, have made their entire fortunes on referral business and sphere of influence marketing  or “farming” their personal contacts — planting seeds with business cards, direct mail, and social networking in the hopes that one day those people will do business with them, or refer people to do business with them.  Why is referral business better than other business?

The simple answer is found in an old study by the Word of Mouth Marketing Association.  People don’t trust you.  Well, they might trust you if they knew you, but 76% of people don’t believe that you tell the truth in your marketing, or that any company does for that matter.  However, the study found the people do trust their peers — other people like themselves.  In fact, 92% of people believe a personal recommendation from a peer is the best source of information about a product or service.

In other words, a glowing review from a friend is nearly four times more effective than than the best advertisement out there.  So it is easy to see why real estate referrals are such a powerful source of business.  Unfortunately, several things have happened over the last two decades that have significantly weakened agents’ ability to rely on referrals for a major portion of their business.

In this globalizing economy, jobs are no longer fixed to a geographic location.  Companies are more mobile than ever and transfer jobs between markets seamlessly.  This has led to a deterioration of family and social ties.  Families more and more find themselves spread all over the map.  The same with friends.  People on average share fewer deep lifelong relationships every generation.  Practically, what that means is that your referral network is no longer rooted in the community.  It is never more than a few job transfers away from completely falling apart.  And agents often see that happen. 

This has also had the effect of isolating neighbors and neighborhoods. Block parties and community functions are rarer and rarer these days, and that means it’s more difficult to meet and connect with new people.  

Finally and most importantly, the advent of IDX and free home searches online has seemingly struck a final blow against referral networks.  Recent surveys suggest that over 90% of buyers now begin their search on the Internet, rather than asking a friend for a recommendation.

But REALTORS® are beginning to strike back.  Rather than losing traditional business to online giants like Realtor.com, Lending Tree, HouseValues, and others, forward-thinking agents have created referral networks online to attract customers and to refer business to agents they can trust.

Online referral networks, like NewsGeni.us’ new Professional Referral Directory, create a virtual network of preferred agents that you can refer business to and receive business from through a simple, searchable directory, with an easy-to-use rating system.  In addition to connecting agents with other agents, online directories like NewsGeni.us’ increase your web site page rank in Google’s proprietary index system.  By having a high-traffic news site link to your website, you can actually attract more visitors to your web site through Google’s organic ranking system.

The writing on the wall is clear.  Hang onto every referral you can get, but a time is coming, if it hasn’t already passed, when a majority of real estate business will not come from your friends’ and family’s recommendations.  They will come from online.  Getting listed with a professional referral directory to send and receive customers to and from a network of trusted agents is extremely inexpensive.  It often costs less than $5.00 per month for a premium listing.  That means one referral could pay for the service for 10 years.  It’s a no-brainer!

 

To find out more about NewsGeni.us Professional Referral Directory, click here.

InsuranceLoansMortgageAttorney

Comments (0)

To view or post comments you must connect to Facebook via the "Connect to Facebook" button.
Connect to Facebook