In This Chapter

A pioneer in the field of real estate training, John Lumbleu, moved the Rolodex system to the next level by implementing a color-coded 3×5 index card system for setting up your farm area and keeping track of your buyers and sellers. His program, while antiquated by today’s technology, for many agents, established a foundational contact information base with a viable, serviceable contact management system. This program has been used by thousands of agents in a time before computers, the Internet, and high tech as we know it today.

While the system worked well it was incumbent upon the sales associate to keep meticulous records and log by hand on each index card various bits and pieces of information. Unfortunately, on occasion the agent accidentally dumped the box of cards on the floor, effectively destroying the entire system. Other perils such as the spilled cup of coffee, a gust of wind, or misplacing/misfiling one of the contact cards would be catastrophic.

In those days we had an excuse for clutter. Now we don’t. With the simplified database management systems we have at our fingertips, anyone can be organized. In fact, in the real estate business where the never-ending parade of names and details are the backbone of your business, a foolproof system is a must. The best way I know of is to utilize computer-based contact management and make it Internet-based. Regardless, many agents are still fighting computer technology.

This chapter shows you how to build your contacts database into a referral stream system that will turn your business into a circle of abundance. It’s all based on three easy steps—setup, input, and processing. For every input, there is an output and from that output there is a return in the form of an ongoing stream of referrals.

Real estate is a people business. It’s just plain and simple. You need to know everyone’s name and a little bit of information about them. The people (contacts) you will keep track of in your database consist of service providers (peers and Power Team members), new and old clients (as distinguished from prospects), and prospects (people you’d like to have as clients). In the referral stream system you are about to build, each contact receives one or more marketing products. Here’s an example: my next-door neighbors are entered in my contacts database and categorized to receive a newsletter and a holiday greeting.

If you work forty hours a week in the manner described in this book, keep an organized, up-to-date contacts database, and follow the referral stream system to a T, you will never have to prospect after the first few years of your business. This is known as the referral stream system because that’s exactly how it works. Contacts are entered in your system, they receive gifts and mailers from you, and they give you a steady stream of business. When you couple this with your automated online lead generating 24/7 campaigns (described in the Master Marketing Model in Chapter 13), you will have a system that feeds you all the business you need.

If you step into the mindset of good organization, described in the previous chapter, vigilant caretaking of your database becomes one of the primary steps to creating professional and financial abundance. It is important to remember, though, that your contacts database has to go everywhere with you. That’s why a smaller, more portable device, like a PDA, is essential. Get used to having this device with you and use it.

The referral stream model is based on the premise that every qualified person you come in contact with becomes a relationship you will have for the next 20 years. As such, they end up in your database under easily searchable criteria and on a list to receive one thing or another from you for the rest of your career.

Sounds like a big commitment, doesn’t it, treating everyone as if you will know them for the next two decades? Actually, it’s the only way to build a business that will last for twenty years. With this enduring point of view, your business becomes a flourishing hub of activity because what you give out comes back to you many times over. And you will be giving out a lot, both in terms of service and appreciation. This model is a highly organized, efficient system that makes you unforgettable because you go out of your way for people and you appreciate them. The system is simple and doesn’t take much time, and the reward is abundance for the rest of your career.

The plan is built in three easy steps:

The categories you will need to set up in your contacts program follow. Feel free to substitute categories:

You set these categories up in your contacts database. In Outlook, you click the Category button on the bottom of the general contact page. Other programs have a similar feature. Then, when you enter a contact, you select the output you want them to receive. It all happens on the contact entry page described in Step 2, the “Input” step.

Why a newsletter? Always keep in mind that Market is your middle name. You become your best mover and shaker when you consistently let people know you are moving and shaking. Because you cannot be in front of your entire contacts database on a continual basis, your personalized newsletter is the next best choice.

My system has two categories for newsletters: those snail mailed and those e-mailed. Your newsletter will go to your current sphere of influence by e-mail when you have addresses and snail mail when you don’t. Later, you also will include your farm and any other important contacts you do not have e-mail addresses for.

Your sphere of influence contacts will all eventually transition to the e-mail newsletter category as you ascertain e-mail addresses for them. This choice is up to you. I continue to retain sphere of influence contacts as snail mail recipients because I believe in the power of print media. Furthermore, surveys indicate that while snail mail has a tendency to go in the garbage, it is more likely than e-mail to meet your contact’s eyes. If you can carve out the time to snail mail to your sphere and your farm, keep them on the snail mail list.

Those of you who follow the Master Marketing Model will have newsletter capability bundled with your website and with your database management program. It’s all done for you, all you have to do is choose the newsletter you like the most. If you don’t want to adopt the entire Master Marketing Model, sign on for MarketReach (www.ihouseweb.com) or any other real estate database marketing service that includes monthly newsletters.

You also can check with your state’s Association of Realtors to see if they have newsletters for member use. For instance, as a service to its members, the California Association of Realtors provides a newsletter which updates each month free of charge. You just download it from their web site, personalize it, and mail it out. Go to www.car.org and click on Home Owner’s Guide, Free Marketing Tool. More and more, Realtor organizations and brokerage firms are providing either free or more affordable resources to agents. Before you scout newsletter vendors, check with your office and your local associations to see what they have available.

You can customize all of these prefabricated newsletters to a certain extent. In the olden days we used to spend quite a bit of time customizing our newsletters. We discovered our time was better spent servicing listings or networking.

Don’t spend significant time customizing your newsletter. The intent here is not to become a publisher. It is to repeatedly place your name before your contacts in a way that associates your name with real estate.

Your e-mailed newsletter will be transmitted to recipients automatically on a monthly basis. All you do is preselect the newsletter you want to send, schedule your database management program to send this newsletter to your group of e-mail newsletter recipients, and on the date you have selected, presto, e-mailing is initiated by your program. All this while you sit on the beach in Hawaii.

Because snail mailing is time and cost intensive, your snail mail newsletters are only sent out quarterly instead of monthly.

When you add postage and a long mailing list, a snail mailed newsletter can get a bit pricey, especially when your mailers go out four times a year. Yet snail mailed newsletters are mandatory, not optional. The place to cut the budget is not with the newsletter itself; it is with your decision as to who to send the newsletter to.

When you add a contact to your snail mail newsletter category, evaluate whether the expense of mailing to them is warranted. In other words, qualify them as much as you can before you add them to your snail mail newsletter list. Before adding a contact to receive my snail mailed newsletter, I go through a mental checklist to qualify them. Is this person relatively close to hiring me as their agent or are they someone who is recreationally shopping around? If the contact passes my test, I input them to receive a snail mail newsletter; if not, I will place them on my e-mail newsletter list if I have their e-mail address.

For a nominal charge, mailing services have the ability to process your quarterly mailing for you. The cost of having them do all the prep work versus you taking time away from networking and servicing clients may make this a very cost-effective option.

A personalized cover letter or header on your newsletter should accompany your first snail mail newsletter to both your sphere of influence and your farm. This message should be something that associates you with them and makes them want to read your mailer to discover more about you. This way they will be on the lookout for future newsletters and begin associating you with real estate.

In this message you don’t really want to emphasize that you are new to the business because people do not really want to hire someone inexperienced to help them buy or sell their most valuable asset. It is probably best just to let them know you want to include them on your newsletter list and ask them to contact you if they need real estate help or refer anyone who does. I use a handwriting type font for these letters and try to personally sign them. Here are sample messages for your consideration:

Anyone who refers someone who becomes a client goes on the gift certificate list, which you print out and process monthly. A referral source is typically already in the contacts database, but if not, you should enter the contact.

I have an account with an Internet merchandiser and my gift certificates are all sent by my vendor. Just pick a product you like, set up an account with the vendor, and when it comes time to order a gift certificate, all you do is give the vendor your client’s delivery information. I do it all by e-mail.

My buyer gifts change as I hear of new improved choices. Currently, I use www.charpics.com to prepare a rendering of the house my clients purchased. I just e-mail a picture to this vendor; they create a rendering and send it to the buyer with thanks from me. This is one of my most popular buyer and seller gifts. The sellers like to have a classy memento of their old home, and the buyers enjoy having something more than a picture of their new home to show friends and family. A long time favorite buyer gift is still an engraved brass or chrome door plate which greets them every time they walk through the door of their new home. These gifts are a nice gesture as well as a constant reminder of you.

My current seller gift is the rendering of the house they just sold described above. It seems to receive more applause than my prior gift, which was a brass alarm clock engraved with their old address and the years of their ownership of the home we sold. I offer gift choices such as freshly made truffles, chocolate chip cookies, and a bottle of wine to some clients who buy and sell frequently. I send them a few website addresses, and they select their own gift.

A NTHMY follow-up card or e-mail should be sent to all potential clients, whether you gave them a formal seller or buyer presentation (discussed in later chapters) or just discussed their real estate needs. People appreciate good manners. You want each prospect to receive your message right after you meet with them.

In my business, NTHMYs are not handled by category selection in the contacts database. You can handle them that way if you choose and for this reason they are included as a category. I like to process them immediately so I handle them on a priority basis. When I schedule an appointment with prospects, I immediately enter them on my calendar for the day after the appointment to send a card. I never leave it to memory. I have e-mail and regular mail NTHMYs. I grab the one that applies when my calendar sends my reminder, include a brief personal greeting, and it’s done.

When I enter my NTHMY contact, sometimes I include them in the newsletter category and sometimes I don’t. It all depends on how much I want a relationship with that prospect for the next twenty years. Always think in terms of longevity. That’s what makes this model so successful. When a prospect turns into a buyer or seller, they are added to the appropriate buyer or seller gift category. If they were not already targeted for a newsletter, they are added to the list.

I only do one mailing of holiday cards each year, at Christmas time. Just about every buyer, seller, prospect, and regular business contact is on the list. A simple card to wish these people well will do. I generally go with a generic message like “Season’s Greetings” or “Happy Holidays,” as some people do not observe this occasion as Christmas.

Another way to address the holiday season and remain politically correct is to send a New Year’s card! A New Year’s card is not as emotionally charged as a religious themed holiday card. Plus, it gives you greater flexibility in terms of time. You can send it before the new year starts or even a few days after the start of the new year.

One agent I know personally forgot to send his holiday cards in a timely fashion. Although they were all addressed, sealed, and stamped he had forgotten to take them to the post office. Now he had 350 holiday cards sitting on his desk just as they had been for the past two weeks. He sheepishly put them into a bag and stuffed them into the closet hoping to remember to send the next year. In the middle of the summer, as he was cleaning out his closet he discovered the bag of holiday cards. His business was a bit slow so he considered the ramifications of sending out his cards right then and there in the middle of July. And he did.

He received numerous phone calls from his friends, clients, and past customers all of whom were delighted to have received his card, albeit a bit late. In fact, each and every one of the calls blamed the post office for the delay. The result was an instant boom to his business and renewed relationships with the people he so desperately needed to stay in touch with.

Anyone whose birthday was filled out in the contacts detail page under “birthday” should receive an e-mailed birthday card on their birthday when they come up on the calendar. If there is no e-mail address, cards should be sent by mail. You don’t even have to perform a category search to send your birthday cards because the contact management program automatically displays each birthday entered on your calendar for that date. My office has one standard birthday card that is used for a year, and then we switch to a new one for the next year.

Here’s an example of how this works. At the Chamber of Commerce meeting, I met Bill, a mortgage broker. I had my PDA with me. I find that just the process of entering contact information can bring about lively conversation. I was impressed with Bill and how he conducted himself. We exchanged cards and I said, “Bill, I want to make sure I have your information in my database. Do you mind if I enter you right now and ask you a few more questions?” People love the opportunity to speak about themselves. They are also quite impressed with your level of organization and computer competence. It took me two minutes of fun conversation to enter the information I need for Bill into my PDA.

Real estate is a people business, and you don’t want to detract from its social quality. In the beginning, entering data can be clumsy and impersonal. Hang in there; it’s worth it. Because you are already a multitasking real estate professional, you’ll soon be a pro at inputting information and making lively conversation at the same time.

The information I enter includes the following:

Simple. I made nine brief entries in the fields described in this list. In Outlook, these entries appear on the general and detail pages for a contact. Because I spent two minutes entering Bill’s information, he will automatically come up on my newsletter mailing list and my holiday card list. He also will appear on my calendar on his birthday so we can send him a birthday card. Additionally, I will be able to send him an e-mail or fax by just clicking a button.

I will be able to access him for mortgage information and to send him clients without even recalling his name. Because I entered his profession as mortgage broker, he comes up under an advanced search for “mortgage broker” under the field “profession” along with all the mortgage brokers in my database.

When Bill called me a few months later, I didn’t remember him. I could, however, search for his name (which took just a few seconds), and I could instantly see how I came into contact with him and all the important information about him. Quick and easy retrieval of information is invaluable, especially when your contacts database is brimming. On this call from Bill, he mentioned his wife by name, and so I added his wife’s name to his contact information.

People love to be remembered and appreciated, especially in a service-oriented industry like real estate. Bill will be part of my business for all the years to come because

I took a few minutes to record his information in my database and knew how to easily access it when he later called. My contact entry and recall system made him feel important and in turn he has made me important. Since our initial meeting not two years ago, Bill has referred six people who became clients.

If you cannot bring yourself to engage in database entry at these events, don’t give up. You can follow these same steps writing on your contact’s business card, but you must religiously input the contact when you next reach your computer. To save entry time, there is scanning software (www.cardscan.com) that will transfer business cards into easily manageable computer data.

Step 3, processing, is the final step before the referral stream begins to take hold. The gift department processes gifts monthly while the snail mail department performs its processing at varying intervals. The processing department at my office is my assistant who looks a lot like Mrs. Santa on processing day.

The gift department in my office processes the following gifts monthly:

The gift department does everything by e-mail. Because gifting in these categories occurs monthly, I just use the fourth Friday of every month for gift certificates, buyer gifts, and seller gifts categories. On that day, I click a button and receive contact information for anyone coming under those categories, with each category run separately.

For gift certificates, I go directly to the Internet vendor I have selected for gift certificates and enter the recipient name and address. It takes a minute per person.

For buyer and seller gifts, I e-mail a list of those contacts to our respective vendors who include a nice thank-you card from us with their deliveries.

Now to the snail mail department. This department handles the following categories at the intervals specified:

Your snail mail list is produced by calling up all contacts that come under the specified category. Your snail mail newsletters are mailed quarterly. If you follow the Master Marketing Model you just have color prints made of the newsletter you choose from your website or contacts database program. If you are signed up with a real estate newsletter publisher, every quarter you receive your shipment. These arrive automatically after you’re on their quarterly list. Most of these companies will also mail the newsletters for you.

In my company, for holiday cards we use a service or my assistant does them. We calendar a month and a half ahead of time for ordering the cards. NTHMYs and birthday cards are sent by snail mail or e-mail on the day they come up on the calendar.

The example above of Bill, the mortgage broker, illustrates how you should enter a contact into your database. So far you haven’t seen the stream of referrals resulting from the referral stream system. Here is an example of a seller. Carol and James sold their vacation home with my help. After they received their seller gift from us, they continued to appear on the holiday card and newsletter list.

Carol and James referred eleven people over the next seven years, three of whom ended up as buyers and two as sellers. Three of the other referrals did not become clients, but they referred clients which resulted in two more purchases. The remaining three have not culminated in any business or prospects. One of these three is still on our quarterly mailer list.

The three buyers Carol and James referred have resulted in fourteen referrals, which have resulted in five sales. One was a repeat sale. The two sellers they referred resulted in two purchases, because they both purchased when they sold, and seven referrals which have resulted in two sales. You can see the result of doing a good job for Carol and James and keeping in touch with them via the referral stream system. Just considering these three levels of connections brought in thirteen purchases or sales, which at an average 3 percent commission for properties worth $250,000, resulted in commissions of $97,500.

Was it worth spending the time to run the referral stream system to send gifts, holiday cards, gift certificates, and quarterly newsletters to Carol and James and the same to the other twelve clients to earn $97,500? I would estimate that to earn this referral income stream of $97,500, the time spent inputting contacts or automating my system was three hours and the cost of gifts and mailers was about $2,200. Of course, that doesn’t include the time it took to service listings and find buyer homes, but it shows that the referral stream system is well worth the time and money.

When you do a good job for people, they remember you, but only for a little while. When you do a good job for people and give them a gift, they remember you a little longer. When you do a good job for them, give them a gift, and continually stay in touch, they remember you forever. That’s the philosophy of the referral stream system. And it works.

The system is based on principles of psychology and sociology. You show people your competence, and they remember you in the competence sector of their brains. You give them a gift and let them know you appreciate them, and you are also remembered in the nice person sector. When you continually remind them of you, you reactivate the places in which your memory is stored. With Carol and James, I was in two areas, which were activated five times a year with my quarterly mailer and our Christmas cards, not including gift certificates they received. I was therefore on their minds whenever they thought about real estate.

Don’t be cheap with your gifts. Remember, you will know these people for at least twenty more years. You are an important part of their lives when you assist them with their transactions, and they contribute to your financial abundance through the commissions they pay you.

Choosing recipients wisely is another important step. Make sure the people you add to your referral stream system are qualified. Establish a definition of your own as to who is qualified. Buyer, seller, and prospect checklists for qualification are presented in later chapters. Good common sense and the ability to recognize the difference between qualified people and nonqualified ones is essential to making your model work well. If you aren’t discerning, you could end up spending too much time inputting contacts or too much money on gifts or mailings. If you follow the suggested criteria, your database contacts will all be qualified and your time and money will be justified because the result will be an enviable referral stream.

A final note is, why spend your time cold-calling people you’ve never had contact with, which no one enjoys? Why not spend it setting up a good marketing system and working the system? You still need to get out there, greet your market, and put contacts into your system. But after you’ve got them in the system, you can keep them if you stay on top of your system. I guarantee it.