Automatic Lead Conversion - Part One

I was recently interviewed by Dean Jackson about how I built my business. The interview was transcribed and I've included part one for you in this blog post.

We’ve got a very special Marking Monday for you this week. Recently I interviewed my friend Rob Minton.

Some of you might be familiar with Rob, he was able to build a very successful real estate practice in the Cleveland, Ohio market and he was subsequently able to sell that business recently for more than a million dollars.

Rob has some great insights on choosing a very specific niche market and then applying direct response marketing to that business to build it in an incredible way so that clients were actually applying to work with Rob and his team.

So we’ve got some great insights for you today and I hope that you enjoy this interview and tell all your friends.

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Hey Rob, thanks for joining us.

You’re welcome Dean.

Hey, where in the world is Rob Minton today?

Rob Minton is calling from his home office in lovely Cleveland Ohio, and I always say lovely before I say Cleveland, little, supposed to be a little joke because it’s not really lovely here.

Cleveland Rocks.

Go Browns baby, right?

There you go. Well Rob I really appreciate you taking the time to spend with us today, and I know you’ve got an interesting story about how you built your real estate business, so can you share a little bit about your career in real estate sales?

Yeah I’d be happy to, and just kind of a quick warning, I’m struggling with a little bit of bronchitis, so if I, I’ve got cough drops and all kinds of stuff, so I will do my best not to cough up a lung as we go forward. I got my real estate license in the mid 1990’s and I was working for a small company, you know this small brokerage, and I was working with buyers and trying to get listings, and I did what everybody else did, I was out there copying other real estate agents that I thought were successful, and at some point I started to read some books on business, and I decided to open my own brokerage, and this was about near 2000. My main strategy at that point was I’d run a lead generation advertisement offering a free report, and a prospect that would be interested in that free report would call and leave a message, or maybe they’d go to my website and request it, and then I, the idea was we would return the phone call and in that phone call try to set an appointment with the person who requests the report and, so that was kind of the main approach, and…

Did you start right out of the gate, using direct response like that? Like were you familiar with it, and you started immediately applying it to your real estate business?

No actually, no. My original broker was old school, so we weren’t doing any direct response advertising whatsoever, but when I made the decision to start my own company and I started to hire agents, I realized that I needed to do something to be able to have new clients coming into the business on a consistent basis, and when I started research marketing, direct response seemed like to be the best approach to use going forward. But the problem is once you generate the lead, what do you do with it, right? How do you get that lead to become a client? I recruit a couple of agents and the idea was “Okay I’ll generate the leads, I’ll hand these leads off to my agents and then my agents will make these phone calls” – you’re laughing.

Well I laugh because we always joke that it’s like, you expect and you think that you can generate all these leads and hand somebody the ball on sort of the fifty yard line and they can take it from there, but the reality is you’ve got to, you’ve almost have to hand it to them on the goal line and push them over the edge.

That it, nobody told me that right. I’d hand them the ball and they’d fumble it like Cleveland Browns would do, and so what ended up happening was, because I own the business, I’ve got to pay for all the expenses. In addition, I ended up being the one making the phone calls because I couldn’t get them to do it. So I’m on the phone in the evenings, I’m on the phone on the weekends, I’d set the appointments, then I’d hand the appointment off to my agents. When they had the appointment they would do fairly well. But at some point, I realized this strategy is not sustainable going forward. I can’t be the one driving every sale for my business. Sure if I'm working by myself – yeah that would work – but to try to feed your agents that way is not a really good business strategy. I didn’t have the cash flow in the business to hire like an outbound call person or a telemarketer. Ihad to figure out a different way to handle lead conversion. Calling prospects to set appointments just didn’t work for me. Maybe it does for other agents, but the way you laughed is probably saying that it doesn’t.

I just think that was funny because it’s so, you know I work with a lot of agents who have teams, and the dream is that you can generate the leads and hand them off, and agents will turn them into sales but it just doesn’t work out that way.

They don’t appreciate it I guess if they’re not paying for it, I don’t know. But, so what ended up happening was I’m like “Okay this doesn’t work, what do I have to do?” I went back to books and I started studying sales letters and long copy sales letters which my original broker told me if it’s, if you’re writing something long people won’t read it, you’re wasting your time, and it turned out he was wrong. If you have a good sales letter with a neat story, people will read it even if it's long.

The same thing applies to ads though, like a lot of times the advertising sales people, and your brokers, and people who aren’t trained in direct response think you got to have a lot of white space and you got to have short punchy things because people don’t read, but you know I always get a kick out of, our mutual friend Dan Kennedy always says “Nobody reads white space”. We know that for sure.

It would without a doubt, and actually Dan Kennedy, some of his books helped me a lot. One of his books was The Ultimate Sales Letter. This is where I started to learn how to write sales letters. I simply sat down and wrote a long copy sales letter for my business. The goal was to lead a prospect to the conclusion that I was an expert and the best agent for their real estate needs. I put a call to action in the sales letter by adding “If you’re interested in becoming one of my clients, fill out this application and fax it in to my office.” The goal was to pre-sell the prospect, get them to raise their hand and come back to us again. I began advertising a free report, but the free report I sent was the sales letter that I wrote. Slowly but surely, we started to get people sending in these client applications. They would come in via fax, some would come in via mail and some people actually would drive to the office and hand deliver them. This was a huge turning point in my business, because I was able to then hand off these applications to my agents and my agents were able to convert 50-70% of those client applications into exclusive buyer contracts. One sales letter eliminated outbound phone calls and believe it or not, it actually doubled my home sales from 2005 going forward each and every year. The end of my story in selling real estate is that I sold my small real estate brokerage for seven figures in 2007.

Wow. That’s some pretty impressive growth numbers, but what do you think drove the increase in the number of homes that you sold?

Well a couple of things. First off, to touch back on what we just talked about is once I realized I could run a direct response advertisement, generate a lead and then mail them a sales letter and have an application come in, I had a predictable lead conversion type strategy in my business. If I wanted to sell more homes, all I really needed to do was generate more leads. Because the sales funnel worked so well, more leads meant more client applications, which turned into more home sales. Once this was in place in my business, I could leverage it further just by running more lead generation advertisements.

The second was targeting a specific niche in the market. This is different than what I think a lot of agents do. A lot of agents want to be everything to everybody. This is virtually impossible. By selecting a niche, you’re saving a lot of time. You’re able to offer some compelling benefits to your specific niche, and when you do you’ll see an increase in response rates.

How would you describe a niche? I’d love to hear how you would describe what a niche market is for people who maybe not have a crystal clear understanding?

… It’s a gap, a possible gap in the marketplace where other real estate agent’s aren’t necessarily paying attention to that you can dominate. In my business, I decided to niche with real estate investors. Back in 2004 – nobody was really paying attention to investors. I’m not saying working with investors today is the best niche because of all the problems with financing here in the States, but at that point in time no one really wanted to work with investors. In fact, most agents felt investors were a pain in the neck to work with. I decided to make investors my entire business. Basically a niche is a pocket in the market which you can excel at.

Yeah, like a definable market rather than just saying anybody who wants to buy or sell a home – that’s pretty broad, but when you can narrow it down to investors would be a niche, or first time buyers would be a niche, whatever. A segment of the market like that.

Definitely segment of the market. The hard part is letting all other opportunities outside of your niche go. A couple of other things real quick on what I think helped drive the number of home sales is I finally learned the real value of a lead. When I first got into real estate, I didn't see this value. Next was lead conversion systems like the sales letter. The sales letter helped to automatically convert prospects into clients. I viewed this as a very powerful sales asset for the business. Those would probably be the high points which drove our increase in home sales.

Now isn’t it amazing though, because we talked about a lead conversion system and for me, that’s what’s so, that’s why I believe we have so much in common, I like everything that you’re doing because everything that we do is really based in systematic results and the value of system is knowing with predictability what’s going to happen. Like you know if you generate a bundle of a hundred leads and you send out this sales letter, the start of your lead conversion process, and I love how you call them sales assets, because that’s exactly what it is. If you’ve got an add or a postcard or any type of lead generator, or a website that predictably creates a result when you drive people to it, that is an asset. You don’t have to, you put in the work, you’ve done the, you’ve done all the hard work about it, and it can continually be deployed.

Oh without a doubt sales assets are probably the most valuable thing you can have in your business. I had one advertorial advertisement that I referred to as my million dollar ad. When I ran this ad, I would generate three hundred leads. I’d mail three hundred sales letters and would have twenty five new clients – clockwork.

Like clockwork, exactly.

Month after month, month after month, month after month.

Well based on what you’re saying in the market place today, what do you think is the best niche to be in right now? We’re talking here in the fall of 2009.

You know, I know probably listeners aren’t going to want to hear this, but I think foreclosures have to be something everyone has to pay attention to. Even though the media’s saying “We’ve hit the bottom” and you’re hearing all kinds of competition, and foreclosures in certain areas, I still firmly believe foreclosure home sales are going to be a major opportunity for many years to come. There are many reasons why I believe this niche is one to exploit. Obviously our unemployment rate is continuing to escalate, which means more people are losing their jobs. More homes are going to be foreclosure. I think we have a pretty big issue headed our way with all the option arms that are going to be resetting. From what I’m reading, 94% of the people that have pay option arms are only paying interest. This means they’re going negative in their monthly payment - on top of the decrease in value. So I think we will continue to see a large number of foreclosures coming into the market over the next two or three years. Even though you might not be excited about foreclosures, I think that’s where the majority of the home sales are going to come.

Either, it’s certainly, you see all of the, like you said it’s all over the news, you know it’s got, it’s coming. There still continues to be more and more of them, and that’s way, I guess there’s some momentum in it, in that the buyers who are buying, it seems like that, to them seems like they’re getting a deal. I mean it seems like that’s what they, that’s what the buyers are really interested in, is buying <crosstalk>

Oh yeah, no. You said the media has trained everyone to want a foreclosed home. This means it's a lot easier today to attract foreclosure buyers. Prospects are already trained to want a foreclosed home by the media. This has dramatically reduced the cost per lead for agents marketing to foreclosure buyers.

Well there’s momentum.

… Yeah because you’re riding in the wave of what the media’s telling everyone. The media attention  drives your marketing cost down dramatically. To give you an example - when I was running my business, my average cost per lead was probably about fifteen dollars. Today agents who market to foreclosure buyers are generating leads sometimes for 30, 40, 50 cents. And in many cases, they're generating free leads  onCraigslist.org. Or if they’re running an advertorial style advertisement, they’re generating high quality leads for a dollar, two dollars, three dollars. I used to pay fifteen dollars, on average, for a lead. This simply means the media exposure on foreclosures is a huge benefit to real estate agents.

See it’s kind of interesting too that you, when you have an asset like your system, the conversion system that you were talking about, you don’t, you’re not afraid to spend money to generate those leads, even though, you talked about generating two, three, four hundred leads a month, and on an average cost of fifteen dollars, you’re spending four, five, six thousand dollars in generating those leads, and a lot of people just don’t have the confidence to do that because they don’t have a system that would convert.

And rightly so. If you don’t have a lead conversion system, you may be wasting your money.

That’s exactly right, but here you are, you knew that you’re going to spend that money, but then at the end of the day you’re going to have twenty five new clients, and you’ve got the value of that is way higher than the money that you spent to generate those leads.

You know it’s funny you bring this up because I honestly believe buying leads for your business is the single best investment you could possibly make. Especially if you have a lead conversion system that turns prospects into clients. It beats every other investment opportunity available by a wide margin. 

Stay tuned for part two of this interview coming soon!

Comments

[Joe Hildebrand]

Woooo HOOOOO! Browns win!

Congrats, Rob! (take it with a grain of salt, it's coming from a Bronco fan).

Joe H

[kim]

Nice, thanks for this. I have to agree on many aspects. Thanks for the bullet points on how you systems worked for you. We've added foreclosures and short sales to our business. Not only have we closed more sales, but we also are able to help homeowners move out from under a heavy loan.