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The Lead - Why Your Referral Strategy Isn't Working

Last week PropertyManagement.comreleased a great newsletter talking about using stale listings as a new lead source, and leveraging realtor referral relationships. Referrals are one of the most commonly talked about ways to grow a service business, but it's easier said than done. What really makes a great referral relationship?

My first sales job was selling insurance, and one of the first things I did was to join a BNI group (Business Networking International). I suspect many of you are familiar with it, but essentially it's a networking group made up professionals each representing an exclusive seat in the group. One realtor, one banker, one insurance broker etc.

The idea is we meet weekly, learn more about each others business and then share referrals. They preach the "Giver's Gain" philosophy. As is the case with many things, there's good and bad. Overall I think it's a good concept.

As a fresh faced, completely inexperienced 23 year old, I went to the weekly gatherings, eager to see what potential business I might walk away with after each meeting. Everyone has home and auto insurance right? This should be easy. All my fellow BNI members could immediately come up with 20 names off the top of their head and send them my way.

Of course, it's not quite that simple. By no fault of BNI, I was pretty singularly focused on myself. When I met with potential referral partners I was eager to tell them all about what I do, the carriers I represent. Essentially why they should send referrals to me. But my premise was exactly the problem. It was about me.

I think most of you would agree that this is the wrong posture to have. The best way to build fruitful referral relationships is to start with helping another person. It is to give, without expectation of anything in return. In theory it's simple, so why do most salespeople fail at this?

Within the world of property management, the most common way to incentivize referrals is to offer a fee to the referring broker. Most PM companies offer something ranging from a couple hundred dollars, maybe even up to $1000 if they want to be aggressive. It really doesn't matter what the amount is though. We shouldn't misplace a referral fee as a solution to the "what's in it for me" equation.

Most realtors are not actually all that motivated by your referral fee. They are trying to do buy/sell transactions. The commission they make from a transaction might be 10x your referral fee. It might as well be a pat on the back.

The other typical component of a realtor referral program is a promise to return the client if/when they're ready to sell the property. This is obviously a good thing, but isn't it table stakes? Of course you should promise to return my client to me when they want to complete another transaction???

Alright hopefully I've made my point. So what actually moves the needle? What should you do to build strong relationships that yield referral opportunities?

For starters, seek to understand your referral partners just like you would your ideal client. What are the pain points they experience? What do they care about? What are their goals? And I mean actually ask them these questions. Obviously they want more business, and you could send them referrals yourself. But they have their own unique goals, initiatives, people they want to meet.

I thought early on that if I didn't have a direct referral for someone, then I couldn't help them. I didn't have something to offer in the relationship. But that's not true. Maybe they need other vendor contacts, like a home inspector or a photographer. Maybe they're hosting a charity event and need a sponsor/partner.

By even asking what they need, or what might be helpful to them, you will stand out from everyone else begging them for business. You have to remember that a realtor is also getting bombarded by mortgage lenders, lawyers, insurance brokers etc. You are vying for their attention, just like you are with your prospects.

The newsletter from PropertyManagement.com wraps up like this:

"Don’t just network with realtors — be useful to them.

Call their stale listings.

Run the analysis.

Offer solutions when their sellers are frustrated.

Be the person who helps them save deals and protect relationships.

The PMs who win aren’t the ones dropping donuts.

They’re the ones providing real support at the exact moment a realtor needs it."

The starting point for being useful, and supportive is understanding how you can help and then doing it. Being effective at this is going to require something that very few are willing to do - actually care. That's right, you have to set aside your own desires and decide you want to do something for someone else. Easily said, but not always easy to do.

The other challenge - It doesn't happen after one conversation. These are relationships. You have to build trust and credibility. Our instant gratification brains tend to resist the consistency required before we actually see results. Putting them in your realtor drip campaign might help, but not as much as a handwritten note, or a phone call to see how someone's doing and what they might need.

Final point - the line about the donuts is funny, but it makes another valuable point. Everyone wants to drop off food, coffee, etc. because it's easy. Challenge yourself to think differently. The harder, more time consuming thing isn't convenient. Any yet, it's what actually stands out.

Check out https://propertymanagement.com/resources/blog for their past posts.