Why Real Estate Agents Make Bad Marketing Investment?

In real estate business realtors have many decisions to make when it comes to marketing their businesses, but sadly, a lot of the same bad marketing investments are made over and over again. Most of the time, agents blindly invest in marketing processes that everyone else is doing without giving thought to whether or not their return on investment (ROI) will come.

Marketing success metrics, paired with genuine feedback from real estate customers, paint a vivid picture: real estate agents continue to invest in low-ROI marketing programs. So what's wrong? The number one reason real estate agents make bad marketing investments is because they're trying to reach the wrong audience.

• How consumers actually think?

Without a good understanding of how your consumers think, it will be hard to yield successful results from your marketing campaign. In 2014 the National Association of Realtors' Home Buyer and Seller Generational Trends report sheds a lot of light on consumer behaviors that significantly impact the success of your marketing.

The key point in this report is the breakdown of how consumers find their agents. Bernice Ross did a wonderful write up for Inman News on this and makes a striking point: "With all the noise around prospecting using websites, social media and other online resources, the one factor that really makes the difference is a referral from a trusted resource or face-to-face contact. This is true for buyers and sellers from all age categories".

It's important to note that while cold prospecting from social media and websites might not be as lucrative an option to get brand-new leads, those channels are still expected to be alive and active. The point is, consumers will check you online once they learn your name, and you had better be established there when they do.

• How people find their selling agents?

As a real estate agent, you already know that word of mouth is the best way to win new listings. So why continue to invest in activities that don't help you build up your word-of-mouth marketing reach?

According to the 2014 NAR report, the most lucrative channels aren't newspaper ads, direct mail or website ads. No, it clearly says that 71 % of all closed sellers transactions resulted from trusted sources or face-to-face contact:

• 39% found their listing agent through a friend, neighbor or relative.
• 25% used the agent they had previously used to list or buy a home.
• 4% came from referrals from other real estate agents or brokers.
• 3% came through an employer or relocation company.

If you're spending money on marketing to unknown people and not to those listed in the categories above, you can pretty much guarantee that you're missing the mark. You need to market to those people in a way that helps keep you top of mind so you can increase your repeat and referral business.

• How people find their buying agents?

It's pretty much clear that people find their buying agents in an almost identical fashion. As it turns out, 68% of all closed buyer leads came from a trusted source or face-to-face contact:

• 42% came from the agent's sphere of influence.
• 12% had used their agent on a previous transaction.
• 6% met at an open house.
• 4% were referred by another agent.
• 4% were referred by a relocation company.

All of these face-to-face and trusted interactions are deeply rooted in familiarity. When someone sees a static direct mail piece with a name and a face on it, they'll never know the real you. Your business needs a marketing strategy focused on building relationships with clients, even after doing business with them.

• The bottom line:

If you're continually spending your marketing money on channels that don't prompt referrals or face-to-face interactions, you're simply throwing your money away. The trends from NAR are clear: new business comes from word-of-mouth relationships from trusted connections. That's why your marketing should focus on staying in touch with past clients and friends, not trying to reach new audiences who don't know who you are.