Internet Leads are WORTHLESS!!!

By
Real Estate Broker/Owner with Joel McDonald -- www.AutomatedHomefinder.com

As the owner of a Colorado real estate company, I end up "talking shop" quite often with other Realtors®, and conversation inevitably ends up around our online business model and how our agents depend almost entirely on internet leads for getting new business.  No cold calls. No farming. No open houses.  Just internet leads.  In response, the Realtors® I'm talking with usually say "How can you do that?  I've always found internet leads to be worthless and a big waste of time."  The funny thing is -- I partly agree with that statement.  At face value, an internet lead not properly followed up with is practically worthless.  Proper followup, however, makes all the difference in the world and can change your odds of closing an internet lead from about one tenth of a percent -- to 5%, 10%, or even higher.

 

We've studied tens of thousands of internet leads.  Automated Homefinder has generated tens of thousands of internet inquiries in the 12 years since our inception, and we've learned a lot from our successful closings with many of those leads.  We've learned even more from those who don't buy through our agents.  The biggest lesson: Within the first six months of signing up, approximately 40% of the people who unsubscribe are doing so because they bought a home, or are under contract to buy a home. Let's not forget that this statistic excludes those who bought a home through one of our agents!

In other words -- when you get an internet lead, you have well over a 40% chance that they're going to buy a home within 6 months.  Knowing that a prospect who signed up on the internet has well over a 40% chance of closing within 6 months of them signing up with you, does that change your motivations about how to treat that lead?  If so, Your job is simple: You just have to convince them to buy a home through you vs. one of your competitors. The best way to get them to buy through you? Follow up with them early and often.

An interesting statistic from another internet company:  I was at the 2008 NAR conference just last week, and I heard an interesting statistic from J. Lennox Scott - CEO of John L. Scott Realty.  He said that you are 21 times more likely to close an internet lead if you call them within 30 minutes of their inquiry -- and 100 times more likely if you call within 5 minutes!  At first, this seemed like a bit of an exaggeration, but the more I thought about it, the difference between our producers who sell $10 to $12 million in sales per year, and our agents who close only $2 or $3 million with similar volumes of leads comes down to one thing:  Our $10 to $12 million a year producers follow up with new leads as soon as feasibly possible.  I was once at lunch with one of our top producing agents, and he called two of his internet leads right then and there while we were at lunch.  Since he was at lunch with me, he told them he was at an appointment, but wanted to call just to introduce himeself, and that he'd call them back to see what they think of the houses he sent a bit later.

You might be thinking "How in the world can I be expected to follow up so quickly with internet inquiries without being tethered to my computer all day?"  The solution is simple: Whether you have an IDX solution with an opt-in, a direct response system (free reports, home valuation requests, etc), or something else, odds are that you are able to get an email alert whenever you get a new lead.  If you can get an email, you can get a text message.  If you can get a text message, you can call your new leads -- ALL of your new leads -- within minutes of them signing up.

To get an instant text message as soon as a lead signs up, all you have to do is find out what your carrier's email extension is.  Once you know your "email to text" email address, all you have to do is enter that email address in your prospect alert system.  For example, if you are with Verizon and your cell phone number is (555) 555-1212, your email address is 5555551212@vtext.com Here are some of the email-to-text addresses for the major cell phone carriers:

  • Verizon: 10digitnumber@vtext.com
  • AT&T: 10digitnumber@txt.att.net
  • T-Mobile: 10digitnumber@tmomail.net
  • Virgin Mobile: 10digitnumber@vmobl.com
  • Voicestream: 10digitnumber@voicestream.net
  • Sprint: 10digitnumber@messaging.sprintpcs.com
  • Nextel: 10digitnumber@messaging.nextel.com 
  • Alltel: 10digitnumber@message.alltel.com

In summary, if you've been in the camp of "Internet leads are worthless", and are letting those leads sit dormantly in your database because you don't want to waste any time on them, try calling them within minutes of them signing up & see what happens.  If they don't answer, hang up and try calling from a different phone.  I'd be willing to bet dollars to donuts that if you simply make an effort to call them ASAP, you'll see a drastic improvement in your conversion rates.

Good luck!  Leave me a comment & let me know how it goes!

 

 

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Rainer
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Joel McDonald
Joel McDonald -- www.AutomatedHomefinder.com - Castle Pines North, CO

Interesting points John. I'll admit that it's hard to generalize on the best way to follow up with a lead - no matter what medium it came from. 

In our case, phone numbers are optional, so we assume that people expect to be called, and from my experience, when I catch them while still on our site, it can only help because we're able to give them a personal tour of how to have the best experience using our site.  (That also decreases the odds of them signing up with additional competitors - some of whom might have the same philosophy about diligent follow up ;-). 

I'm sure it would be different if phone numbers were mandatory, and "proceeding with caution" might be the better protocol.

Nov 17, 2008 10:39 AM #11
Rainmaker
60,697
Tami Vroma
West Michigan Real Estate Specialist-Five Star Real Estate - Grand Haven, MI
Realtor, Grand Rapids MI Real Estate

Awesome post Joel - this one is bookmarked!!!!

Nov 17, 2008 11:28 AM #12
Anonymous
Susan Hopper Realtor Dallas, TX

Hi Joel.  Great post!  I've generated hundreds upon hundreds of internet leads over the past year and my experences have been consistent with what you've said here.   I have learned the hard way that to let a lead sit for even a day considerably lowers my odds of conversion.   It's become a matter of discipline to follow up while the leads are hot; and I'm sad to say that my discipline has been very inconsistant in this area.   I'm going to take your advice and implement a text messaging system to notify me of new leads.

Nov 17, 2008 02:52 PM #13
Rainer
153,983
Sasha Miletic - Windsor Real Estate
RE/MAX Preferred Realty Ltd. - Windsor, ON

Hi Joel, Great post. Thanks for sharing this. Keep posting best.

Best - Sash

Nov 18, 2008 06:30 AM #14
Rainmaker
162,516
Suzanne Sands
Pavao Real Estate - Somerset, MA
Somerset MA Real Estate

Hi Joel,

Before reading your post I would have finished lunch then followed up, but now I think I will change my ways! Thanks Joel, good information! :)

Nov 18, 2008 08:54 AM #15
Rainer
75,888
Jason Ellis
Coastal REO Solutions - Myrtle Beach Short Sales & REO's - Myrtle Beach, SC

Joel -- great info -- your post have good, solid info -- thanks JE

Nov 18, 2008 09:17 AM #16
Rainer
17,829
Vicki Walker
Coldwell Banker, D.A.R.E. - Davis, CA

Joel:

Your information helps in the challenge we all face to develop and follow an effective lead-response system.

I'm trying to cobble together the best ideas from Realtors that have been successfull in converting on-line leads. Your data was a big help. Thanks.

Nov 19, 2008 12:15 PM #17
Anonymous
Perfect timimg

Words of encouragement and caution. We tend to forget that this type of lead as is any other..

sometimes you click... often you do not. Thanks!

Nov 20, 2008 10:59 PM #18
Rainer
26,859
Joel McDonald
Joel McDonald -- www.AutomatedHomefinder.com - Castle Pines North, CO

Thanks Perfect Timing, but this post wasn't about getting traffic, or conversion rates of your existing traffic.  It was about converting your existing leads after they already visited your site and opted to give you their contact info.

Whether you get 25 leads a month or 2500 -- the principle is the same:  Contact them as soon as possible, and your odds of converting them will drastically increase.

Nov 21, 2008 08:59 AM #19
Rainmaker
104,740
Amber Noble Garland, CEO & Team Leader of A NOBLE HOME TEAM
Strategic Marketing Expert & Relocation Specialist in NJ, GA and nationwide! - Manalapan, NJ
and COO of The Egypt Sherrod Real Estate Group

Good point Joel...People are on the Internet, because they not necessarily the print buyer or seller. They want rapid-fire feedback. I agree- following up quickly makes a big difference in converting the Internet lead or not.

Nov 23, 2008 02:45 PM #20
Anonymous
Not Yet Licensed

In other words -- when you get an internet lead, you have well over a 40% chance that they're going to buy a home within 6 months. 

Good morning Joel,

Thanks for the great study!  I appreciate your reminder about FAST response.  This is actually the second time I've heard over 40% of internet leads will buy.  I'm going to share this information with all my clients.

Best regards,

Bruce

Nov 24, 2008 08:07 AM #21
Rainer
20,196
Christopher Johnston
The Johnston Team - Metairie, LA

Before I became an agent, and one could argue why I became an agent, I never had a call back in less than a day when I made a request online. I had gotten a few auto-responders within minutes and I got one phone call the next day. but usually I NEVER got contacted. I think with cell phones, text messaging, Blackberry's and iPhones this is just unacceptable. If you are working with Gen-X or Gen-Y buyers and sellers it will mean you won't be working with them.

I think that the Realtor population has lot of people over the age of 50 and many of them don't see the urgency and sadly they will adapt or their business will perish.

Nov 27, 2008 09:58 AM #22
Rainer
201,820
Greg Wilson
1st Cornerstone Realty - Schaumburg, IL

Joel.. you are absolutely right.  The internet leads really aren't great leads but there are a lot of people still buying them.

Nov 27, 2008 07:06 PM #23
Rainer
26,859
Joel McDonald
Joel McDonald -- www.AutomatedHomefinder.com - Castle Pines North, CO

Thanks for the comment Greg.  Actually, my point is that internet leads are only of low value if you treat them that way.  However, if you make a priority of following up with them, they are FANTASTIC.  Our agents sold over $200 million in sales last year from internet leads alone.

Nov 28, 2008 10:20 AM #24
Rainmaker
437,888
Marcy Moyer
Keller Williams Realty Palo Alto Probate & Trust Specialist - Palo Alto, CA
CDPE

Great article. I agree speed is essential in getting back to a lead.

 

Marcy Moyer Keller Williams Realty Palo Alto Ca.

Dec 01, 2008 11:02 PM #25
Rainer
26,859
Joel McDonald
Joel McDonald -- www.AutomatedHomefinder.com - Castle Pines North, CO

Marcy -- Agreed!  There certainly is a need for speed when getting back to a lead. ;-)

Dec 01, 2008 11:18 PM #26
Ambassador
1,579,203
Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 800-610-7253 DRE01267479 - Costa M

I find that phone calls to my internet leads make a huge difference as does constant follow up.

Jan 03, 2009 12:20 AM #27
Rainer
11,697
Cindy Hartpence
Edisto Real Estate Company - Edisto Beach, SC

Thanks ..this is where having a blackberry has helped me a great deal. Folks often respod by, "Oh how quickly you've gotten back to me"; speaking with them helps build rapport"

Thanks,

Cindy

Jan 04, 2009 01:28 PM #28
Rainer
11,188
Ron Spanton
RE/MAX Real Estate Associates - Gilbertsville, KY
Kentucky Lake Area

I agree that the internet shopper wants information fast! But either through an email or by phone I let them know that their privacy is very important to me and I would be happy to answer any questions they may have. I've been able to build real relationships leading to closings from the internet.

Jan 04, 2009 01:50 PM #29
Rainer
7,998
Julie OnullBrien
Keller Williams - Bonney Lake, WA
The Right Choice in Realtors

I really need to work on my website.  I've been missing the boat!

That you for all your information.  It is so helpful.

May 11, 2009 04:19 PM #30
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