Referrals and Why They Are Important!
Updated: Aug 9, 2020
In real estate, referrals are what drive our business. When a past or current client speaks to what I have or can offer them to their friends and family, that speaks more volume than someone calling me from Google.
The Importance of Client Referrals in Real Estate
Posted by Premier Commission
In any sales industry, referrals can either make or break a business. At the very minimum, a referral is a recommendation. However, when it is done properly, a referral represents high-quality leads that can be much easier to close. The following blog post explains a few of the top benefits and the importance of generating client referrals in real estate.
Client Referrals Quickly Build Rapport
In sales, especially real estate, it’s imperative for your prospect to trust you. One of the best and most efficient ways to build this trust is for you to be introduced to the prospect by a mutually trusted party. A prospect is much more likely to trust and become interested in your business if they have heard about a positive experience from a trusted source. It pays significant dividends to offer incentives for referrals to encourage loyal customers to talk about your business and the benefits it has to offer. This type of word of mouth marketing creates much more interest in you as a real estate agent, and can be much more effective than other marketing efforts, including cold calling. Simply put, the word of a satisfied friend will entice more clients because it is coming from a reliable source.
Client Referrals Have Cost Benefits
Real estate agents and firms can also utilize referral programs to increase profit margins. According to Darrel Zahorsky, a business expert and consultant, referred customers are more likely to purchase services at full price because of the trusted, positive review. When it comes to real estate, this potentially means higher selling prices and higher commissions. Simply put, referred customers are commonly less sensitive to price. As a result, the majority of referrals can result in a much higher profit margin because they are pre sold based on your client’s credibility and trust.
Client Referrals Stay Longer
According to a study conducted by Goethe University published in Forbes, client referrals are 18% more likely to stay with your business than other customers. The study traced the referral program of a German Bank over three years and found this number to be consistent. While the reason client referrals have a higher level of retention may be debatable, it can more than likely due to the increased level of trust with you as an agent.
Client Referrals Increase Satisfied Customers
When you effectively utilize a client referral program for your real estate business, you will build a network of satisfied customers that will essentially do the lion’s share of your marketing.
Show Clients You Care
Word of mouth marketing or client referrals present the ideal opportunity to let you clients know you care about their opinion. It sends the message to prospective home buyers or sellers that you care about the relationship. More importantly, it shows clients that you will go above and beyond to gain their satisfaction because only satisfied clients will refer their friends and family members. In any case, as your real estate business grows and develops, it’s important to make sure you implement an effective client referral system to foster productive and profitable long-term client relationships.
Client referrals are one of the best ways to save money on advertising and grow your real estate business. You can use word of mouth marketing to create huge networks and an excellent level of customer loyalty. While simply asking for referrals is one way, it works best to offer your current customers an incentive to refer their friends and family.