The Customer is #1 – Now More Than Ever Before

Real Estate confronts Customer Acquisition

By Stefan Swanepoel and Janet Branton

While great care and research was undertaken to provide accurate and current information, the ideas, suggestions, comments, general principles and conclusions contained in this whitepaper are the opinions of the authors. The authors and publishers disclaim any responsibility for any liability, loss or risk (financial, personal or otherwise) that may be claimed or incurred as a consequence, directly or indirectly, of the use and/or application of the contents of this document. References to any company, products or services do not constitute or imply endorsement or recommendation. The authors may have an interest in, or consult for, companies listed in this whitepaper. The reader is urged to consult proper counsel or other authority regarding any points of law, finance, technology and business before proceeding. The information contained in this paper is intended as an overview and should not be a substitute for common sense, thorough research and competent advice. Conclusions expressed herein are subject to local, state and federal laws and regulations. REALTOR® is a registered trademark of the National Association of REALTORS®. Provided the integrity and meaning is maintained, this paper may be reproduced by citing the title of this whitepaper and the authors.

Preface

For the past 6,000 years of recorded history, merchants have sought to acquire customers. The premise and promise is simple and the idea is nothing new: Sell or exchange products and services and thereby create profits which in-turn creates salaries, assets, companies, cities, nations and economic world models.

Although historical retrospect offers a display of numerous social work/welfare schemes, developed and overseen by political heads that ranged from tyrannical rule to utopian give-away programs, many of these experiments have systematically failed. However, for purposes of economic survival, the profit incentive has not changed from generation to generation.

In a free enterprise nation the mysterious question always remains the same: How does a business turn the ownership/management of real estate, financial services, manufacturing goods or other assets into a cost effective, sustainable and profitable enterprise? Although there are many factors involved in the answer, it is not too simplistic to say that a business must acquire and keep customers in order to flourish.

Therefore, to succeed in the new world of real estate, real estate professionals must continuously seek new strategies, new methods, new products and new services that still achieve the same goals.

Throughout recorded history, the golden rule of customer acquisition has not changed: Treat others the way you want to be treated …put yourself in their place and act accordingly.

We hope that this whitepaper will contribute towards your success in finding, transacting and keeping more customers that ever before.

The Authors
January 2004

SECTION 1: REVISIT YOUR THINKING

1.1 Overview

For purposes of brevity, clarity and business method revelations, let us simplify successful commerce into two customer acquisition rules.

Rule #1 - Without Customers Businesses Fail

• Business must understand customer behavior.
• Business marketing strategies must be designed around customer behavior, needs, supplies and demands.

Rule #2 - Without Profits through Those Customers, Businesses Fail

• Profits must be sustainable over a certain life cycle.
• Business must foresee, forecast and build a profit model that takes into consideration every possible contingency.

During the last decade, the Internet has become a driver of fantastic financial hopes and enchanting customer acquisition dreams with its potential for worldwide outreach and almost instant communication. Unfortunately, as many disillusioned website owners can now testify, clicks don't necessarily equate to paying customers.

With these profit making needs in mind - particularly as they relate to the real estate industry - the purpose now is to lay a framework and assess the nuts and bolts. At the same time we will provide examples of companies that are finding, attracting, managing and conducting business with new companies. As we begin this customer acquisition journey, we will examine a few concepts that introduce the current state of customer acquisition. Let's start by offering the following 5-step methodology, which looks simple but requires great diligence to both implement and maintain as a sustainable initiative:

• Identify imminent buyers/sellers with purchasing/selling intent;
• Target these potential clients;
• Capture their attention;
• Convert them into clients; and
• Retain them, providing lifetime value.

Every real estate professional's situation is unique and therefore there are many different customer acquisition services/tools available to address each situation.

Current services/tools include:

• Direct response;
• Dedicated inbound services;
• Multilingual services;
• Outbound call management;
• Interactive voice response;
• Advanced speech recognition;
• Web based services; and
• Contact management.

1.2 The ABC's of Customer Acquisition

Real estate professionals must understand customer behavior in order to influence, acquire and serve them effectively. When it comes to discerning customer behavior there are six basic stages that customers pass through:

• Unaware prospect;
• Aware prospect;
• Interested prospect;
• Trial customer;
• Repeat customer; and
• Loyal customer.

In order to increase profitability, customer behavior and marketing strategy studies encourage businesses to gain a better understanding of their customer. Customer acquisition strategies should take the following into consideration:

• The psychology of how customers think, feel, reason and select between different alternatives (e.g., brands and products);
• The psychology of how the customer is influenced by his or her environment (e.g., culture, family, signs and media);
• The behavior of customers while shopping or making other marketing decisions
• Limitations in customer knowledge or information processing abilities which influence decisions and marketing outcome;
• How customer motivation and decision strategies differ between products; and
• How marketers can adapt and improve their marketing campaigns and strategies to more effectively reach the customer.

Understanding these issues can help real estate professionals adapt strategies that earnestly take the customer into consideration. We also have also learned that customers will sometimes be persuaded more by logical arguments while at other times more by emotional or symbolic appeals.

1.3 The Economic Value of a Customer

If we think in terms of customer value – the potential profitability of each customer to the company as a financial asset - our acquisition and marketing programs will change. In reality, it comes down to customer equity management; the building and implementing of powerful new business and marketing systems centered around five key practices: 1) Customer behavior research and implemented strategy; 2) Balancing customer acquisition, retention and add-on selling; 3) Managing the customer life cycle; 4) Exploiting the power of databases; and 5) Precisely quantifying customer value and return on investment.

Understanding customer value enhances the ability of real estate professionals to make better decisions and generate higher profits. Basic awareness of customer lifetime value should include items such as:

• The level of investment in customer acquisition efforts;
• Customer value understanding and strategy;
• Customer relations commitment;
• Customer retention plan;
• Direct marketing program;
• Distribution of services offered to customers;
• Market analysis;
• Market research;
• Marketing planning;
• Marketing strategy;
• Sales and marketing tactics; and
• Service management.

Business marketing strategies must be designed around customer behavior, customer needs and the laws of product/service supply and demand.

Approaches to acquiring new customers are also changing as technology changes. You need to optimize all the traditional marketing channels available to you as well as find ways to optimize the avenues brought to us by the Internet. Discovering and breaking into new niche markets often requires exploring and testing a comprehensive array of prospecting, profiling and modeling options.

One solution offered by a large credit-reporting agency – 215 million customers in 110 million households across the US – is a customer acquisition program that begins with data. As a large information provider they maintain data on individuals and businesses – both demographic and credit information. They offer their proprietary decision making tools, hosted database technologies, industry-best list processing services and expert letter shop and e-mail delivery systems to identify and reach your best prospects. The benefits of this approach are said to include: Improved response rates, a cut in promotional and delivery costs, and a higher return on the marketing investment – both online and offline.

1.4 Customer Acquisition Costs

Online customer acquisition costs are high and getting higher. International Data Corporation (IDC) reported that the average online customer acquisition cost in 2000 was $95. They predict that this number will most likely rise beyond $120 in 2004 with pure-play “e-tailers” bearing the highest costs. With online customer acquisition costs on the rise, making customer acquisition system more effective is critical.

Broadly speaking there are three ways to bring online customers to your website: link propagation, banner ads and email. These three methods cannot be used in isolation but must be used in harmony to find and capture your target audience. The more you know about your customers, the better prepared you are to communicate effectively with them. This applies to everything from phone calls to online contact. When you have good information about your customers, you can shape your customer care and acquisition accordingly. Some call this "Customer Value Management," or CVM – this means:

• Best information involves better understanding your customers by managing, examining, and segmenting data on the person with whom you are communicating.
  
• Right technology facilitates how we communicate with customers by using for example interactive voice response systems.
  
• Smart people that take this information and deliver the right communication in the right way.
  A well-founded, people-centered approach can help you exceed the expectations of your most valuable customers. It also helps you pursue low-cost alternatives for low-value customers. If you're not sure which of your customers contribute the most value, you must find out, otherwise your recourse allocation may be ineffective and inefficient. In a world heavily influenced by fear-generating events, humans by nature are skittish. People want safety, they want assurances and that often means that they need to have someone walk them through a new experience. Acquiring customers requires that we not only understand our prospect's fears but that we build into our acquisition efforts factors that counter-balance those fears.

1.5 Summary

Customer acquisition solutions should provide integrated programs to cost-effectively acquire high-quality prospects and convert them to lifetime customers. Understanding the Who, What, When, Where, Why and How of your prospective customer's need matrix is difficult in any marketing channel, let alone in the mercurial world of the Internet. Therefore, this whitepaper is designed to help you engage your prospects with a holistic approach to customer acquisition that generates qualified leads, new customer, sales, long-term profit and actionable customer migration strategies.

SECTION 2: NEW CUSTOMER ACQUISTION MODELS

2.1 Overview

Few structures, strategies or concepts in the real estate industry have gone unchanged during the last decade. Of course one can still acquire customers the old way – knocking on doors, cold calling and mailers. All those methods still work, although many of them have become outdated, too expensive or have been replaced with new strategies. Many new methods have been created, some optimizing and maximizing the capabilities of the Internet, some incorporating telecommunication services while others are just completely re-engineering the whole paradigm. Whichever path agents decide to take, they cannot acquire new customers without making contact - and that’s what it’s all about - making contact both cost effectively and business efficiently. Below are three exciting companies that we believe have created new and innovative ways to achieve these objectives.

2.2 Securing Leads to Acquire New Customers

2.2.1. HomeGain – Overview

Since its inception in 1999, HomeGain has become one of the nation’s leading generators of online buyer and seller leads. Over the past four years, the company has generated more than 1.4 million customer leads for 68,000 agents representing more than 3,200 real estate brokerages that have utilized their services. Each month their website attracts some two million unique visitors, making it one of the country’s largest online real estate websites.

Customers are driven to HomeGain through partnerships with more than 90 of the Internet’s top customer websites and portals, including Yahoo!, E*Trade, CNN, FoxNews, LookSmart, Quicken, MSN, Lycos and Google. The company provides the customers the following products and services:

• Agent Evaluator: Buyers and Sellers can anonymously compare local real estate agents. Agents then submit proposals to Buyers or Sellers, who can contact one or more agents for further information.
  
• Home Price Express: Potential sellers can submit a request for a home price estimate and receive a mini-CMA, featuring the agent’s photo and contact information. Agents participating in this service receive exclusive territory rights.
  
• BuyerLink: This new pay-per-visitor service drives buyers to agents’ websites to view listings. Customers who do state or city searches are directed to a map page to select a specific market. They are then routed to an agent’s website to view full MLS listings.

2.2.2 Benefits for Agents

Agents pay a basic $29.95 monthly subscription fee. Upon completion of a transaction with a buyer or seller, agents then pay a 25% referral fee. Referral fees are collected in the same manner as standard off-line referral companies. With Agent Evaluator, agents receive an average of 30 ZIP code-specific leads per month from homeowners or homebuyers seeking representation. Agents can register to receive leads in up to 48 ZIP codes, and HomeGain provides agent with online tools they can use to manage the status of their leads. Agents may also choose to further market themselves by paying an additional monthly fee for exclusive ZIP code rights to sellers who request a mini-CMA through Home Price Express. Or, they may choose to subscribe to BuyerLink, a new pay-per-visitor service that drives buyers who do a state or city search on HomeGain or its partner sites and portals to a local agent’s listings.

2.2.3 Benefits for Customers

Once inside their website, potential buyers and sellers can use their Agent Evaluator service to anonymously find and compare real estate agents, access Home Price Express to receive a mini-CMA on their home from a local real estate agent, use BuyerLink to view real estate listings through a local real estate agent’s website, obtain pre-approval and receive rate quotes for a mortgage or search moving and other real estate-related information resources.

Sellers seeking a real estate agent complete a short form, providing their address and information about their home. Buyers are encouraged to seek an agent only if they are ready to buy during the next six months, know the cities or neighborhoods where they would like to buy know the general price range of the home they can afford and are ready to find a top-performing local agent to help them with the process. Buyers who affirmatively answer these questions are invited to provide more detailed information. Once a form is submitted, it is immediately distributed by email to agent subscribers in the relevant ZIP code area. On average, customers receive proposals from seven agents, providing them with a fast, convenient and confidential way to screen and select an agent in the comfort of their home or office without high-pressure sales tactics. Research indicates that a fast response and personal touch are among the major factors cited by buyers and sellers in selecting an agent.

2.2.4 Summary

Based on the last few years, it seems that this new model for acquiring customers works. Some 100 agents have reached their Century Club status - this means they have earned in excess of $100,000 in gross closed commissions. This is a great example of how technology has given an added boost to today’s already hot real estate marketplace. By increasing customer exposure to properties, providing ready and able buyers and sellers, increasing agent productivity and driving improved customer satisfaction. HomeGain basically works because it provides a low-pressure marketplace in which customers can comparison-shop and choose a local real estate professional. It allows customers to self-identify their interest in buying or selling, something traditional paper or advertising-based lead generation programs fail to do, and perhaps most important, the agent incurs almost no cost until a transaction is completed.

2.3 Making Contact with New Customers

2.3.1 GenuTec – Overview

GenuTec Business Solutions, Inc. is a public company that owns the intellectual property rights and software to a suite of unified messaging, enhanced communication services, voice portals and telecommunications services designed to enhance, improve and manage telephonic and Internet customer interaction.

The company has various different products, but it is the Connect4info (branded in the real estate industry as Click4info) product that has various application possibilities for acquiring and maintaining a close relationship with customers. In essence, the product is a simple piece of code pasted into a website or an email that allows customers to connect directly to the real estate professional with one or two clicks of a mouse. Click4info provides a simple button that when clicked, initiates a phone call within seconds between the customer online and the real estate professional. This call can be directed to any phone, including a cell phone. The button can be placed by each listing as well as on any page in the website. The agent can change the ring-to number instantly by going to the secured portal. It is equally easy to paste the HTML into an email. When the recipient receives the email, they just click on the button, fill in the number where they wish to be called and in about three seconds the customer’s phone will ring, and within seconds the customer is speaking directly with the real estate agent. At the same time the system logs every call with date, time and the telephone number, name and address of the person making the inquiry – even “call blocked” numbers.

2.3.2 Benefits for Agents

• Improved Customer Acquisition: Research conducted by Jupiter Research Inc., one of the world’s largest e-commerce research companies, showed up to a 45% increase in website sales by using this type of technology online.
  
• Improved Online Closing Ratio: That same Jupiter Research document indicates that sales people have a nine times better chance of closing a sale when they speak with a customer directly, rather than relying only on email.
  
• Capture Online Sales: DataMonitor Research reports that 69.4% of all online shoppers do not make a purchase because they have questions. The new customer of today wants information and as soon as possible.

2.3.3 Benefits for Customers

The customer does not have to worry about where the agent is or look up how to reach him or her. By simply clicking the button, Click4info will call the agent’s office, home or cell phone, wherever the agent has set the ring-to number. This service offers the customer a method to contact the agent at the critical moment of decision. According to Jupiter Research 96% of all customers polled stated that the quality of customer service would affect their future purchasing decisions. Acquiring a new customer is one thing but holding onto that customer is another, and we all know that good customer service starts with follow-up and delivering everything promised.

2.3.4 Summary

Keeping current customers and getting them to refer new customers is as important, if not more so, as just getting them. In today’s fast moving society, you need new tools that can provide communication support at a fraction of the cost and at a fraction of the time. As technology advances, this is one area to keep an eye on as numerous new enhanced communication and unified messaging products redefine the traditional ways in making and maintaining customer contact – at a cost of pennies per call. As Click4info is just being rolled out to the real estate industry this year, its success in the industry is unknown. However, based on the interest and quick acceptance in other industries, it appears that the product should do well.

2.4 Securing New Customers Upfront

2.4.1 PreList America – Overview

Generally speaking, the system begins with a company, organization or individual referred to as the Originator. The originator is often a non-profit organization, a company human resource department, a lender or builder. The Originator offers to their customer, network or employee (their relationship base) the opportunity to enter into an agreement, whereby they agree to use a specific broker or agent on the eventual listing of their current home. This allows them to enter into an agreement with their Advisor (real estate agent) to purchase their next home. Each agreement represents two transactions. Many agreements convert to immediate business but in any case, the agent is exclusively assured the future business opportunity.

The Originator sends their client (customer, employee) an agreement to be assigned to a participating local agent. The participating agent agrees to pay a 29% referral fee (20% to Originator and 9% to Prelist America) on each transaction side. The agent then immediately contacts the client to introduce himself or herself as the client’s Advisor, on behalf of the Originator. The customer, of course, is always given the option to specifically request an agent of their choice. Currently, 30% of the customers specifically request an agent and the other 70% elect to have PreList America select a qualified agent. The selected agent is not required to accept the agreement and, in that event, the customer has agreed to permit PreList America to assign them a participating agent. Critical to the success of the Advisor is ensuring that the customer has a good experience.

PreList America does not charge for membership. Only when a specific contact has been originated is an Assignment Fee of $49.50 per transaction (assigned in groups of two) due. The agent can purchase 10 assignments for $99 each. The gross sale and purchase side commissions after paying PreList America 29% is $12,780 or a $127,800 in-pipeline asset for a $990 investment. This is not potential future business open for everyone to take or bid for, but instead, future business for the agent that is under contract.

2.4.2 Benefits for Agents

This is a tremendous departure from the customer real estate leads being generally marketed. They come without any relationship being involved, let alone one requested by the customer. This whole strategy, however, is about relationships – long-term relationships. Every customer enters into the Prelist America system through an invitation from someone with whom they already have a relationship. The broker or agent is then invited into this relationship as a trusted Advisor, predicated upon the customer's future real estate needs and transactions. There are many benefits including:

• Locking-in customers in a specific marketplace and blocking other agents in the process;
  
• Improving recruiting efforts by having a new, qualified business flow that can be allocated as desired;
  
• Gaining new customers and new business by leveraging other entities’ business and/or personal relationships;
  
• Developing a tangible future asset portfolio by having future business opportunities under contract, while not relying on mutual loyalty;
  
• Capturing leads with binding, exclusive contracts; and
  
• Contracting relationships and establishing a bond between all parties at the outset, without sales pressure hindering the development of trust and mutual confidence.

2.4.3 Benefits for Customers

The customer is able to enjoy their home owning/buying/selling experience with the knowledge that they have a trusted Advisor as an agent, and they do not feel as if they are constantly being sold or being solicited. By entering into an agreement with the agent early on, the customer is provided with a better educational forum that is tailored to their specific situation. HR departments have found other benefits to encourage participation in the program. They are offering their employees the opportunity to prelist their home and select their personal agent. In this instance the 20% referral fee referred to previously is given back to the employee as a company benefit. Now employers can leverage their own relationship with their employees and provide them with substantial savings.

Portfolio Lenders are reaching out to their current clients and offering them something of value (i.e., payment reductions for a period of time). Under this model, the customer enjoys some immediate financial benefit by simply entering into an agreement today with a game plan for a future transaction. Aside from the 20% referral fee that the lender receives, of equal or greater value is the notification they receive that their customer is re-entering the marketplace. The ability to overtly contact their client and secure a repeat business is clearly invaluable.

PreList America has a strong base of national companies that originate within their current relationships. However, participating agents do not have to wait for such assignments. Another benefit of using the system is that the entire system is made available to the agent to secure similar business by working with the local church building fund, nearby apartment complex or local builder. In each case, when an agent originates the client locally, they designate themselves as the assigned agent in advance. Not only does this secure a strong, reliable flow of business under contract, but also for the aggressive agent, this works as a powerful block-out strategy. By contracting with the customer long before the onslaught of agents farming them with post cards, flyers or other paraphernalia, the customer and their Advisor have a relationship built on trust and reliability.

2.4.4 Summary

This is really a very innovative way for real estate agents to circumvent certain existing lead generation strategies and to acquire new customers. The concept provides customers with the ability to benefit today by committing to a future business transaction through a legally binding contract. This contract now forms the foundation for the future business relationship, thereby pre-empting other strategies, and giving the agent the security that there will be a financial return on the initial time and energy spent building and servicing the relationship.

SECTION 3: THE CHANGING REAL ESTATE CUSTOMER

3.1 Overview

Customer acquisition in the real estate industry has for a long time has been associated with the acquisition of inventory; the listing, the home and the seller. The logic has always been, list the property and the customer comes with it. Everyone knows that he who controls the listings controls the market. Until the early 1990’s that might have been true, but during the last decade a whole new way of looking at customers has developed.

Almost unheard of ten years ago, buyer agency has elevated the importance of buyers and has changed the way the real estate industry fundamental functions. The concept has affected the internal workings of real estate brokerage companies as well as the way real estate professionals interact with each other. This change has all but eliminated sub-agency from the real estate landscape and has created a new opportunity in acquiring customers for those willing to understand this not-so-new-anymore way of doing business.

For traditional real estate agents, buyer agency can add to existing business - provided they learn the intricacies involved with working as both a listing and buying agent. But understanding this new model can also provide a new method to survive – and even flourish – in markets where the competition for listings is especially intense. And depending on market conditions, “owning” the buyer may be even more valuable than “owning” the listing.

3.2 Buyer Agency Comes of Age

“Nobody owns the buyer” is an old adage that appears to have less and less meaning by the day. As a growing number of buyers are signing Exclusive Buyer Representation Agreements with agents, these buyers now belong to someone. This agreement puts the loyalty factor with buyers on an equal par with the “owned” seller. It has taken about a decade for the concept of buyer agency to become an accepted practice in the real estate industry.

Buyer agency really exploded when in 1996, the National Association of REALTORS® (NAR) acquired the Real Estate BUYER’S AGENT Council (REBAC). By 2003 REBAC had grown to become the world's largest association of agents focusing on representing real estate buyers and the largest society within the NAR family. Today REBAC has some 42,000 members and awards the much sought after ABR (Accredited Buyer's Representative) and Accredited Buyer's Representative Manager (ABRM) designations.

According to the NAR 2003 Profile of Home Buyers and Sellers, 63% of buyers who bought a home through an agent used a buyer representative, and most of them had a written agreement with their agent. This shift in business models has also changed the customer’s perception of the agent’s role in the process of purchasing a home, a process that has traditionally been seller-driven. But with property listings now readily available online through a wide variety of Internet websites, buyers no longer view real estate agents as purveyors of properties.

Buyers can search an area well before they take the first real step in the home buying process. These homebuyers that are still early in the process previously wasted a lot of valuable time of many real estate professionals, thereby helping to engender the once pervasive negative view of buyers.

Today, customers can take their early “reconnaissance” to the Internet. However, statistics show that ultimately buyers learned about the home they eventually bought from an agent 41% of the time, versus just 16% of the time through the Internet. Many say that this statistic reveals that buyers use the Internet early in the process, i.e., during that tentative time when they are not yet really ready to buy.

Since homebuyers know they no longer need a real estate agent to find listings, their perception of agents are changing. Customers now look to their real estate agent as a source of knowledge rather than a source of listings. The NAR study indicates that customers most often cited as the qualities they most prefer in their agent: knowledge of the process (93%); knowledge of the market (89%); negotiation skills (84%) and knowledge of the area (81%). Properties the agent had listed did not even make the list. So, rather than looking for the right buyer for a certain property, agents are now switching sides and are looking for the right property for a certain buyer. 59% percent of repeat buyers and 54% of first-timers are looking for their agent to help them find the right home.

Despite all this good news, the buyer agency model does present unique challenges of its own. For the agents looking to expand their client lists, first and foremost among these concerns is how to acquire new buyer-clients. Buyer agents enjoy slightly better referral opinions than listing agents: 74% of buyers would definitely recommend their agent to others versus 70% of sellers. And in a perfect world, all clients would find their agent through referral. But the real world isn’t perfect. In fact, only 44% of buyers found their agent through recommendation and 40% of sellers did. When you consider that over 70% of buyers would recommend their agent, but only 40% of buyers found their agent through referrals that may sound like bad news.

But then consider all the goodwill floating around for buyer agents. Of course, a lot of it is going unrecognized – and not rewarded with referrals – but that means there’s lots of room for improvement. And that goes back to marketing and getting the right message to the right people at the right time.

3.3 Finding Buyers

Since buyer agents don’t have inventory to market, they need to find other ways to attract the attention of buyers. The traditional direct mail campaigns that have forever been a big part of marketing for listing agents can also be as effective for buyer agents as they are for listing agents. Unfortunately, the power of direct mail is diminishing and the key remains to grab the attention of buyers at exactly the right time. This often means regular mailings again and again – and that takes perseverance, discipline and dollars.

Other traditional methods offer slightly better odds. Buyers found agents through advertising in newspapers, telephone directories and home books just 3% of the time, through agent-to-agent referrals 4% of the time and 5% of the time through employer relocation company referrals. While separately these channels account for a low percentage, together they attract enough buyers for ambitious buyer agents to make sure they cover all of their bases. Of course, new anti-solicitation laws will limit telephone, email and fax solicitations sent to individuals with whom agents don’t have an existing relationship. But this is an issue that all real estate professionals have to contend with, regardless of whether they are buyer agents or listing agents.

It may be surprising, but buyers find their agent just as often by simply walking into or calling a real estate office and talking to an on-duty agent as they do through the Internet. Or maybe it isn’t that surprising, since this statistic could just as easily be turned around. What it also tells us is that even though technology now plays a large role in the real estate industry, it is still a face-to-face business that makes the sale. Buyer agents can never lose sight of this fact when they are plotting their client acquisition strategies, whether it’s a shotgun or rifle tactic.

Still, in this day and age, a website is a foregone conclusion for both listing agents and buyer agents. But the difference between the websites is in the overall emphasis on the content. Sellers are looking for different information than buyers, and to capture the attention of buyers, a website should have the information buyers want. A searchable listing function is a given. Community information is also a must, though it should not include matter that is unlawful to provide under Fair Housing laws. Even buyers who are moving within the same market will need these tools. Buyer agents who provide them with the information they need on their websites will get repeat hits, and that’s just like hitting buyers with repeat direct mail campaigns – only more effective; six times more effective.

Buyer’s agents who also list, however, do have one leg up on exclusive buyer agents. They know who’s selling their houses and therefore who’s probably looking for a new home. In fact, 41% of sellers used the same agent for their subsequent purchase as they used for their sale. But 59% of buyers – that’s well over half – did not. Understanding what customers are now looking for in their real estate agent when buying a home and knowing that listing agents already have a relationship with their sellers, it only makes sense to offer their “seller/buyers” your “buyer-client” services. If you don’t, someone else will - and that also provides opportunities.

While many of the characteristics good listing agents possess will also serve buyer agents well - market and purchasing process knowledge prime among them – the demands on buyer agents make other traits invaluable. Part of that is because of the difference in the mindset between sellers and buyers. For sellers, their concerns are more fiscal. The proceeds from their sale will often dictate what they can afford in the next home. Decisions they make about the sale will more than likely be calculated based upon that fact.

Buyers, on the other hand, are more driven by their feelings about a feature, a home, a neighborhood or a town. They are often more willing to rationalize fiscal decisions emotionally, weighing them against the intangible feel-good benefits and about that must-have fireplace or backyard deck. Effective buyer agents understand this. They tailor their marketing and client acquisition messages towards buyers in a way that will appeal to this more emotionally driven audience.

That emotional side can, however, have its drawbacks. And indeed buyers can be more labor intensive – in both time and effort – for real estate professionals. The median length for a buyer’s home search in 2003 was 8 weeks. Only 8% of homes stayed on the market that long, with 21% selling in a week or less. There are, however, resources available for buyer agents that can help them climb the buyer-client acquisition learning curve quickly.

3.4 Summary

In the end, customer acquisition really isn’t all that different for buyer agents than it is for listing agents. Both need to get the right message out to the right people at the right time, taking the audience into utmost consideration. Knowing what buyers need to hear and when they need to hear it will increase the chances for buyer agents to get clients. The main difference is in what buyers hear and what they want to hear. And that’s a lot different from telling a seller that you’ll find them a buyer. Master the difference between these messages – and how to deliver them – and master the biggest leap in buyer-client acquisition.

CONCLUSION

So why are customers #1?

They are #1 because today’s customers have more information at their fingertips than ever before. More information has led to more sophisticated buyers, buyers that in turn have become more knowledgeable. More knowledge allows a person to become more demanding, which in turn leads to increased choice. And choice creates power.

So why are customers #1?

Because they have power, more power to choose whom they want to serve them. And that’s important. Remember we started this whitepaper by saying that without customers, you have no business being in the real estate business.

Does this mean the death of the real estate sales professional?

By no means – but real estate brokers and agents will have to change their thinking. Professionals in the real estate industry will have to develop a more empathetic attitude towards customer care, redefine customer maintenance and create a better “customer keeping” strategy. They will have to become “married” to their customers.

Customer acquisition is frequently still brushed aside as little more than advertising, mass mailing or telemarketing. That is no longer the case. Customer acquisition has developed into a science, and to succeed with a science you will need a strategy and a plan that is executed with precision.

Real estate professionals must learn to find the “right customer,” and learn to find that customer more “cost effectively” while providing more value added services than ever before.

Organize your business around the customer’s needs, service them like they want to be serviced and develop an unparalleled “customer keeping” strategy. Don’t put this on hold until you think you are ready, the future doesn’t wait and neither your future customers.

THE AUTHORS

Stefan Swanepoel

Chairman & CEO: RealtyU
The nation’s largest network of real estate schools and colleges educating 230,000 real estate agents annually.

President & CEO: iSucceed
Leading provider of mentoring modules and money-making systems to real estate broker and agents.

Managing Partner: RealSure
Consulting practice and publisher of the Real Estate confronts series of books and whitepapers.

Stefan Swanepoel is widely recognized as the leading visionary on trends and change in the real estate industry. He has penned ten books and whitepapers including the 1998 Amazon.com bestseller, Real Estate confronts Reality, and the latest sequel Real Estate confronts the Future (March 2004).

Before making California his home, Stefan lived on three continents and developed a broad international business background and has served as senior executive of various types of businesses including a; bank, construction company, property developer, appraisal firm, national franchise, software company, multi listing service, real estate brokerage, film studio, publishing company and REALTOR® association.

His academic accomplishments include a bachelor’s in science, a master’s in business economics and diplomas in arbitration, mergers and acquisitions, real estate, computer science and in marketing.

Janet Branton

Vice President: Business Specialties for NAR

Executive Director: Real Estate BUYER'S AGENT Council

Janet Branton is Vice President of NAR’s Business Specialties Area that includes management of Real Estate BUYER’S AGENT Council (REBAC), REALTORS Land Institute (RLI), Resort Specialty, Appraisal Specialty, Auction Specialty and Real Estate Professional Assistant (REPA).

Before joining the National Association of REALTORS® in June of 2000, Janet served as an Association Executive for local real estate associations in south Florida for 10 years. She holds the prestigious Certified Association Executive (CAE) designation from the American Society of Association Executives and the CIPS designation from NAR.

REBAC awards the ABR (Accredited Buyer's Representative) and Accredited Buyer's Representative Manager (ABRM) designations to REALTORS® who have fulfilled the educational and experiential requirements. Currently there are more than 42,000 active members worldwide, making REBAC the world's largest association of agents focusing on representing real estate buyers.

OTHER PUBLICATIONS in the “Real Estate confronts” series:

Real Estate confronts Reality (1997)
Real Estate confronts Technology (1999)
Real Estate confronts the e-Consumer (2000)
Real Estate confronts the Banks (2002)
Real Estate confronts Profitability (2003)
Real Estate confronts Customer Acquisition (2004)
Real Estate confronts the Future (2004)
Real Estate confronts the Bundled Services (2005)

COMING SOON

Real Estate confronts The Future
Which Trends will Change our Business
And Who is Shaping the Industry?

To Suggest Future Topics
eMail Anita@RealSure.com