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Real Estate News and Advice |
December 4, 2009 |
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 What Online Lead Generation Vendors Forgot About Realtors
by Blanche Evans
A lot of Internet-based service providers have gone broke this year trying to convince the world's largest mobile sales force to buy their online lead generation tools. Realtors are a delectable demographic to market to because they are large in number, they can be reached easily as a group, they are mostly independent contractors, and they require personal marketing tools to generate business. So why aren't they buying? It could be that some factors about real estate professionals simply weren't taken into consideration. In the rush to capture the Realtor market share, companies overlooked a few little things that inhibited Realtors' adoption of the Internet as a primary marketing medium. If hindsight is 20-20 vision, we can easily look back and see what went wrong and why companies that are left are going to have to change the way they market services to Realtors in order to meet their business plan goals. Generally, most of these problems can be found in three key areas: local market conditions, Realtor behavior, and industry politics. Market Conditions The last few years has been a boom period for real estate. While the Nasdaq crashes, national real estate sales are still at record levels, buoyed by favorable interest rates and consumer confidence in real estate as a personal investment, among other reasons. Most full-time Realtors are busy and successful in key markets without devoting much time or attention to the Internet. In fact, the number one consumer complaint about Realtors online is that they don't respond to e-mail inquiries quickly enough. They just don't have the time and they don't take these inquiries seriously enough and with good reason - online buyers aren't proving themselves to be valuable leads. One e-brokerage which has now changed its business model completely, eHome, told me that in the company's market research, it was discovered that Internet buyers were taking as long as six months before they bought a home. Realtors want to work with customers who are ready to buy now. Although it would have been easy to automate "nurturing" tools such as newsletters with local market conditions to sustain these buyers' interest, it just wasn't part of the transaction platform. Instead, buyers received e-mail listing alerts which hardly was enough to distinguish eHome from its competitors. eHome isn't the only one who can't see the forest for the trees. The National Association of Realtors estimates that more than 50 percent of home buyers are now using the Internet to look at homes and seek information about homebuying before talking with a Realtor. While that fact should compel Realtors to adopt the Internet more seriously, it hasn't. With the sweetheart deal of the century giving them preferred status and access to the NAR membership, Homestore.com, the largest, most well-financed sales force in online lead generation packages, has failed to close more than one out of ten Realtors. About 130,000 Realtors have purchased the company's I-LEAD lead generation packages which include a Web page and various upgrades and marketing tools. The company has even found it necessary to buy customers through its acquisitions of companies such as Top Producer (about 100,000 registered users) and Move.com (about 200,000 real estate professionals.) Lead generation service providers tried to convince Realtors that they needed to have a presence on the Internet, particularly in association with national sites to capture leads. But the reality is that less than eight percent of homebuyers are relocating from out of town. Most buyers purchase within 50 miles of their present home. In other words, real estate is a local event. What Realtors need and want are ways to drive customers to them locally. Realtor behavior If business is good and you're making the kind of money you want to make it would take a lot to convince you that you need to change the way you do business. By the same token if business isn't good you probably need to make a change but you are unlikely to be well-financed enough to permit much risk-taking. Vendors may have the membership of the NAR to market to but the reality is only a select few Realtors have their businesses in the kind of shape that will allow them to maneuver between these two extremes. Realtors also tend to hesitate if they are confused or distrusting. Very few service providers have been able to approach Realtors with a simple clean product that does what it is supposed to do without requiring a lot of training or change of behavior on the part of the Realtor. And if they are deluged with lots of choices points of difference have to be clear for them to make a selection. According to Michael Russer aka Mr. Internet service providers must take into account the tremendous momentum required in order to make a change. The carrot has to be big enough to entice Realtors to modify their behavior from relying on traditional means of generating leads to online methods. So far most service providers haven't been able to do so. Most service providers spend money on technology development with very little left over for customer support and training because those are the parts that can't be automated easily. And that's where they dropped the ball. Most Realtors are middle-aged creatures of habit. They know that phones and classified ads work well enough. Why should they invest in new lead generation tools that they have to take a class to learn to use? Habit is the very edge the lead generation companies could have used to their advantage. If they would budget for customer support and training they would have the captive subscription base they want and renewals for years to come. But most didn't think that far ahead. HomeSeekers did something about it. When they found that some Realtors weren't renewing their Web pages because they weren't getting leads company president John Giaimo found the complainants weren't answering their e-mail inquiries. Rather than watch his company go out of business trying to get Realtors to change their behavior he designed a lead generation tool that spoke to the problem. HomeSeekers will autodial and message the agent when they get an Internet lead. Not surprisingly the renewal rate for agent customers who use this feature on their Web sites is significantly higher than for those who don't reports Giaimo. Industry politics The Realtor.com/MLS/broker Gold Alliance deals were a perfect illustration of why politics can be deadly. Just ask Cyberhomes, HomeSeekers.com, Homes.com, HomeAdvisor.com and Realestate.com how much fun the listings wars of the past three years was. These national listings services competed with Realtor.com to post listings free of charge to Realtors and in some cases with compensation and these companies still could not convince the vast real estate community of the value of having their listings on multiple sites. The result? Spotty poorly edited listings that fail to engage consumers or deliver many leads to agents. The national public listings sites tried to create revenues by offering agents lead generation tools that originated with the listings such as Web sites and school and neighborhood reports. Confused agents couldn't understand why these lead generation tools weren't free. After all they reasoned they had provided the listings to the site. Agents had difficulty capturing leads off the national sites because the drive to build revenues put the national sites in the position of having to cut deals with multiple vendors allowing visitors (buyers) multiple avenues to be led away from Realtors - and in some cases from their own listings. Another problem for vendors is in pricing. How much is too little and how much is too much? One company has found that it is being shut out of Realtor.com Web pages in favor of another company with whom Realtor.com has formed an alliance. The first company's product is similar to the second's and costs 25 percent as much to the Realtor. But because it is so fairly priced there isn't room to share revenues with Realtor.com. Companies who were concerned with serving Realtors found out that nice guys finish last. It's about revenues not what's best for Realtors. Industry alliances also filter down to the broker and to the agent. One Dallas agent purchased a third-party Web site which she was pleased about until she found that her broker would not give permission to the MLS to let her post her own listings on the site. It seems the site wasn't a "partner of the NAR." Because listings are what the consumers want to see the agent has paid for a site that is generating few leads and now she says she has no reason to renew her subscription. The broker shut her ears to the agent's complaint that having the listings on more Web sites was good for the client and helped the agent distinguish herself among competitors. What this means is that service providers have a lot of minefields to negotiate before they think their good idea is going to take them public or otherwise make them rich. They will have to do a lot of permission marketing to build enough customers to have a viable business. Unfortunately a good idea that may provide genuine benefits to Realtors simply isn't enough. Published: January 8, 2001 Use of this article without permission is a violation of federal copyright laws. 
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Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68.
