3 Lessons from Marketing Strategy for Real Estate
Can you name a real estate agent? Even if you don’t know any personally, I bet you can name at least one. That’s because the marketing strategy for real estate often centres on making sure people remember your name.
There is much that small businesses can learn from realtors regarding marketing. They spend a LOT of money on marketing, and they have a very broad definition of what expenditures they consider marketing. Here are the top three marketing lessons real estate can teach us.
Tip #1 – Referrals, referrals, referrals
Realtors rely heavily on their existing customers connecting them to their future customers. These referrals work because the good opinion of other people has a lot of psychological influence. I often cite this stat: more than ninety percent of buyers say reviews affect how likely they are to try a business.
Cultivating word-of-mouth recommendations is such a fundamental part of marketing strategy for real estate that the most successful realtors don’t wait for a recommendation. Instead, they have a formal marketing program for cultivating referrals. A 2020 study from Baylor University showed 55% of realtors use referral incentives.
A referral program can be as simple as letting your clients know you offer an incentive if they refer a friend. For some businesses, that incentive might be a discount on future services. For others, it might be a gift card for gas or groceries. The Baylor research shows the most effective referral programs do one little thing differently.
It’s a fact I’ve noticed in the many client referral programs I’ve set up for my own clients: good referral programs reward the new customer, not just the original customer.
See, it’s actually pretty easy to convince someone to recommend you. Everyone likes making a recommendation. We like the idea of “knowing a guy.” There’s a whole Jerry Seinfeld bit about this. “Oh, you need a [insert business here]? I know a guy! Use my guy; he’s great!”
Researchers call this a difference in “action cost.” The action cost of getting people to make recommendations is low.
“It requires little effort to send an email or a URL referring a friend to your business. The receiver faces the largest action cost, as most customers perceive that acting on a referral requires extra effort as well as possible financial cost,” says Rachel Gershon, the study’s author.
The Baylor study says the most effective referral programs offer an incentive to the new customer.
Banks have known this for a while. The “action cost” to changing banks is high. Another way to put this might be that it’s a giant pain in the ass to change banks. To help potential new customers surmount the obstacles, banks very often tell their customers that if they refer a friend, the friend gets a gift like a new iPad.
They don’t need to reward the person doing the referring. Who wouldn’t want to help their friend get a free iPad?! They need to reward the friend who is changing banks. If they rewarded the referrer but not the new customer, they’d end up with limitless attempts at referrals, but few conversions.
Strictly speaking, getting your current customers to recommend you doesn’t bring in money. You don’t get the benefit of the recommendation until the recommendation recipient chooses you.
Beginning a new transaction with a gift or discount can cement a long-term relationship, which brings us to realtor marketing tactic #2.
Tip #2 – Everybody Likes Presents
My parents moved into the house I grew up in in 1992 and then didn’t move again until last winter. Their realtor was a woman called Jeanne Rouse. Every Thanksgiving, without fail, Jeanne sent them a pumpkin pie.
Eventually, Jeanne retired, and her son Neil took over the brokerage. Thanks partly to the 30 years of pastry equity the firm invested, my parents used Neil to sell the home his mom helped them buy 30 years ago.
I don’t know the figures in my parents’ case specifically, but say he spends $500 on pies over the lifecycle of a client. That’s a pretty good deal when you consider the commission on a sale could be tens of thousands of dollars or more.
I predict that the pies are so effective because of the halo effect of associating your business with an enjoyable family meal. One pie may or may not be effective. Cultivating an annual tradition your clients look forward to? That’s a winning strategy.
There are many routes to this kind of positive association. I remember visiting a friend and spotting a beautiful Tiffany & Co. crystal bowl on her dining room table. I had received the same one as a wedding gift. When I commented on the coincidence, she told me the bowl was a closing gift from her realtor. That agent has cultivated a savvy association with a beautiful item my friend sees every day. The next time she buys a house, she won’t forget who sold her last one.
Realtors understand this: simply being remembered is half the battle.
Billboards. Bus benches. Pens, keychains, magnets. Realtors will slap their name and contact information on anything that gets in front of potential new clients.
Many small business owners look past the importance of name recognition. If you’re in a competitive field, you might be more focused on ensuring your audience knows how you differ from the others. (Which is important!)
So why do realtors put so much time and money into getting their name and contact information out there? It’s simple.
No one can buy from you without that information. Of course, potential customers may also want additional information, but name and contact info are the bare minimum.
When I was a reporter trying to find sources, my pet peeve was business owners who make their personal email and direct phone line hard to find. Sure, maybe elected officials or accident victims don’t want strangers contacting them. But if you run a business, why on earth would you want to make it harder for people to track you down? They can’t give you money unless they can find you.
This week, our marketing coordinator Vanessa compiled a list of realtors and their contact information for an upcoming marketing project. She finished in a fraction of the time we expected because real estate agents plaster their contact information in every possible place a potential client might look.
This lesson is probably the most crucial marketing strategy we can learn from real estate agents. If you want to increase the number of people who buy from you, make sure you’re aren’t putting up any unintended barriers.