Today’s successful mega-producers are generating plenty of business, but unlike the customers of yesterday, today’s real estate customer is beginning online. According to the latest figures, in excess of 90% (94%) are beginning their search online. In my last installment, I explained how successful agents today are going way “upstream” to capture their business — before the customer has had the opportunity to be attracted by old-school marketing techniques. If you haven’t read it yet, you owe it to yourself to start there.

I’ll assume you read that installment. In this post, I’ll share with you how today’s agent can create plenty of low-cost leads. I’m not talking about buying leads or being dependent on your broker, your company, or some RELO company that wants a pound of flesh for every lead they send your way. I’m talking about creating your own leads! And I’m talking about making so many leads that you have so much business you can’t do it all!

I know that many of you reading this post will immediately dismiss the notion of making your own low-cost leads as “impossible”, but it is possible. And not only is it possible, it’s the very thing that differentiates today’s mega-producers from the average agents. I know of dozens of agents who make literally hundreds of their own low-cost leads every single month. I know agents that start off each day with 5 to 6 brand new leads in their contact manager. It’s not only possible — it’s the only way you’ll reach mega-producer status in today’s market.

Any discussion of lead generation has to start by discussing advertising. Lee Iacocca, when he was head of Chrysler Corporation, made an amazing statement. When asked about advertising, he said he was convinced that half of the millions of dollars that Chrysler spent each year on advertising was wasted. Half! But then he added that, if he could only figure out which half was being wasted, he could save the company a lot of money.

As REALTORS®, we typically spend 20% of our GCI, or gross commission income, on advertising. Magazines, newspapers, business cards, fliers, direct mail, websites, radio and television spots, billboards, and every promotional gimmick that comes down the pike: we sink money into all of these in a frantic attempt to generate enough customers to keep our businesses rolling. And the sad thing is that we know deep down in our hearts that much of what we spend our hard-earned commission dollars on is utterly wasted. Well the good news is that it doesn’t have to be wasted! Here’s what I mean.

If, as the NAR has told us, our customer chooses the first agent he talks to three out of four times, the key is to be first, right? And if the customer starts his search online 94% of the time, where do you think would be the best place to advertise if your goal was simply to be first? Online. Duh! See how easy that was? But I know what you’re thinking… “I have a website and I get almost no business from it.” Or, “I’ve done online advertising and it costs a lot of money and I’ve gotten very little if any results.” I completely understand. Those are legitimate concerns. Let me speak to them both.

Today nearly all home buyers begin their quests on the Internet. Many of them begin by going to a search engine like Google to search for homes or REALTORS®. Then they choose a link to a real estate website and visit the website of that REALTOR®, hoping to find help in their search. The overwhelming majority of these real estate customers are looking for home searches. If they don’t find a good, easy-to-use home search, they will generally move on to another website.

That seems pretty easy. Just get a website with an IDX home search. Heck, you probably have one already. But here’s where we come to the first problem. If that website is a “typical” real estate website, only a small number of visitors will fill out a guest registration form and identify themselves — generally only about 1%. What this means is that, out of every thousand visitors, you, the website owner, will actually capture only about ten leads. The capture is extremely inefficient because real estate websites are not designed for capturing, but rather giving out information.

So what’s the problem? Well, Internet traffic costs money. Either through pay-per-click (PPC) advertising or through search engine optimization (SEO), the website owner is able to list his website on the search engines so that it is displayed whenever a customer does a real estate search. Pay-per-click advertising often costs several dollars per visitor, while search engine optimization costs several thousand dollars up front and needs to be continually managed in order to keep the site ranking high.

Now, when you combine the high cost of traffic with the low capture rate (1%) of most real estate websites, your cost per online lead is extremely high, usually well over $100 per lead. This is why many agents, even those with websites, choose to purchase leads from vendors rather than make their own. Lead generation companies often charge $50 and up for leads, and many times they sell the same lead to multiple agents. Some vendors charge as much as 30% of the closed transaction, resulting in lead costs of thousands of dollars. To make matters even worse, not only are those leads expensive, but often the quality is poor as well.

This is the very problem that caused me to begin to look for a better way of capturing online customers. When I couldn’t find an effective solution, I had to develop my own technology, the LCM gateway. Instead of having the inefficiencies inherent in even the best real estate websites — websites designed around delivering information, the LCM gateway was designed to do only one thing: to capture Internet traffic. Rather than having a capture rate of 1% or less, as with typical websites, the LCM gateway captures as much as 30% of all visitors, thus bringing the cost per lead down to as little as $3. More importantly, the quality of lead is much higher than the quality of the leads supplied by lead vendors.

I can still remember buying leads from companies such as HouseValues, HomeGain, and Service Magic. I remember getting the same lead that had been sold to three other agents, and I remember getting some “leads” that had only a name and an email address. I remember a high number of bogus leads. It was very frustrating, but I was desperate. That’s why I decided to learn how to make my own leads. Now we generate all our own leads using LCM gateway technology — as many as two thousand good leads every single month.

So to summarize, being successful in online lead capture really comes down to the efficiency of your website. You should be able to make all the leads you want for $3-5 per lead. If your online leads are costing you more than that, you are spending too much. Let me give you an example. In Greensboro, North Carolina, we have an agent partner (an agent who licenses our LCM gateway technology) named Kay Hunkins. She’s a veteran agent who was one of the first in her market to begin to try to tap the Internet. Well, she was getting literally thousands of hits to her websites every month and had her sites listed in lots of online relocation directories. And she was getting between 10 and 15 leads from the Internet every month, much more than the average agent produces from his website.

Then she installed our lead capture gateway on her existing website — nothing else — and she was immediately so busy that she found herself ignoring most of her prospects and cherry picking only the best buyers. The turn-around in her business was so fast she put a deal in escrow the same week she started with us. Without upping her advertising a dime, she began to capture over 20 leads every day (over thirty times her previous capture rate!). All of her leads were people who had been coming to use her site anyway, but now she was able to identify them!

And there’s John Miller, an agent in Austin, Texas. When he began using lead capture technology on his website, John was struggling with only a handful of leads every month. Now, using the lead capture gateway technology, he is able to capture between 300 and 400 leads every month. His business will never be the same! Now he’s so busy that he’s having to recruit agents and build his own real estate team!

So did these agents suddenly get smarter? Did they begin working harder? Did they work longer hours? Did they just get lucky? No. No. No. No. They just got better fishing equipment. Now, instead of having to be dependent on “commercial fishing operations” to sell them leads, they make more leads than they can possibly use, and all for next to nothing.

If you don’t have good lead capture technology on your website, I encourage you to get it in place. Certainly, I would love you to consider our technology, but you very well may be able to build your own. Either way, having a low-cost source for copious amounts of leads is the single key to becoming a mega-producer in today’s changing marketplace. So get your technology in place. For less than the cost of a cup of Starbucks’ a day, you can make your own leads. Our typical agent partner spends under $300 per month and makes about 80-100 leads as compared to spending $500 on a magazine ad and getting maybe 8-10 leads! Efficient lead capture makes all the difference.

In my next installment, we’ll move on to the third thing you need to become a mega-producer in today’s real estate climate — the tools, strategies, and the discipline to manage all those low-cost leads for the time required to actually complete transactions with a large number of them. You won’t want to miss this installment. Until then…  Oh -- you can always read ahead one installment by going to my blog, BlogMattBlog.com.