Today on the Listing Agent Lifestyle I'm calling in from Toronto, on our summer adventure, and this week we're going to be talking about referrals.
Referrals really are one of the highest yield, lowest cost things you can do to grow your real estate business, and in this episode we had a great discussion about all the different ways you can orchestrate them..
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Transcript: Listing Agent Lifestyle Ep083
Dean: Warm welcome to the Listing Agent Lifestyle podcast. My name is Dean Jackson, and today I'm calling in from Toronto in our summer adventure, and this week, we're going to be talking about referrals. Referrals really are one of the highest yield, lowest cost things that you can do to grow your real estate business. We had a great discussion about this, and I think you're really going to enjoy this episode, so here we go.
Barry: When I look at all of the things that I know that have the surest fire way of creating a breakthrough in your business, number four is concentrate on orchestrating referrals. That, looking at it now that it's so interesting and fun to do stuff in the before unit. Because of the perception is that it's new business and you're doing something proactive and you're going out there, but there's nothing that I've seen or done in all the 25 years that I've been doing this that has a higher ROI than concentrating on getting referrals and repeat business from the people who already know you, like you, and trust you.
I put that first because to really fully deploy that doesn't take very much time at all. When I look at it, that my friend, Tim Ferriss has this concept of the minimum effective dose of something and I like that concept a lot. Like we talked a lot about it in New York actually. That there are certain things that if you do these things have a disproportionate return on that investment, and doing certain things like if you're aiming to lose weight, then eating 30 grams of protein within 30 minutes of waking up is one of the surest things that you can do that will make it like a moving sidewalk getting towards that goal.
My friend Harlan Kilstein just launched a new site called justfourminutes.com, and he discovered this exercise technique that this guy in Japan Tabata had revolutionized. That it's the basis of these we've seen in the Sky Mall magazine or in the back of magazines that exercise and just four minutes and it's this $14,000 machine, and so Harlan was looking into that and just typed in four minute exercise instead of four minute exercising machine and uncovered this Tabata, who had worked with the Olympic teams in Japan speed skating teams and discovered that this protocol of these four minute workouts where you're doing 20 seconds at peak intensity, and 10 seconds of rest, 20 seconds at peak intensity 10 seconds of rest for four minutes. Gets the equivalent of a full more than 60 minutes workout like a traditional workout.
To test the results on that divided the some of the team members into one team that did the regular full workout schedule and another that did just three times a week the four minute protocol, and on their insistence, they would walk one day a week, and so forth total days, and this group outperformed the group that was doing the full training in all the measures serve oxygen intake, all of that kind of stuff. That kind of leverage, it's kind of an interesting thing of applying that minimum effective dose.
What I found, how I'm been applying that with the after unit is realizing that what is the highest probability and I found like the minimum effective dose for an after unit for orchestrating referrals is about 100 people, if you focused on that 100 I mean, 150 is great. A lot of people can't get to that or are not dealing with people that they actually know, but finding that those 100 people and making this concerted effort to increase the return on relationship with those people add more value and be in front of them more.
Part of that is really not only just looking for the passive and reactive referrals where people call you up and say, "Hey, you sold us our house, we want to sell our house," or, "My friend, Michelle told me to give me a call." All those passive referrals is to really focus on orchestrated referrals, where you can create those referrals in a proactive way rather than just kind of waiting for them to happen.
The first thing that comes up when we start thinking about that is that most of the time we have to overcome this sense of asking for referrals is like a sign of weakness or that you're bugging them or that you're asking them to do you a favor. It's perceived in a sort of a negative way, or we're uncomfortable about it, but when you really look at why people refer, the real reason people refer is because it makes them feel good.
They really want their friends to have a good experience, or they want to add value to their friends, and on even deeper level, genetically, they're programmed to be aware of their status in the herd. I know that if I refer something to you and I brought value and you didn't know about it, that that raises my status in your mind. That I'm adding value. We get on that appreciation, we get these squirts of dopamine and we feel happy about that. We kind of puff up when you see it, even if you take it out of the context of a referral in real estate, and you talked about it in terms of something that everybody refers like a movie or a book or a restaurant, even when you're having that, and you tell somebody about it, and you see them again, somewhere in the back of your mind, you're waiting for that acknowledgement of whether they saw that movie, or they went to that restaurant, or they read that book.
If they don't volunteer it sometimes you might ask, Hey, did you ever go to that restaurant?" "Oh, yes, we loved." And then you're like, yes, you feel good, because you brought that to them and you brought that good experience and you knew that they would have a good time. Part of orchestrating referrals is about understanding why people refer and not being blocked by that. Not being blocked that you're asking them to do your favor because they're not doing it for you, they're doing it because it's going to make them feel good, which really means that the barrier to entry, the baseline thing is that you have to be referable.
You have to create an experience that you're going to get the result for people, and you're going to have a good experience getting that result, because nobody's going to refer anybody that they don't have 100% confidence that the outcome is going to be that they look good. Nobody wants to refer anything that there's a 50-50 chance that it's going to go horribly wrong, and I'm going to get blamed for that. Nobody wants that. You refer things that are going to be a good experience for people. Once you get over that mindset, then you can start looking at the actual mechanics of how referrals happen, and realizing that in every referral is the result of a conversation. The only time that referrals take place is in conversation.
Three things have to take place for a referral to take place. Number one, they have to notice that the conversation is about real estate. So many times people are in conversation with everybody that they're in conversation with at work, their neighbors, their family, their friends, the people they golf with, or bowl with or go to church with, or whatever they have with their kids with, socialize with. All the places where those conversations happen, there's a high probability that those 100 people that you have in your after unit identified as the people that you're going to try, and orchestrate referrals with. There's a high probability that they're going to be in conversations about real estate.
What has to happen next, is that they have to think about you. They have to notice that the conversations about real estate, and that has to trigger a thought about you. When they have that thought, the third thing has to take place is that they have to introduce you into the conversation. You can see how there's so many opportunities for this to go wrong, that you can see that your clients are probably in lots of conversations that they consciously know that it's about real estate, but that doesn't trigger a thought about you. Maybe they think about you but they don't say anything about you. It's like a fleeting thought that because it talked about real estate that brings up that Rolodex part of their brain that you're their realtor, so you're there kind of on stage ready, if something happens, and maybe they even introduce you into the conversation, but they do it in a way that is not going to result in an actual referral. That you're not actually going to meet those people.
You run into them at the grocery store six months later, and they say, "Hey, did my friend Bob ever give you a call? Yes, we were talking about you back in the spring, they were going to be selling their house. Oh, you never connect. Yes, they're gone." That happens a lot. What you really want to get good at when you understand the mechanics of how those referrals happen is to set up the circumstances so that more of the time those conversations turn into a referral. You kind of imagine if you could plant a chip in their ear, like Homeland Security or something and monitor their conversations, and when you heard certain trigger words, you were alerted to that and you can take over the conversation and put the words in their mouth that would turn that conversation into a referral. Right?
Who thinks they could get more referrals if they can do that? Yes, but the big trouble would be if you couldn't get more referrals from that, you have to kind of know how to thread those beads. You have to know how to turn that conversation into a referral, and how to do it in a way that turns your client’s conversation into a referral. If you imagine what those conversations are, those high probability conversations, and you start thinking about how to thread the beads, so that it turns into a referral for you, all the while knowing that the whole purpose of this is not that they're doing a favor for you, but they're doing it so that they look good.
Now you can organize things so that the referral happens, but it happens in a way that's going to make them look good. Let me put it all together for you. Let's say we're coming into the spring market right now. There's a high probability that somebody in your top 100 is going to be in a conversation with somebody who's about to put their house on the market in the spring, and we want to be there.
What if we were to plant that seed for people and have a little note and what we the tool we've been using for that is the world's most interesting postcard, that we send that out, and on the back of the postcard, we got a little post it note, we're write a little note that would say, "Hey, Michelle, just a quick note, in case you hear someone talking about selling their house this month, we're coming into the spring market and lots of people are going to be putting their house on the market. If you hear someone give me a call, or text me, and I'll give you a copy of our how to sell your house for top dollar fast book for you to give to them."
We're seeing that now we're kind of stacking the deck in your favor, that it's much more likely that the person in your top 100 would feel comfortable calling you, than the person they're talking to, would feel in calling you out of the blue. That makes sense? We know that and we want to make it so that the instruction is not, "Hey, please tell them about us because we sure appreciate your referrals." It's, "Give me a call or text me, and I'll give you a copy of our how to sell your house for top dollar fast booklet for you to give to them."
Now it's not saying, "Hey, if you hear someone talking about selling their house, tell them about me because we can help them get it sold." Right? I'm not depending on my client or my friend to convince them to sell their house with me to list with me. That's not the point at all. That's not it. All I'm doing is I'm giving Michelle an opportunity to look like a hero to her friend. Right? Because if she's in a conversation, and now it's like when as soon as you say those words, and Michelle reads those words, and she goes out the next day, and somebody starts talking about selling their house that's going to light up in her mind because it just happened.
You can see how that reticular activator is always at work like that. It's no different than if you were having a conversation with somebody and they were talking about, they were going to be taking their kids to Disney World. Here you are in Orlando, and you look in the paper, or in this coupon things and there's an offer for a book, or a coupon book or something that they can get all kinds of savings on Disney. If you are here and they're coming in three weeks, you're going to pick that up, and when you go back to the office, you're going to give them that, "Hey, I was just in Orlando, I saw this. Here you go." You're going to look like a hero. That's going to make you feel good because they are getting something beneficial because of something that you did.
Michelle: I just had this conversation with my friend that I sold her house like four months ago, and the agent that was on the other side was a nightmare. She has some friends, and I said, "Well it's better to hook us up sooner than later because you don't want her to get a Vivian by just walking into an open house." That was the other agent, but this would have been much better.
Dean: Yes.
Michelle: Now I just need to go home and call Nadine and say, "Nadine let me get you a book so that you can give it to your friends."
Dean: Right, but there's the thing, is that when they call you though, to get this book, now that they've been talking with somebody who's going to be selling their house. Now you're at the level of you've made that invisible person visible, and your connection to it is your relationship with the person who had that conversation. So, I'm going to give you this booklet, and then having the conversation of, "Well you know them best, what's the best way for us to connect?" Making sure that you have the next step lined up, "When do you think you'll see them? When will you give them the book? Should I call them ahead of time, or would you call me when you have given the book to them?"
Now you're orchestrating this connection of being introduced to them, because when they get the book, the next steps are right there. They can get the free pinpoint price analysis, or they can get a room by room review or get their house in the market. It's all connecting those things, but you have to just start with realizing somebody is going to be in conversation about selling their house.
Michelle: But the conversation it started well, I told my friend about you.
Dean: Mm-hmm, okay yes.
Michelle: Because it happens all the time.
Dean: Absolutely.
Michelle: I told my friend about you, and now being able to say this first-
Dean: Now they have called you.
Michelle: Now that makes that even easier than saying, "Oh, well, the easiest way to introduce me is by sending us both an email at the same time, while you getting their phone number giving it to me." You don't have to do that.
Dean: Copy an email, right.
Michelle: Because sometimes that is still an uncomfortable step.
Dean: So you make it as easy as possible. You're right.
Michelle: This really changes the whole ballgame.
Dean: Right. That kind of thing, that process of knowing how the mechanics of referrals work. That they have to notice that the conversation is about real estate, they have to think about you and they have to introduce you into the conversation that also works for you. That now being a master referral orchestrator is that you have the opportunity to realize and recognize opportunities that you have to orchestrate referrals.
Part of it is noticing what's going on around you. I'll give you a couple of examples. A couple of years ago, there was an article in the newspaper and on TV about that state farm was closing the Daytona office and they're going to be moving people to Winter Haven. How long ago was that? Would you remember? You were still at State Farm then so then three years? Yes. If I were a real estate agent in Winter Haven, I know four people, Nikki was working at State Farm at the time, I knew four people who worked at State Farm. If I saw that, I would notice that there's going to be 350 people moving to Winter Haven, and I would think, "Who do I know that can help me get in touch with those 350 people?"
So I think, "I know for people that work at State Farm I know Cindy, I know Nikki, I know. Whatever Keith's wife's name is, I don't remember that and Susan." I know those four people. If I just introduced this idea to them, I could send an email to those four people and say, "Hey, Nikki, I just saw in the paper I just saw on TV that they're going to be moving 350 people from Daytona to the Winter Haven office, who in the office there is handling the relocations? I'd love to get them a copy of our guide to Winter Haven real estate prices that they can give to those people moving to town." That is a high probability that I mean, that's right in there goes on there, right? Odds are that one of those four people would know who the human resources are the who the relocation person is, and I'm giving them an opportunity. I'm just introducing this opportunity to them.
Now that's a very pinpoint thing. I've picked those specific people. You have this awareness of what's going on, where is there a referral opportunity, and who do that could help with that? Another situation might be anytime you're showing houses. If I were in Georgetown, I would have friends Mark and Connie who live in RiverRun in the townhouse complex. Connie stays home with the kids, and she's real active in the neighborhood there out on the playground with the other mothers and on the condo association board, and really a people person. A connected kind of person.
I think about, if she's likely to be in conversation, a lot of the conversations that she's in are revolving around RiverRun on the playground with all the other mothers and stuff. If I'm showing townhouses, and I send an email to Connie and say, "Hey, Connie, I'm showing townhouses to a couple from Ajax this weekend, and there's only a couple on the market. Have you heard anybody in RiverRun, talking about selling their house? We may be able to match them up with these, this couple from Ajax." That's a very high probability conversation that she might be in and I had the awareness to know that that's a possibility.
Cindy, who was one of the other ones who works at State Farm, her husband, Lane, owns a ski school, water ski school, is a barefoot water skier, and so people come from all over the country to ski with Lane on all of these lakes and Winter Haven. All the time, people are asking him, "Well, how much are houses on the lakes." We have a guide to like front house prices. Now when people are out and ask about the lakefront house prices, Lane texts, and says, "Hey, can you send me a guide to these people?" That's a very high probability thing that you notice what the situation is, you think about how they could help or where that can be a referral opportunity. Introduce the idea of how that can happen.
There are those three examples of just you doing what has to happen for a referral to take place, but you doing it in an orchestrated way. The minimum effective dose when we talk about just sending the postcard that's having that type of conversation in there every month, and I want it to get back to you Barry about what you're sending things out to people with the real estate information, but I suspect that there's probably not that level of orchestration in what you're sending.
Barry: No, there hasn't been to date.
Dean: Right.
Barry: Again, we're two years into it, we're getting ready to mail or 25th monthly card. It's probably time to do exactly what you're talking about with the, "If somebody we can send the booklet." That's a great idea. What we've overcome just in the last nine months, is if anyone who's been to the Bay Area knows how fragmented geographically we are, there's a great big body of water. The Peninsula doesn't talk to San Francisco doesn't talk to Marin doesn't talk to West Contra Costa County, doesn't talk to Oakland.
Dean: Right, all pockets. Right.
Barry: With all pockets it's tough. I mean, if we were to grow to 3 million, like we're talking about a little while ago, we'd need 50 websites. That's just exactly how we would have to target. We realized we have lots of friends in San Francisco, in Marin, in particular, and Berkeley, which is its own little People's Republic. They don't talk to people who live in Oakland. What we did was we opened virtual offices in San Francisco, and Marin, and in Berkeley. That's been the subject of the address side of the postcard for the last four months, and it's been fabulous.
Now, we don't have any business, but everybody we run into says, "Wow, you guys are really expanding. I didn't know you worked in this city. If I'd known I would have had you represent me" Everybody's looking backwards saying, "We could have been a contender. You could have helped." So that's what we've been emphasizing for the last six months, it's been wildly successful. We will do transactions at San Francisco and Marin.
Dean: That's awesome.
Barry: We're already in process in Berkeley with some stuff that's going to come on stream in the near future.
Dean: Perfect.
Barry: So this would now be the next step. To get the booklet printed with our four virtual addresses on the back so people know that we can help them, and then, yes, it's time to do that.
Dean: Perfect. That's the kind of thing that when you start looking at that, that I look at the world's most interesting postcard as the easiest way to just do that. I've seen now, even just with the Julie Matthews group of going from 13 referred transactions to 33. With just doing that, because it was, Julie would only send a calendar to people every year. She would send a magnet calendar, and that was it for communicating with anybody. That generated 13 transactions in 2011, and now just sending the postcard bumped that to 33. I mean, that's a pretty significant thing.
Even in situations where like Chuck and Melissa sending out a pretty active after unit, like send newsletter with a letter from the heart inside and would do birthday cards in their client party. They had a pretty good, pretty robust after unit, and we're generating it for the three years prior to starting sending the world's most interesting postcard had generated 19 and 20 referred transactions from the after unit. The last two years have been 30 and 31. That bump of 50% from just adding that one thing.
Now, the real thing that's interesting is that it's not even often the exact thing that you're asking for that you get the referral. It's not in the situation where they get the postcard and they hear somebody talking about selling their house and they call for the book, and you give it to them and you list their house. It's often peripheral thing, raises that awareness that now well I don't know anybody who's thinking of selling their house, but I've just had this conversation with someone who's buying. That's how that happens as well.
Funniest thing happened was when we first did the just listed cards, do what your neighbor, neighbors at 22 Greystone did last night? Well, when this was maybe 1997, or 1998 when we first did that. Julie had sent those how in Lake Alfred, and she got a call from the mailman, who was delivering the postcard to come and list his house, and sold him another house and she had been to sending him the calendar, then this year, she starts sending the postcard and she got a call from the mailman's daughter, who was 13 years old then and now is 26 or 27, and buying their first house that her dad had, referred her to come in and buy a house with Julie.
All these things happen on the periphery of that, but when you look at it, dollar for dollar and time investment, when I put that as the first thing that I would do is I would get that handled because really there in 15 minutes a month, you can have that whole process done because we've set it up so that I write the note on the card. All you really do is put your picture, your address and stuff and send it over to prospect and they mail the whole thing. How long did it take you Michelle? Do you give the mic there? Yes. You just started, you just did it.
Michelle: First time?
Dean: Yes. How long did it take you the first time to?
Michelle: I sent it over to my mom.
Dean: Oh okay, there you go.
Michelle: Who's my virtual assistant, and it took her maybe 15 or 20 minutes she sent it back. So I could just look and see what it looked like. Then 10 minutes later, maybe 15 minutes later, she sent off the prospects and I got a little email on my box that said 88 bucks for 100 of them.
Dean: Right, and that's it. That's the kind of thing where you look at that and that's the same thing here that I think we're sending 130 cards for the after unit, but 100 or 150, or whatever, it's just so low cost, when you look at the return on, that would cost maybe just over $1,000 to do that to those 100 people all year, and to go from 13 to 33 is big ROI. Same with going from, 20 to 31.
Dean: Anybody doing those postcards around listings that aren't theirs?
Dean: Yes. The listing next door?
Barry: How do you figure out which hundred or so to send to?
Dean: That's a great question. People who you have sold a house to, people who are in the house that you helped them buy where you're the incumbent realtor, you are their realtor, those are the people who should be on there. Then building up from there, would be people who you have a relationship with, even if you haven't helped them buy or sell a house, the people who you're in conversation with who you would hope would consider you to be their real estate agent. It could be your neighbors, it could be family, it could be people that you play golf with, or whatever you do. People that you just have a relationship with.
The tests that I always use are, if you went to the grocery store, these are the people that if you saw them, you'd recognize them by name, and you'd stop and have a conversation with them. That's who you have a relationship with not just people on your list, if you look at it, and you don't know them, or it would be an awkward conversation, you would run away, if you saw them, try and hide from them. You don't want those people on there, but you want the people who you have a relationship with that you think would either refer you or do business with you themselves.
Michelle: I guess my question is what if you know 500 friends, or something that you would have a relationship? Do you upgrade that to 500, or 1000?
Dean: I really don't think that when you think about that you may have 500 addresses or something like that, but when you really think about it, you probably don't have 500 relationships. You want to pick the top ones, the ones that have the highest probability, that's where I'm going with the minimum effective dose, I want the top 100 people. The 100 people that you know best because I want to stack this in your favor.
This is one of those things where more is not necessarily better, it's not five times better to send to 500 people. In fact, sometimes it's counterproductive to send to 500 people because your expenses have gone up by five times, but the bottom 300 of those people don't have the kind of relationship with you that they would refer you. This is something where I'm talking about ultimate leverage here. What I'm saying is, pick 100 people, and no matter what else you're doing in your after unit do this, in addition to that, and it just gets more referrals, because it's only purpose is to get referrals, and it's doing it in a way that really understands the mechanics of how referrals happen. It's stacking the deck, I'm pretty proud of it. I don't know anything else like it. In my market, I've had a lot of sellers who have to rent for a year, and they may also be a good one to send it to.
Michelle: As long as you know them. It's not something that you would send to a farm area, or to a neighbor those are the kind of the mistakes that I've seen people make. Is they'll send it to five or 600 people are there send it to a farm area, but what I'm saying is the top 100 people that you want to orchestrate referrals with and where I use that as the minimum effective dose, you picked 100, and you do it every month with those and it takes you 15 minutes a month to manage your after unit of that or somebody else doing it for you. Like Lillian does it on Julie's behalf. Julie has no idea what happens with it, but it goes out every month, you know?
Barry: Part of my businesses is property management. I don't know about 50 or so tenants probably and then multiple owners. I implemented a newsletter last year mainly to try and keep up or keep in touch with them and generate referrals, but just this week, and I've had this happen a couple times. I've had people call me and they say, "Well, we're looking at buying a house," I've been sending them this newsletter for a year to keep in touch with them. I remember looking at the postcard, I haven't implemented it, but I do believe is a little more direct maybe than because the whole newsletter is not about, selling houses, but it does have a couple things in there about, if you're looking to buy a house, we offer them a guide or market analysis. Just this week, I had somebody call and say, "Well, I'm thinking about buying a house."
Dean: That can happen.
Barry: She somehow got hooked up with somebody else.
Dean: That will happen.
Barry: I've been sending them a newsletter for a year. I guess what I'm getting at is possibly that they may not even be opening it.
Dean: Well, that's the thing. I mean, I guarantee you, the world's most interesting postcards, the most interesting thing they're going to get in their mailbox. I mean, the first time we send it out, Julie's nail tech, was on the list and got one she went in for a nail appointment, and the girl was like, "You just saved me $650 I had this great antique wood table that had this big watermark on it, and I saw on that postcard that if you rub mayonnaise on the watermark, it will make it disappear. I did that and don't you know it, it did disappear." It was like, some people do read it and pay attention to that. It's an interesting thing. You're right, it doesn't require any opening.
Barry: Also doesn't require printing and going to pick it up, and organizing it, stuffing it.
Dean: Right. It's one phone call and off you go with all of those leverage points.
Michelle: And less expensive.
Dean: And less expensive, right.
Michelle: Less expensive than my newsletter.
Barry: Just a quick aside, as we're wandering out in the world and people who have received our postcard we hadn't seen them for a while. They'll tell us how much they love it. They'll recall something like the mayonnaise, or a computer tip, or a recipe that Katherine's put in it or something like that. We've very, very carefully honed our response, people acknowledge the card instead of saying, "Oh, I'm so glad you like it." We say, "All we want is that six seconds between your mailbox and the garbage can." And they say, "Oh, well, I hang on to them all." and then they just continue to extol the virtues and that that line is just it's gold, it works for us. We just want you to know that we're there.
Dean: Yes.
Barry: The six seconds between the mailbox in the trash can.
Dean: Sometimes see that awareness, really readies the ground for that email that you send for with a very specific request because it's not coming out of the blue. I am in contact with you. You send me that postcard every month. I love getting that. Yes, "Oh, I got an email from Zach." It's not coming out of the blue now you've really got that and it's exciting.
Dean: There we have it. Another great episode. If you'd like to continue the conversation, you can go to ListingAgentLifestyle.com, you can download a copy of the listing agent lifestyle book, the manifesto that shares everything that we're talking about here, and you can be a guest on the show. If you'd like to talk about how we can build a listing agent lifestyle plan for your business. Just click on the, "Be a guest," link at ListingAgentLifestyle.com and if you'd like to join our community of people who are applying, all of the things we talked about in the listing agent lifestyle, come on over to GoGoAgent.com it's where we've got all the programs, all the tools, everything you need to get listings, to multiply your listings to get referrals, convert leads, and to find buyers. You can get a free, truly free no credit card required trial for 30 days at GoGoAgent.com. Come on over and I will see you there.