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Summary:
We’re talking about Realtor referral programs on The Property Management Show today, specifically, why they fail and what is required to make them successful. Vitaliy Merkulov from Renter, Inc. has joined us to share what he’s learned about referral programs and how to ensure property managers are making the most of these tools.
Key Takeaways:
- A Realtor referral program is a tool or system that a property management company uses to collect leads based on referrals from Realtors.
- Realtor referral programs can be a great source of generating leads. To make yours successful, you need to be willing to put time into maintaining and managing your program, and your relationships with Realtors.
- Realtor referral programs are the most successful when supported by a holistic property management marketing strategy.
Basics of a Realtor Referral Program
Everyone has a different idea about what a Realtor referral program is and how it should work. At its most basic, the program is a tool or a system that a property management company sets up to help them with the marketing of their leads. There are typically multiple components involved:
- A website or a web page that explains the program. This site should include information about the referral bonus paid to eligible Realtors who refer clients to the property manager and a list of benefits that the Realtor will enjoy by working with the property manager.
- An automated marketing system where social media outreach is done or a Business Development Manager calls Realtors on a consistent basis.
- Online form asking for referrals
These are the typical components, but that’s not everything your referral program should include.
Creating the Realtor referral program is your first step. Then, you have to make it work for you. That requires marketing and managing your program. There are multiple levels to its success, and it requires ongoing attention.
Check out our step by step guide to creating your own referral program makers
Successful Programs vs. Those That Fail
Why do some Realtor referral programs work and others do not?
Vitaliy says it really comes down to effort.
As with any program, you have to put in a lot of work to get the results you want. With referral programs, it’s easy to get discouraged if you don’t see immediate results. But, you have to realize that building successful referral relationships takes time. Programs fail because property managers don’t make the effort. They don’t spend time networking with real estate agents and marketing their services and value. If a lot of traction isn’t made right away, it’s easy to lose interest in the program and begin focusing on other things.
This is a mistake.
Referral programs aren’t easy. Earning those referrals requires time and effort, and it’s not going to happen right away.
Everyone knows that property managers are busy. There’s a lot of talk about property managers working in their business instead of on their business. A referral program sounds like a great idea but it starts with a website and relationships and marketing. Before too long, something else will grab your attention and you’ll go back to getting lost in the day-to-day business needs. If you want your program to work, you have to focus on implementing that program and jumping on Zoom calls and meetings with Realtors. You need to share your expertise and your knowledge while promoting your services. That’s what will bring you the success you’re hoping for with a referral program.
In the property management industry, no two days are ever the same. Things are always coming up. Property managers in Texas, for example, never imagined they’d have to deal with frozen pipes in their properties and mass power outages. You need a plan to push through the daily work and the craziness you encounter from tenants and owners to make time for your referral program.
Research and Statistics: How are Realtor Referrals Used?
A lot of research has been done on referral programs and one particular study looked at over 600 professionals across North America. Here are some of the interesting things that were found:
- 84 percent of decision makers start with a referral.
- 82 percent of respondents said referrals are their biggest leads.
Those are big numbers. The best leads come from referrals because they convert at a higher rate. It’s cost effective, too. You’ll close deals faster which means you can spend your marketing dollars elsewhere.
Another important statistic: Only 30 percent of companies have a formalized referral program.
When you call a lead that you got off a Google Ads campaign, the conversation is going to be more challenging than the lead you call from a referral.
We know referrals are an excellent source of marketing leads. So, why do only 30 percent of companies have a formal program?
Out of the 30 percent of companies that use referral programs, 86 percent of those companies have grown in last two years.
We know they work.
How Can You Make Your Realtor Referral Program Work?
Different markets are going to have different results. For many of the most successful Realtor referral programs, five to seven leads per week is the result. Some companies can get up to 10 or 15 per week. These numbers are above average. If you can go from 0 referral leads to 60 referral leads in one year, you’ve got a successful program.
One or two referrals a week are going to increase your business and set you up to grow.
Give yourself some time for the program to yield results. When your program and your marketing are in place and your BDM is building relationships with Realtors, you may not have any new business today. But, in six months, you may see leads start to come in.
You have to keep yourself and your company in front of those Realtors. Maybe you’ll present your program to a meeting of real estate agents and they’ll send you a referral that they happen to have, collect their referral fee, and then forget that you’re available. You have to keep reminding them of who you are and what you can provide.
You have to keep asking for referrals. It’s an important part of maintaining your value and your relationship.
Here are some other things to remember:
- Make sure you have a property management website set up that specifically speaks to your referral program. If people can’t find you or don’t know about the program, they’re not going to make referrals.
- Don’t just dangle the fees in front of Realtors and expect them to respond. $200 or $300 isn’t a lot of money when you consider the commissions that real estate agents earn on sales. Focus less on the fee and more on the value of your program.
- Incentivize your referral. Realtors care about ongoing business more than they care about a one-time referral fee. Talk about how you return the clients to them and help them grow their own business.
- Introduce a contract and the details that limit their risk. Most real estate agents will worry you’re going to steal their client. Be specific about the details of your program, and be transparent so everyone feels better.
This is not a transaction. This is a relationship-building program with long term benefits.
Setting Yourself Apart from Other Property Management Companies
How do you keep your property management brand on the minds of Realtors when so many other companies are doing the same thing?
Competing for attention is nothing new to property managers. You have to be in front of Realtors when one of their clients is looking for property management.
The study we referenced earlier showed that 91 percent of people are willing to give a referral but only 29 percent do.
We need to figure out how to get that number up. People are willing to refer business to you. You have to make sure it’s easy for them to remember you.
Keep your company in front of Realtors who may refer business to you. There are a couple of good ways to do that:
- Automated online marketing programs can ensure Realtors are aware of who you are and what you do.
- Social media posts can be routinely made to demonstrate successful results.
- Your BDM can call Realtors every Friday.
The marketing needs to be intentional. Instead of calling every Friday to ask for referrals, contact your agents to find out if there’s anything they need. Maybe you can share a new law with them and what it means for their clients. Talk about eviction updates. There are a lot of things they should know but probably don’t. If you’re an educational resource, they’ll know who to call when they need help.
Relationships aren’t only about referrals. They’re about sharing information.
They’re about building trust.
Talk to Realtors about the help you can provide when their clients are looking to buy an investment property. If you can help them choose between a fourplex and a single-family home or you can provide a rental analysis or some ideas for improvements that will make the property cash flow better, you’re going to earn that investor’s business when management services are needed.
Present yourself as a partner.
Tracking Your Realtor Referrals
Your system has to include tracking. It’s very easy to get disorganized when referrals start rolling in.
It should be more than making a note that a particular Realtor referred the new client. You want to track every step of the referral process. Note when the referral was contacted, when you scheduled a meeting, when you evaluated the property, when the management contract was signed, when you listed the home, when it was leased, etc.
Track the movement of your referred client and communicate the steps to the agent who made the referral.
Some people think there can be too much communication and you should keep your business to yourself. But, those who communicate more often have better results. Keep your referring agent informed. It helps you retain their trust. No one will want to refer a client to a company that can’t keep track of where their clients are coming from.
PM Referral App
Vitaliy and his team at Renter, Inc. developed a unique tool that property managers can use to manage their referral program.
The PM Referral App is a tracking system for property management companies to gather all their referrals. The system has a web dashboard and it integrates with your CRM, whether that’s Lead Simple or something else.
More importantly, there’s a mobile app that’s branded to your property management company. You can give that app to the Realtors who can submit referrals through the app. With a simple swipe, they can ask you for a rental analysis or send you a client’s information. You get a notification right away that there’s a referral waiting. Both you and the referring agent can see each stage of the process.
You can also provide content on the app. This is a great way to demonstrate your expertise in the local property management industry and the rental market.
This tool helps property managers automate their communication. But the tool isn’t going to magically deliver referrals. You have to use it to make it successful, and providing quality content will help.
Before you can get Realtors to download your app, you have to get them interested in your company and your services. Explain the benefits and how you can help.
Once you’ve established that communication, you can set up your automated marketing system or your drip campaign. This provides you with a regular method for providing information and asking for referrals. You get to deliver informative and interesting content, and Realtors have an easy way to get in touch with you.
The system alone isn’t going to increase referrals. Your job as a property manager is to engage with Realtors and keep yourself at the top of their minds.
If you have any questions about referral programs or how companies like Vitaliy’s can help you, please contact us at Fourandhalf.
