If you have ever attended one of my courses you have most likely heard me refer to “hand waver leads”. If you haven’t then just continue reading and you will be caught up in no time.
What is the definition of a Lead?
First, let me give you my definition of a lead. A lead is a person you have NOT met yet who did something to indicate to you they may be looking to buy or sell a home (or whatever product you are selling if you’re in a different industry). Two traits make someone a lead… 1. You have not met them and 2. They did something to indicate they may be looking for what you are selling.
How Many Types of Leads Are There?
You may think there are many types of leads, but I break them down into only 2 possibilities.
- Referral Leads – These are the good stuff! These are the leads we all want but find the least. A Referral lead is pretty much what the title says. Someone refers a client to you. We love these because they are far and away the easiest leads to convert from “lead” to “prospect.” Simply put, “converting from lead to prospect” means we took that person from “haven’t met, which is a person we haven’t had a conversation about their wants or needs into a “met” which is defined as someone we have had the deep conversation about their wants or needs.
- Hand Waver Leads – These are leads that are “captured” in your marketing, prospecting, and lead generation activities. The list of types of hand waver leads is long. In real estate, these can be people who were captured on your website, captured on a website like Zillow and you bought the lead, open house, FSBO sign in front of their house, list of expired leads… Hopefully you get the idea. These leads are people who kind of waved their hands and made themselves known to you.
Two Sides of the Same Coin
A Good lead generator is Great at either capturing referral leads or hand waver leads. A Great lead generator is good at capturing both types of leads.
In order to be a truly successful lead generator it is important to work both sides of the coin. In other words, you need to focus on BOTH the referral leads, which is done by getting “top of mind” through a systematic and consistent “touch” program (“Click here” to learn more about this) and hand waver leads. I see way too many lead generators focus on one or the other.
There are pros and cons to each type of lead. Let’s have a quick look at them to understand why you need to focus on both.
Hand Waver Leads
Check out the chart above. As you can see, the hand waver leads have the advantage of saving lead gen time by casting a wide net. That simply means that you have the opportunity to work many leads at one time. Sending out email blasts with a call to action is a good example. You can send it out to hundreds or even thousands of people. Ideally, it would be an email that targets a specific crowd more likely to click on your call to action, and hence, get captured. Hand waver leads also have the advantage of numbers. There are a lot of these leads all over the place. Think about it, you can buy Zillow® leads and the more zip codes you buy, the more leads you will capture. You can boost posts, hold open houses, email and direct mail FSBOs…. the list of ways you can capture “hand waver leads” seems endless.
On the other hand, they have a couple of major disadvantages. First, these leads come mostly from marketing and can get extremely expensive, especially if you hare taking the internet lead generation route to capture these leads. Second, these leads generally take a LONG time to convert and they convert at a very low percentage.
If you look back at our post about Time vs Money (“click here” to see the Time vs Money post) yo may remember we try to limit activities that chew up a lot of our time AND our money. Hand wavers are the prime example of this… You will spend a lot of time to convert a low percentage of these leads and therefore, if you were to spend all of your lead generation time on these leads you’d have a real hard time making a living.
Of course, this doesn’t mean that you should ignore these leads! When these leads come your way, work them hard and convert as many as you can. (“Click here” for tips on how to convert more leads)
Referral Leads
Now let’s turn our attention to the Referral Leads section of the chart. The big advantages of this type of lead are that they are easy to convert and don’t cost you a lot of money to capture. These are HUGE advantages. Because time and money are our most important resources and need to be protected, referral leads are the most desired type of lead we have.
The biggest advantage to a referral lead is undoubtedly the ease of converting to “haven’t met” to a “met” AND the conversion rate of that “met” turning into an actual sale is way higher than the conversion rates of hand waver leads. In fact, my research shows it takes less than 2 calls to convert the referral lead to a “met” and the conversion is almost 100% (Remember, this is a conversion from haven’t met to met, NOT a conversion from “Haven’t met” to closed sale). Hand wavers, on the other hand require up to 8 calls and the conversion rate of “haven’t met” to “met” is an abysmal 10%!
So with these massive advantages in mind, you may be wondering why we don’t focus exclusively on the referral leads. Well, the big reason is that even though we like these leads best, we have to accept the fact that they are kind of scarce. After all, how many people do you know at a time that happen to know someone who is looking for the product or service you sell? Even if you are GREAT at getting “top of mind” and get every referral your sphere of influence to offer, you’d still have a hard time making a great living because there just aren’t enough of them to stand up on their own (at least for the first several years that you’re in business) It also takes quite a while to fully achieve “Top of mind” and to grow your sphere of influence large enough to capture enough referral leads to make a huge difference.
That’s why you need to work them both.
Which Type of Lead Should I Focus On?
Once again, after we analyse the question, the answer seems really simple. You need to focus on both. Don’t be a good lead generator by focusing on one or the other, be a GREAT lead generator and focus on both. But remember…. consistency and lead conversion are essential to both sides of the coin or neither will make you any money!
