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This article was published on: 08/01/2004

FEATURE: Internet gold is real president Allan Dalton speaks out on the risk of missed marketing opportunities.


In the decade since the Internet became a daily fixture in our lives, a vast majority of real estate practitioners have begun using e-mail and established a Web presence. Yet most still rely on traditional prospecting methods for most of their leads.

It’s time to rethink this approach, says REALTOR.comPresident Allan Dalton, who came to in 2002 after developing customized national marketing systems for several of the country’s largest national franchise brands, including Century 21, ERA, and Better Homes and Gardens (now GMAC Real Estate Services).

The Internet isn’t about generating a few leads to supplement your traditional approach, he says, but about changing the core way you reach customers. Most consumers now start the buying or selling process online, which presents an enormous opportunity to leverage the Internet as a prospecting tool, says Dalton, but it also presents an enormous risk for the industry. We talked with him recently about the opportunities and risks as he sees them and about why his message is beginning to resonate within the industry.

RM: How do you think the real estate business is different today from, say, five years ago?

AD: The business hasn’t experienced any seismic changes like it did 10 years ago, when the Internet burst onto the scene and we also witnessed tremendous consolidation. What we’re seeing now is the emergence of a customer-service void as real estate professionals struggle to get their arms around the impact of the Internet.

The real-time and interactive aspects of the Internet, if not properly managed, threaten to expose an acute vulnerability of our industry—that our systems are geared to the point at which a consumer becomes a customer, not the earlier stage in which they’re just seeking information online.

This new consumer demand is somewhat incongruous with an industry that’s essentially compensated for the transaction and not the consumer experience.

RM: What is the impact?

AD: Before, consumers were passive. We bought advertising space on billboards and shopping carts, so when consumers decided to buy or sell, they would call us. They had to call us, because we had the information.

That’s not how consumers approach the process today. Now, more than 70 percent of consumers start the buying and selling process on the Internet, we know from NAR research. If they’re looking to buy, they go online to search for property, and in searching, they come across a real estate professional.

Which properties are they looking at? They’re looking at the ones with multiple photos. In effect, consumers become seduced by photos. That’s a huge opportunity for real estate practitioners, particularly those who’ve never liked to prospect. The Internet is both a billboard for us and a billboard for our properties.

In looking at the homes online with multiple photos, consumers are in effect prospecting for the practitioners who most successfully package listings, who know how to capitalize on the full marketing capabilities of the online environment.

And sellers now expect you to capitalize on the seductive quality of multiple photos. To some sellers, posting only one photo of their house is like a photographer taking only one photo of their daughter at her wedding.

RM: Where does the customer-service void come in?

AD: With our listings on the Internet—on,our broker’s site, our individual site, the MLS site—inquiries are pouring in. But we’re not responding to them.

We are lead-obsessive as an industry but not inquiry-obsessive. So, in effect, we’re demonstrating to consumers we’re inhospitable to Internet inquiries. We can’t afford to borrow the mantra of the U.S. Marines that only a few are chosen. We must treat consumers in the information-gathering stage with the same vigilance as we treat buyers and sellers or we’ll lose them.

For those who respond immediately to online inquiries, the conversion rate is tremendous—about 20 percent, data show. For those who don’t respond immediately, the conversion rate, as you would expect, is much less, only about 2 percent.

Fully 70 percent of online inquiries are never responded to, according to REALTOR.comdata. When the practitioner does respond, it’s often too late to build a relationship, because the potential customer has already moved on, or the response is inadequate.

RM: Why the poor response rate by practitioners?

AD: Two reasons. First, we know most of the inquiries won’t lead to immediate conversion to a client. As we noted, even in the best case only one of five are converted to a customer—so we’re reluctant to devote too much time turning around a quick response just to build a relationship with a person who might or might not be ready to become a client or customer. Second, if we’re doing our job right and we’re out working with our existing clients, we don’t have time to be checking and responding to our e-mail.

Nor should we be expected to do that. Just as a doctor shouldn’t be expected to answer e-mail while performing surgery, associates shouldn’t be expected to perform two professional tasks simultaneously. Real estate professionals intuitively prioritize their work, and unfortunately, e-mail isn’t always a top priority for them. But it is for consumers.

At REALTOR.comwe’re besieged with requests from companies and associates to send only qualified leads and not an ongoing barrage of indiscriminate consumer e-mail.

But in the meantime, as individuals we’re losing consumers, and, just as important, we’re making our industry look bad, particularly to young first-time buyers who are comfortable doing their business online and expect their e-mail to be answered within minutes. To the potential customers, we come across as a service industry that’s failing at this most basic level of service.

So you have a conundrum. Where traditionally we expend all these resources marketing ourselves and prospecting for customers, we now have consumers effectively prospecting for us. But we’re losing this potential business because we’re letting these e-mail inquiries disappear into a void.

RM: You acknowledge that practitioners use their time best when they’re working with their clients. So what’s the remedy to this consumer-service void?

AD: Answering e-mail is a task best handled at the company level, or, in the case of a sales team, by one of the team members. For those with the resources, either at the team or the company level, leads are being handled. The problem arises for smaller companies and solo practitioners who lack the resources to properly manage leads. It’s a full-time job.

RM: Is there a role for a third-party provider to step in and manage these leads?

AD: There is, but it’s as much inquiry management as lead management. Many real estate companies are happy to manage leads, but we need to manage inquiries and convert them into leads. We’re constantly asked if REALTOR.comcould provide a lead-management service, and that’s something we’re looking at very seriously. But the important thing is that consumer inquiries must not continue to be ignored.

RM: Assuming associates address this void, is it enough just to put listings and multiple photos online and let consumers do the prospecting? Surely as more practitioners build their presence on the Internet, the competition is only going to stiffen. How do associates differentiate themselves?

AD: By demonstrating that they’ve mastered the online medium. We know multiple photos attract buyers. At the same time, we know from NAR research that most buyers end up not buying the home they first see online. But if that practitioner has instilled confidence in them, the buyers aren’t lost. How you present that first listing is like an audition.

The same thing applies to sellers. Before they approach a practitioner, they go online to research the competition. How much are comparable houses in their neighborhood going for? Who are the practitioners marketing them? How are they marketing them? If comparable houses are being marketed with multiple photos, those sellers will want multiple photos, too. And what’s more, they’ll want those photos to showcase what’s special about the house. They’ll want us, as the professionals, to come up with a pictorial strategy in the manner of a design director. You start with a curb-appeal photo and end on a dramatic note with a photo showing the cathedral ceilings.

The Internet is raising the bar on what we need to do to help our clients. Before the Internet, it was arguably a misnomer to tell sellers we were going to market their homes because in reality the full universe of potential buyers—including those in another town, another state, and another country—couldn’t be reached cost-effectively. Advertising in the local newspaper couldn’t reach those buyers, and most ads are reduced to three lines of copy, with no photos.

What’s going to get you the listing—telling sellers you can sell their house or telling them you can sell it for more than your competition can? We now have the tools to sell the house for more because we’re opening up the universe of potential buyers. When you expand the pool of potential buyers, you increase the competition. And when you increase the competition, you put upward pressure on prices. We’re now trying to attract not just a buyer but the right buyer.

RM: Last year, you created a new marketing program that enabled practitioners to get multiple photos without having to buy services they might not want—and you changed to variable pricing, based on the market subscribers are in, the volume of listings they enhance, and how many hits their listings generate—more akin to marketing costs in print and other media. The site had critics before the changes, and the changes have drawn some new critics. What’s at the root of concerns?

AD: Based on conversations I’ve had with practitioners, I’d say there are four issues: Some have had a bad personal experience with our service. Maybe they didn’t get timely assistance with a problem or maybe data on the site wasn’t refreshed quickly. Mike Long, Homestore CEO, and I have made our commitment to service the No. 1 company priority.

Others think that everything REALTOR.comprovides should be free because they believe a portion of their dues is earmarked for the site. But no dues are earmarked for it.

Some who pay more per listing than top producers believe they are subsidizing the high-fliers, and some top producers who pay more in total costs—even if they pay less per listing—believe they’re subsidizing their less-productive colleagues. Before the pricing change, someone in Manhattan, Kan., paid the same as someone in Manhattan, N.Y. Our pricing was equal but not fair. Now it’s fair but not equal.

Another source of concern is from those who say they can’t keep up with the e-mail. The fact is, none of us anticipated the avalanche of interest from both buyers and sellers coming through’s truly overwhelming.

7 things you might not know about
1. About $425 million of public capital was used to build the site. No NAR dues money goes to support the site.

2. The site captures 78 percent of all online minutes consumers spend searching for real estate.

3. Seventy-five percent of prospective homebuyers using the site are searching within 50 miles of where they live.

4. Each month the site attracts 6.4 million unique visitors, who spend an average of 45 minutes there.

5. Homes with six photos are viewed six times more frequently than those with no photos.

6. One out of every six unique visitors to the site sends an e-mail to a real estate practitioner (1 million e-mail messages per month), and two out of every six call a practitioner.

7. In the time it takes you to read this list, more than 6,000 searches will have been conducted on the site and 155,000 properties will have been viewed.


REALTOR.comtraffic growth

NAR’s Web site saw a 41 percent increase in visitors between October 2002 and April 2004, thanks in part to content and marketing agreements the site’s operator, Homestore Inc., signed with America Online and the MSN House & Home channel.

October 2002 4,394,000

November 2002 4,276,000

December 2002 3,481,000

January 2003 5,237,000 (New agreement with AOL)

February 2003 5,106,000

March 2003 5,316,000

April 2003 5,380,000

May 2003 5,701,000

June 2003 5,636,000

July 2003 5,871,000

August 2003 5,561,000

September 2003 4,290,000

October 2003 3,948,000

November 2003 3,799,000

December 2003 3,916,000

January 2004 5,526,000 (New agreement with MSN)

February 2004 5,503,000 (AOL launches new real estate channel)

March 2004 6,446,000 (First month recognizing MSN traffic)

April 2004 6,203,000

Source: Homestore Inc., based on MediaMetrix figures

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