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You spend money to attract prospects, but what are you doing to turn these same shoppers into buyers?
Recently I received an invitation from BMW to test-drive one its 2002 models. That invitation was soon followed with an e-mail asking me to participate in a focus group. A couple of months later the gift of a key ring and a glossy catalog showcasing the company’s newest innovations, features and products arrived. I likely will visit my local BMW dealership when it comes time to buy a new car.
National marketers such as BMW, Jaguar and Ford realize that over your lifetime you will spend tens of thousands of dollars on new car purchases, and they recognize the value of prospect retention. They develop loyalties and nurture relationships with their existing customer base, and they want “to be your car company for life.”
In contrast, home developers generally build and sell a project, and then go on to the next deal virtually starting from scratch to develop new customers. But builders who have studied the strategies of national marketers and initiated prospect retention programs have found success tapping into an existing client base to reach prospective buyers.
Never Let Them Go
Wilshire Realtors, a Los Angeles-based real estate agency specializing in luxury and high-rise/density real estate on the city’s west side, uses database marketing to find buyers even before its projects have broken ground.
Using the slogan “Once they raise their hands, we never let them go,” partners Bill Schwarz and Lynn Borland developed a database of thousands of past prospects. They keep the database current and use it to market their new projects. The database contains fields that itemize each prospect’s preferences in terms of price range, square footage, bedroom count and building type, such as custom home or luxury high-rise. Before a new community opens for sales, they sort through the database and invite selected prospects to a pre-opening party for a sneak peek at elevations and floor plans. They then keep in touch with potential buyers throughout the life of the project by following up with direct-mail pieces, telephone calls and e-mails updating prospects on news items such as new pricing, phase releases or special incentive programs.
“Whether an individual has bought a home from us or not, we keep him or her in our database permanently because life circumstances will change,” Schwarz says. “Someone who purchased a large custom home from us in the past may now be an empty nester and interested in buying a smaller home in a luxury high-rise that offers lower maintenance and a lock-up-and-go lifestyle for those who want to travel after retirement.
“Because most people do not buy a home on their first visit to a new community, it is important to keep in touch and establish a relationship with them. The typical buyer needs a series of contact visits and bonding before making a purchasing decision, so it is essential to keep our database current in order to stay in touch with prospects on a regular basis.
“We’ve also found that once we’ve established a relationship with a prospective buyer, they refer us to colleagues, which has on numerous occasions generated sales that we were not actively seeking,” Schwarz says. “The bottom line is that we feel we find more sales when we consistently work our database than we do from running regular newspaper and magazine ads.”
Your Next Buyer
While most builders and real estate professionals recognize that prospect retention is an effective marketing tool, it is rare to find a company that uses such a program to its full potential.
At Nelson & Gilmore, we did an extensive survey with the cooperation of a number of builders who opened their sales and traffic files to us. Research revealed that if people do not buy at a community within 30 days of an initial visit, there is less than a 1% chance they will ever buy at that location. The research further showed that to generate more sales through prospect retention, it is essential to establish an aggressive weekly program. We found that when the following principles are applied, a prospect retention program can be as effective as regular newspaper ads.
Lose the Labels
Forecast Homes, a Rancho Cucamonga, Calif.-based home developer specializing in first-time buyer products, has refined its prospect retention program to reach out to every registered prospect.
“We are in a very competitive market here in California, where the demand for first-time buyer homes is at an all-time high,” says Mike Dwight, Forecast’s vice president/sales and marketing. “There are a number of other builders offering similarly priced products in the markets where we build, so share of mind is very critical for us. That is where an effective prospect retention program comes in.
“When we initiated our program, we relied on our sales staff to implement it. However, our representatives were having a hard time following up with ‘A’ prospects and could not find the time to pay attention to ‘B’ and ‘C’ prospects.
“To solve the problem, we asked the sales folks at each of our new home communities to simply and consistently register each visitor without making a distinction between ‘A’, ‘B’ or ‘C’ prospects,” Dwight explains. “We then had our advertising agency design a variety of direct-mail pieces to be sent out once a week for four straight weeks to each of those prospects.”
The results were extremely positive for Forecast. Prospective buyers were being pulled back for additional visits, and sales agents began getting sales from people they had considered ‘C’ prospects.
A consistent prospect retention program also proved to be cost-effective. Industrywide, it costs on average $60 to $80 to get a potential buyer to visit a sales office for the first time. “It is definitely worth the additional $2 to $3 it costs to send out four mailers to each prospect to bring them back for additional visits, particularly since it is extremely rare for someone to purchase a home during the first visit to a community,” Dwight says.
Ultimately, a refined and consistent prospect retention program can increase be-backs, improve closing ratios and save money in mass media. n
M. Wayne Nelson is president and CEO of Redondo Beach, Calif.-based Nelson & Gilmore, a full-service advertising and public relations agency specializing in corporate and project marketing for the real estate industry. Call 310/376-0296 or e-mail email@example.com.