Portals have perfected the art of creating home buyers out of thin air
Property portals seem to have perfected the art of creating a lot more buyers than what there currently are in the market. Thousands of leads can be generated to a single agency in a month, but judging by some agency’s lead reports, and social media comments, very few actually result in sales. Estate agents are frustrated. What gives?
Lead generation is at the heart of the property portal business and forms the lion’s share of their revenue to keep investors happy. The more leads they generate for agents the more they can charge. Some have even taken the opportunity to charge for ‘leads’ that are generated via phone and email clicks on listings, leaving a lot of agencies confused with high bills and a feeling that they are held to ransom by these portals.
Hello lead fatigue
Unfortunately the hard work of actually qualifying the incoming stream of leads is left up to the agent. This can be time consuming as portals (and other sources) can contribute to ‘lead fatigue’ where agents have to follow up with more leads than they can handle in a day. It can get difficult to prioritize and can cause the lead with the best conversion potential to be left diluted in the pool. Agent assistants are appointed to assist with all these would-be buyers. Small teams within agencies are now popular as it leaves the main agent to stay focused on the ‘real’ buyers. Real buyers are in effect paying the price for the would-be buyers. Some agents do pre-qualify buyers or tenants before committing to any viewings but it still leaves an admin overhead.
Portals however, are focused on a path of least resistance to get as many people possible to leave their contact details for an agent. In most cases only the name, telephone number and quick message field will do. Conversions on listings are analyzed and continuously improved, with no care on whether the contact is a serious buyer or can even remotely afford the particular property. Lazy.
Since there are no qualifying criteria most leads agents receive are purely from people speculating. With yearly increases in portal subscription fees and an ever increasing bubble of paid leads, the process of qualifying those leads gets more expensive. Not responding soon enough to enquiries can lead to an onslaught of negative replies from unqualified leads — demotivating.
So you have to ask yourself: is it worthwhile to pay for all those unqualified leads? Keep them in a funnel of drip-email campaigns until they decide to buy or sell in 5 or 10 years time? Maybe it works for you. The actual cost per sale can get high if the conversion rate is low. It can compromise your revenue stream. It is low hanging fruit, but the fruit may already be bad or will never ripen.
The law of diminishing returns
When a particular lead source works well for your business, you can easily be tricked into spending more and more in the believe that your leads from that source will increase in proportion. The law of diminishing returns refers to a point at which the level of profits or benefits gained is less than the amount of money or energy invested.
You have to ask yourself if spending more on those blinking featured property ads is really worth it? If you are an early adopter of something new it can work well, but as soon as all your competitors jumps on the bandwagon and also spends more, there will be fewer winners with less lucrative returns. In return, the portal will introduce even bigger and more expensive ads for you to spend your money on. This is why it is import to calculate the ROI on paid lead sources and try to automate your lead processing as much as possible.
It is also important to keep your lead sources like a well balanced diet. Putting all your faith and money in one or two portals or sources is a mistake. Why overspend on someone else’s business when you can take a long term view and invest in authentic content in your own website to drive SEO and create trust in your local community. Hyperlocal marketing is new new buzzword in real estate. Set aside some time (= money) to engage in your local community through events or facebooks groups and get known.
Portals have a problem though, they need to get closer to the transaction to earn more revenue. They simply can’t keep increasing fees for leads or create bigger ads.
Enter the portal concierge service
US portal Zillow saw the opportunity and launched a concierge service for its Premier Agents, first qualifying the lead and then passing it on to the agent:
“We’re really moving away from the concept of a lead, and we’re really moving to the concept of validated human beings, ….
… We’re going to qualify that consumer to make sure they’re serious about buying or selling, that they really want to move forward, and then we’re going to find out when they want to talk to an agent. It could be immediately or it could be the next day.” ~ Greg Schwartz, chief business officer at Zillow Group
They are saving their Premier agents time. Obviously this comes at a cost and is a way to get closer to the transaction. They are also displacing one of the key roles of many agent teams: qualifying leads.
Are you spending your money blindly on portals including featured ads but not tracking the actual lead cost? Maybe it is time to step back and see if you can start to analyze this. Maybe it is time to test the quality of alternative lead sources including other portals, social media and search engine marketing and start looking at investing time in offline marketing ideas.
Until then, creating buyers out of thin air is a kind of magic for property portals that bedazzle agents.