8 Ways to Ramp Up Your Referral System

Illinois REALTOR® Magazine | January 2014





8 Ways to Ramp Up

Your Referral System

How to transform your hum-drum referral approach into a money-making business pipeline for 2014

By Bridget McCrea

For many REALTORS®, a solid referral system is the very lifeblood of their businesses. And while some professionals take the time to set up formal programs centered on generating new business through referrals, others stick to a less structured approach and hope that it produces results. The latter often leads to missed business opportunities – despite the fact that most agents know the value of always asking for referrals, tracking their progress, and working them regularly.

According to the 2013 National Association of Realtors® Member Profile, referral business accounts for a median 21 percent of activity for NAR members – a number that can actually reach much higher for agents who develop structured programs to build that aspect of their practices.

“From what I’ve seen from working with agents, roughly 82 percent of all real estate sales are based on referrals,” says Richard Casto, a real estate coach, author, and chief strategy officer at Better Homes and Gardens Mason-McDuffie Real Estate in San Francisco. “No matter how many Zillow or Realtor.com leads an agent gets, he or she is still primarily reliant on referrals to build a business.”

If your own referral system could use some polishing, test out these eight strategies to become a business generation machine:

1. Reach out to past customers. According to Casto, about 75 percent of homebuyers and sellers are never contacted again by the agent that they worked with. This lack of contact can be detrimental to a referral system that relies heavily on past and existing clients to generate new leads. “You have to work proactively to get others to refer you,” Casto points outs. Using a customer relationship management (CRM) system or even just a simple spreadsheet, agents can keep track of all past clients, make note of their contacts (when, how, and the disposition of such calls or emails), and list any and all referrals generated by those contacts. “Systematize the way you track and work referrals,” says Casto, “and that aspect of your business will grow exponentially.”

2. Maximize the “pure profit” in your referral base. Getting and cultivating referrals takes elbow grease, but the financial investment involved with this business stream is minimal to zero. There’s also no tedious cold calling, knocking on doors, or farming to do. “Referrals are basically pure profit for agents,” says Brian Kwilosz, broker-owner at EXIT Real Estate Partners in Downers Grove. “There’s no outlay of money for marketing; you’re just contacting people you know and trust and reminding them that you’re here to help them – or to help someone that they know – buy or sell real estate.”

3. Use business groups to build your referral network. Newer agents that are just beginning to build their referral pipelines should check out their local Chamber of Commerce, networking groups like BNI, and other business associations (Kiwanis, Rotary, etc.) for potential connections. “Our agents are immersed in four different Chambers of Commerce and very active in all of them,” says Kwilosz, who advises REALTORS® to not shove their business messages down fellow members’ throats. Instead, he says, focus on building long-term relationships, sharing useful information, and creating potential customers for life.

4. Don’t be afraid to ask for the referral. “The biggest mistake that agents make is not following up with potential referrals,” Kwilosz says. In some cases, he says REALTORS® are afraid of inundating past clients with requests for referrals for fear of sounding “cheesy.” This is fear that can keep an agent’s referral business potential at bay. “In reality, agents aren’t contacting their past clients enough and those customers wind up forgetting about them,” says Kwilosz. “If you’re calling or contacting someone too much don’t worry, they’ll let you know.” Matthew Difanis also subscribes to this philosophy. “The simplest way to build your referral base is to ask,” says Difanis, broker-owner with RE/MAX Realty Associates in Champaign. “We can’t assume that our clients recognize how we make our livings. And because we don’t make our livings without referrals, there is no substitute for asking.”

5. Create a 35-touch-point referral system. Turning referrals into closed deals (and even more referrals) requires a methodic approach to regular and deliberate contacts. Bob Corcoran, founder and president of real estate consultancy Corcoran Consulting Inc., in Chicago, tells agents to use a touch-point system comprised of a monthly email message (for 12 touches), monthly direct mail (another 12), a quarterly newsletter (for four more), and three holiday cards (birthday, holiday, and the anniversary of the client’s home purchase). Add four phone contacts to the mix (agents with large spheres of influence can use 45-second, emailed video messages in lieu of phone calls) “and the end result will be a formal, dedicated system of cultivating referrals all year round,” says Corcoran.

6. Use social media tools to develop and grow your referral network. Your past, existing, and potential clients are all using social networking sites such as Facebook, Vine, LinkedIn, and Instagram to connect with others and share information. And while direct selling on these platforms is generally discouraged, all of them serve as great places to generate business referrals, stay connected with past clients, and socialize from the comfort of your own computer or mobile phone. “Social networking can be a great way to stay in touch with past clients without having to send out direct mail or pick up the phone,” says Carrie Bey-Little, broker at Baird & Warner in Glen Ellyn. “Sites such as Facebook can keep you in front of your clients and ensure that they think of you first when a friend, family member, or colleague needs a REALTOR®.”

7. Prioritize your sphere of influence. Not everyone is going to send referrals your way, says Bey-Little, who advises agents to prioritize their lists of friends, family, colleagues, fellow church members, and other individuals before  approaching them. Create an “A List” of your best referral sources and concentrate your business development efforts on that sphere – rather than your entire database. Walter S. Sanford, president of Sanford Systems in Kankakee, advises agents to regularly cull their databases to remove names that aren’t producing results. “Determine who should go into your database, including past clients, family, friends, family of friends, friends of family, non-agent coworkers, out-of-area agents, people you spend money with, and Internet leads that you have spoken with,” Sanford says. “Make sure the end result is a database filled with people who know who you are – otherwise you are wasting resources.”

8. Avoid complications and keep it simple. Adding complexity to your busy schedule isn’t going to improve your referral system. Instead, Casto says agents should strive for a simple, workable method of 1) keeping in touch with past clients and 2) approaching the referrals that those clients feed to you. In many cases, a quarterly newsletter sent out via email, handwritten cards on holidays, and the occasional phone call may be enough to keep you in touch with this important source of business. “You don’t need to hire a company for $500 a month to send out a stream of letters, newsletters, and invitations for you,” says Casto, “just think of the simple and the obvious. These approaches generally work best anyway.

As you review your current approach to referrals and decide which of the tips to put into action, remember that repeat and referral business will be the easiest way to boost your company’s profits in the 2014. “Getting and working referrals is so much better than trying to deal with total strangers in person, on the phone, or on the Web,” says real estate coach Pat Zaby, principal at InTouch Systems in Dallas. “Ask any agent what his or her goal is and it’s probably to work with more repeat and referral customers. It takes less effort, creates less stress, and results in a much higher success rate than any other method of generating business.”


Bridget McCrea is a business, real estate and technology writer in Clearwater, Fla. She can be reached at bridgetmc@earthlink.net.

Breakout Text: 

January 2014

According to the 2013 National Association of Realtors® Member Profile, referral business accounts for a median 21 percent of activity for NAR members – a number that can actually reach much higher for agents who develop structured programs to build that aspect of their practices.