“20 Minutes of Successful Niche Secrets – EPISODE 42”,
With Dean Jackson where we talk about the value of the Long Game and Lead Conversion
Please check out Dean Jackson's awesome new Podcast at www.listingagentlifestyle.com
“20 Minutes of Successful Niche Secrets – EPISODE 42,”
With Dean Jackson where we talk about the value of the Long Game and Lead Conversion
Glenn: Hi! It’s Glenn McQueenie, and welcome to my 25-Minute Success Series Podcast. Today, we have our first ever repeat guest on the podcast, and that is the legend – the one and only Dean Jackson from beautiful Winter Haven, Florida. How are you, Dean?
Dean: Wow! I’m amazed! The only repeat so far? That’s awesome! I can’t wait to hear what I have to say!
Glenn: Yeah! Well the last time you were on, you added so much value, because you were talking about the profit activators, and how people could really use those different divisions of their business to build a really massive business. And of course, the feedback whenever you podcast is always amazing, so I wanted to really just have you back on again, and I’m so grateful for the time that you’re giving us.
Dean: Awesome! I’m excited. So what are we going to talk about?
Glenn: Well, I think one of the biggest challenges that most agents have is lead conversion.
Glenn: Many of them are relying on Internet leads right now. They’re buying the leads. It was quite interesting – Brian Buffini just released this cd about how to fight back against the takeover of the real estate industry.
Glenn: And he was talking about the research he was doing with Zillow, and how Zillow sent (I think it was 24 million) leads to their Zillow-preferred partners. So I guess you pay Zillow $5,000 a month (or $60,000 a year), and then you get their leads. And that resulted in 271,000 closed transactions, or 1.4 out of every 100 leads. And I loved what Brian Buffini said. He said, “We have to stop calling these things leads, and start really naming them for what they are, which is inquiries.”
Dean: Ah, yes!
Glenn: It’s interesting when you look at it as just inquiries.
Dean: It is! Yeah, definitely. I think that there are so many inefficiencies in the way that that data was probably collected and distilled, because I don’t believe for a minute that only 1 out of 100 people that inquired through Zillow about a property actually bought a property. I think that number is much higher. I would believe it that that person ultimately bought with the person that it was referred to. That’s probably the real thing. It would be inconceivable that 1 out of 100 people who inquired bought, because there are lots of studies that show (and I’ve based all of my lead conversion things on the idea) that just over half of the people that inquire about anything will buy what it is that they inquired about within 18 months. And this ties into what we see all the time. I see it in Facebook and forums in groups, people saying, “I tried Zillow for three months and I didn’t get anything. Those leads are no good. They’re tire kickers” or “Don’t waste your money.” Where I got that study that I’ve based everything on is from a company that handles millions of inquiries across all kinds of different industries. What they do is they have a research division along with it, and they will follow up with a sample of people every 90 days and do what they call “Did you buy” surveys. So let’s say, Glenn, you came to the Home Show, and you inquired about faucets at the Kohler booth. This company would handle all of the distribution of the sales literature and all the stuff that you asked for, and then they would follow up with people every 90 days (a sampling), and say just one question. They’d say, “Glenn, you came to the Home Show, and you inquired about faucets. Have you bought any faucets?” – not “Did you buy Kohler faucets?” or “Did you buy faucets from us?” – just “Did you buy faucets?” And they would determine that just over half of the people that inquired about faucets will buy faucets within 18 months, but only 15% of them will do it in the first 90 days.
Dean: So the offset there is that most people are too focused on the short term and making their evaluations on the short term, without realizing that all the value is in the long term. So that data is probably self-reported conversions of those leads with the agent that they were referred to. But I think if you inquired further, if you looked at it over 18 months or two years, that way more of those people would have bought.
Dean: So it’s not that they’re not buyers; it’s that the agent is not doing a good job of nurturing that relationship with them.
Glenn: Absolutely. And I think that’s really what I got out of those numbers, too. It almost reminds me of 20 or 30 years ago when we were doing newspaper ads. You’d do the “Power of Sale: Bungalow - $99,000” and you’d get 100 calls, and you’d probably pick up one or two clients, right? I don’t think it’s changed much. But I find this interesting – something like Zillow or some of the other big lead aggregators – they’re very adamant that they’re not going to be going into the brokerage side, and I think I figured out why. It’s because that’s where all the hard work is. It’s one thing to spend money and generate a lead and get your coders and programmers and algorithms. All the hard work is from when you get the lead to when you convert it to someone and bring them all the way through the process and get paid on it.
Dean: Well, exactly! And that’s the thing. What’s going to save the real estate industry is that you can’t digitize the last 100 feet of a real estate transaction. That’s why nobody’s been able to, en masse, disrupt the real estate industry, even though for 20 years, people have been trying, thinking that real estate as an industry is this big fat sitting duck, waiting to be disrupted. But you can’t disrupt the last 100 feet, which is where it all happens. I just did a very interesting reflection. You’ve been in real estate a very long time, like me. Next year will be 30 years for me. I got my license in 1988, and I was looking back, reflecting on this and thinking, “There’s so much that’s changed in those 30 years.” Back then, state of the art technology was the fax machine that we had just gotten in the office. It was the thermal fax machine with that roll of paper, that when it came, you had to run to the photocopier to make the copies before the ink disappeared! So think of all of the stuff that’s changed over that 30 years. We had all the information. The only way that a consumer could get any information about what was on the market was to come to a real estate agent, because we had the catalogue, right? We had the MLS catalogue that came out every two weeks, and the only options for the consumer were the newspaper or driving out to the town and looking – coming into a real estate office or going to Open Houses – all that stuff. Now, 30 years later, information about every property and the history of every property and virtual tours and all that stuff is available instantly to everybody on their iPhone. But has anything fundamentally changed? And by fundamentally, I mean, has that affected the things that really matter – the days on the market and the percentage of asking price that the houses get (the fundamental measurements?) Looking for a comparison, I looked back at golf, and in 1990, the leading driver on the PGA Tour was 279 yards. In 2017, the leading driver is 336 yards – so an improvement of 57 yards, all driven by technology. In improvements in the golf club and the golf ball, they drive the ball now 57 yards farther than they did in 1990. But when you look at the thing that really matters, the scoring average, the leading scoring average has improved by less than one quarter of one stroke.
Dean: And it’s the same reason – that you can’t digitize or technologize the last 100 feet of a golf hole.
Dean: You have to be a skilful person who can get the ball on the green and navigate it into the hole. That’s the same thing with the real estate industry. The driving distance is you can instantly buy leads at a velocity that was unimaginable before, right? You can get as many leads as you want. That’s just getting them. Buying Zillow leads is like having a long drive in the middle of the fairway, but you still have to get it on the green and you still have to putt it in the hole. You still have to connect with them and get an appointment and find the house that they really want, and then negotiate an agreement with an equally irrational seller.
Glenn: It’s so true. I defer to your seniority, because I’ll only be in for 29 years in January.
Dean: Let me tell you a couple of things, kid! Yeah. This is how it really happens in the real estate world.
Glenn: This is how it really works. I love that analogy of the last 100 feet in golf. For those people who play golf, they know it’s the same. And I love that about real estate, because this is the problem. There’s always been this debate in our industry about, “Oh, it’s the brand that matters” and all that stuff.
Glenn: And I’m like, “You know what? The brand’s not your security. Your skills are your security.”
Glenn: And in a good market – maybe it’s not a highly skilled market, because you get a big burst and increased population of agents and they’re taking a little bit of market share, and markets move into a stable market or a shifting market – the people who have the high skills to be able to convert a lead (whether it be online or from their niche or from their farm or referral or whatever) are the people who win the game.
Dean: That’s exactly right. What’s happening on a macro level is that the gestation period is longer. Because they’ve got access to everything and they can start that process earlier, people might start looking and dreaming and shopping before they’re ever ready. I’ve shared with you that I just finished up a four-year case study with Tony Kalsi in Scarborough, and this was on listing lead generation. We tracked everything from September of 2013 to September of 2017. Over that period of time, he spent $50,000 on mailing postcards and newsletters to follow up with the people who had responded, but generated $543,000 (so an 11 times ROI on that). Now, here’s what was really fascinating: we tracked back how long it had been since somebody had responded before they listed and sold their house. So he mailed from September to February before he closed his first transaction, but what happened was, when we looked over the four-year period now, going back to people who responded in the first year, there were 21 people who responded in that first year that sold their house in that four years – some of them three and a half years later.
Dean: Most agents would have given up in the first 90 days, right? They would have maybe mailed for three or four months and said, “Oh, this doesn’t work,” and given up. But the long game is where it all happens. The long game is where you get the conversion. You’re building an asset. It’s like planting an orange tree. You’re planting the tree, and it’s going to take a little while to start bearing fruit, but when it does, it’s going to bear fruit over and over and over.
Glenn: Yeah. I’m so glad you said that, because there’s this culture in some parts of our industry (whether it be a mindset of some of the agents or some of the trainers) which is this high-pressure sales, script, fighting, battling them.
Dean: Yeah, they want to “get” people.
Glenn: “Get” them.
Dean: They want to get people converted.
Glenn: “And if they don’t buy in 30 days, you’re fired. Move on.” And what people don’t realize is that – and you really see it in farm areas, and I’m glad we’re talking about this guy Tony in Scarborough (and for those people listening, Scarborough is just a part of Toronto) – the reason that the incumbent farm person is doing so well is because they’ve been there for a long time, nurturing leads over a long period of time. That listing they got today is someone that they actually met at an Open House three and a half years ago, but just kept in contact with.
Dean: Mhmmm. That’s exactly it.
Glenn: Yeah. Tell me more about the insights that you got from this.
Dean: Well, I mean, we’ve done the same things on the buyer’s side. I try and get people to move from an expense-based approach to lead generation and conversion to a capital investment approach to it. When I say expense-based, I mean that I’m going to spend money on Zillow or wherever generating leads, and I’m going to add up the amount of conversions that I had – that only 1 in 100 of them actually converted. I’m looking to spend the money, get the lead, get an appointment, get them in a house, and pay for the leads before the credit card bill comes, right? That’s the way people are looking at it, as an expense-based approach. But when you look at it as a capital investment, you’re investing in this bundle of people who inquired about real estate, and I’m taking a long-term approach to it. That portfolio, if I nurture the relationship with everybody in a systematic way, is going to yield buyers who are ready to buy right now, and as it matures and ages, at all different times along the way. Some people are going to be ready in 90 days, some people in six months, some people in a year, some people in 18 months. The longer that you are nurturing this and growing this snowball of leads that you have, the more valuable that portfolio asset becomes. So I look at your ROI on that as a capital approach – that it’s going to continue to yield.
Glenn: Mhmmm. Well isn’t it fascinating? I love your perspective of “this is an investment.” And you’re actually holding that investment to a return, right?
Glenn: And Tony seems to have gotten an 11:1 return. But most agents, I’ve found (and I’ve even heard you talk about this before), will start spending their money on a niche or into a geographic farm area or whatever (or maybe it’s Facebook targeted ads), and they keep seeing that bill come in every month.
Glenn: To your earlier point, I think the research you were showing was it was about 8-9 months where most people were quitting, but the money was actually just starting to roll in right after that.
Glenn: Can you just talk about that for a second?
Dean: Yeah. Tony closed his first transaction in the fifth month, and that got him into what I call escape velocity. That was the point where he made a tremendous ROI on the money that he spent up to that point. Let’s say the first transaction was $15,000, and maybe he had spent $5,000 up to that point, so he made a 3:1 ROI on the very first transaction that he did. But now, from then on, it’s self-funding. It’s self-perpetuated, right? He gets all that money back, plus he got the extra money that he can reinvest in continuing it. So he only had to really put up the seed money of the first five months of mail. Maybe he spent the first $5,000 on that. That’s the way of thinking about it that you take that long-term approach. And we would track everything. I had a really cool infographic made that showed the whole thing. Along the bottom, we put the months from September 2013 to September 2017, and then above each month, we would put a red dot that showed the cumulative amount of money that he spent (so from 0 to $50,000 over the four years was the amount of spend). Then above the months where he did transactions, we put a cumulative line going up to the right that showed the first month he did $15,000, in that February. Then he did another transaction the next month for $10,000. Now he’s up to $25,000. Then two months later, another one for $15,000. His cumulative is $40,000. So we showed that whole thing all the way up to $543,000 over that four-year period, and then from each of those green dots where the transactions are, we drew a yellow line tracing it back to what month they first responded to the postcard (where they first raised their hand). In some cases, it was three and a half years from the time they raised their hand to the time they sold.
Glenn: If people wanted to know more about that, is it on your podcast (your More Cheese Less Whiskers?)
Dean: Actually, I just started a brand new podcast, Glenn, called Listing Agent Lifestyle, and that’s at listingagentlifestyle.com. I actually did a whole podcast with Tony where we went through that whole chart there. So yeah, it’s on that.
Glenn: Perfect. Well, I know what I’ll be listening to this weekend.
Glenn: That’s great!