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Why Referral Marketing Is Important in Real Estate

05th September, 2018
Why Referral Marketing Is Important in Real Estate

Real estate referrals are the most cost-effective way to acquire new clients from your existing set of customers and in diminishing the cost of lead acquisition.

A referral occurs when an existing customer refers to a developer or promoter a prospective buyer and in return earns a certain incentive or reward.

In India, after the implementation of Real Estate (Regulation and Development) Act 2016, a developer is banned from running his own cash incentive-based real estate referral program.

However, one can make use of real estate referral programs like RelatyX which operate referral programs by abiding the provisions of the new regulatory Act.

Moreover, nearly 30% of all real estate deals in India are made via referrals and a similar percentage is applicable to realty transactions made in metro cities which is also through referrals.

What is a referral?

A referral is defined as:

  • A method of spontaneously promoting a business products or services to a new customer by word of mouth.
  • A referral can simply be termed as a recommendation by a customer who trusts your realty business.

What are the types of referral in real estate?

  • When you say a referral in real estate, there are two chief sources from where it originates. It includes your current customers and referrals from real estate brokers and agents.
  • Out of these, extracting referrals from your existing set of customers can be much simpler, as you have worked with them closely and have catered to their preferences.
  • These referrals, if pursued with the right strategy, can work wonders for your realty business.
  • Real estate referrals from current clients is a powerful way to ensure receiving stable and continuous referrals for your business. Every client is the key to unlock the future chain of referrals.
  • If you are a realty firm offering exceptional customer service, it is very likely that your existing clients will refer you to their friends and family sans the nudging.
  • Yet, you will significantly boost your chances of getting a referral if you ask for them. And you don’t need to spend a bomb to do that.
  • Referral programs, commonly known as ‘loyalty programs’ are an effective way to tap into your current set of customers to earn solid and verified leads via referrals.
  • Make sure you can reward or incentivize a client for every referral that he makes. Incentives can be either in the form of points that can be redeemed online or either non-cash incentives.
  • This can be a win-win situation for both, the customer as well as the business.

What makes it important?

  • Referrals build a real estate business. Real estate referrals tend to have higher margins. Leads via referrals are more likely to convert that leads found online. The reason is that a referral lead is derived from a loyal customer who is also your brand ambassador.
  • Referrals build a realty business. When your customers refer you to a friend, an acquaintance or a colleague, know that they are affirming and confirming your trustworthiness as well as expertise.
  • Moreover, people trust more on the references given by friends and family than any other form of advertising. A survey by Nielsen had concluded that people are more likely to buy when referred by a friend.
  • Having ample visibility online can also hike up your chances of receiving referrals and leads. People search for homes online and look forward to platforms that provide trusted guidance.
  • You can leverage this opportunity to inform and educate your customers about your referral marketing program and explain to them how sharing your product could reward them.
  • Moreover, the rewards under the real estate referral program need not be only cash incentive. Heinz Marketing had conducted a survey in which they inferred that non-cash incentives were 24% more effective at engaging your customers to earn more referrals.
  • To conclude, referrals enable to shorten the sales lead cycle. When a satisfied client refers your business to someone else, they transfer trust that they have in you in the process. As a result, a referred lead will progress quickly as compared to a cold lead, where you may need to start from scratch.
  • Likewise, the referred client focuses more on the value of the product you have to offer and less on the price involved, which makes realty transactions risk-free and less price sensitive.
  • Lastly, you can turn your current set of customers into a database of reliable leads.