1% Lead Conversion Sales Cycle Misunderstanding
….. Real estate agents lead conversion rate is less than 1%.
Realtors spend over 20.5 billion dollars purchasing leads, and their conversion rate would be ZERO if they were to round down. Our team has a 6.9% conversion rate, producing 690% more revenue per dollar spent on advertising.
Let’s break down the secrets to lead conversion:
Imagine we have two agents. If I were to give the first real estate agent one hundred leads to work for one month, what would be their conversion rate in the first thirty days?
ZERO, 99.999% of the time.
If I were to give the second real estate agent one hundred leads to work for twelve months, what would be their conversion rate in their first year?
FIVE TO TEN PERCENT
What is going on here? Real estate agents don’t understand the proper sales cycle and don’t have a system to follow through until conversion happens.
A sales cycle is a repeatable process to convert a lead into a client.
To break this down, you must define the client. A client is not a lead, but a lead can become a client. When you purchase a lead, the person doesn’t know you paid for it.
Agents need to realize they don’t own anything in real estate. You don’t own inventory; you don’t make things; the only thing you own is a service that is a sales process that should take the lead and convert them into a client.
In other words, a client is someone who purchases or sells real estate with you. A big mistake I see in the industry is assuming you have a client when you haven’t earned their business.
Back to the sales cycle, the lead-to-sale process, on average, takes fourteen months.
Agents convert less than one percent of their leads because they give up three hundred and ninety days too early.
Rule #1 – Never purchase or accept a lead unless you are committed to it for fourteen months or longer.
Know this to be accurate, then why won’t agents do it? Agents with a reserve fund to commit to the nurturing and follow-up process will find a pot of gold on the other side.
Fortunately for our team, we have generated leads for over a decade. We have thousands of leads that are in all phases of the sales cycle.
2020 and 2021 ruined the agent’s perspective on the sales cycle because homes sold within minutes, and every buyer was red hot. The sales cycle appeared to be days, not weeks, and not years. Overnight this shifted from days to months and agents were caught.
“Only when the tide goes out do you discover who’s been swimming naked.” Warren Buffett
The agents and teams swimming naked were the ones without a repeatable sales process.
Here are the fundamentals of our lead process.
- Lead registration – Contact the lead within minutes of registration or request.
- If there is no contact, continue to reach out up to seven times in seven days to establish communication.
- Once contact is made, commit to a follow-up a minimum of once a month for leads in the curiosity phase. We only believe in long-term relationships.
- Follow up twice a month for leads that have a life event on the calendar.
- For ready, willing, and able leads in today’s market every day. When surveyed, buyers/sellers said they want to hear from their agents daily when they are ready.
- Set up a property search that notifies the lead of new listings in their price range, linking to our website.
- It is not the job of the lead to remember us; it is our job to make sure they don’t forget us.
Sales skepticism is at an all-time high; therefore, the agent with the most robust follow-up systems will win.
The true champions are the all-weather businesses that improve continuously despite the external factors and challenges they face.