Being a commercial real estate agent is tough. Really tough! The brokerage firm you work for gives you a desk, a telephone, internet connection and secretaries — but you’re on a 100% commission. Which means you work for free (with ZERO pay) until you find a client and make a deal with! So how do you find new client leads so you can start making deals?
I’ve met hundreds of commercial real estate agents throughout the years, and I am always curious to find out how they go about generating leads to grow their business. To this day, I haven’t met many agents that have an interesting prospecting process to generate leads that leaves me with “Wow, why didn’t I think of that?”.
In fact, many of the people that have taught me powerfully exciteful ways to drum-up new business have come outside of the commercial real estate industry entirely. The ones I’ve learned the most powerful lead generation tactics from the most have been recruiters, founders of SaaS companies like Salesforce and successful online marketplaces like Thumbtack.
Here’s how most commercial real estate agents I meet tell me they go about generating leads to grow their business:
- Cold calls
- Networking (attending events or being members of referral groups like BNI)
- Canvassing business parks (dropping off flyers or business cards)
- Sign calls
So let’s break down each one into detail:
First you need people to call, so you need to develop a database of tenants to reach out to. You can buy a database of local businesses, look up comps or walk buildings, collect business cards and enter them into your CRM. What’s the biggest problem with this?
It’s time & ROI
Once you spend the money or time to get a database of tenants to call, it’s time to start dialing. Once you get dialing, you’ll find yourself leaving a lot of voicemail, but not hearing back from many people. When you dial 100 prospects, how many call backs do you get? Not many. It’s common for salespeople to report they get less than a 2% response rate. That’s two call backs for every hundred voicemails you leave — and most of them telling you “take me off your list.”. Hence, not a good return on your time.
Generating new client leads by networking takes time, a lot more time. Before people do business with you, they want to get to know you. Which means you have to be consistently showing up to networking events, shaking hands and keeping in touch — and maybe you’ll get 1 or 2 client leads within a period of 6 months. Again, not a good use of your time.
Canvassing Business Parks
Pick a target business park to canvass, grab some flyers or business cards and spent a few hours knocking on doors and trying to find someone who needs to move. It’s a shotgun approach; the only problem is that a shotgun blasts multiple pellets in one pop. When you’re canvassing, you can only hit one door at a time. It just doesn’t scale, and you spend hours hoping you knock on the right door of a tenant needing your services. If you get a big deal, this can be great! — but the likelihood is a shot in the dark.
Out of all the strategies, this is the most promising. If you’re a tenant rep agent with a sublease listing or an agent that does both landlord and tenant representation, you will have a lot of tenants in the market looking for space calling you with an immediate need for space. When I first started in commercial real estate as a tenant rep agent, I tried to get as many sublease listings as I could, and this strategy worked handsomely. The only problem was the amount of time and energy it was to find clients who needed to sublease space, which poses the same problem we described above with cold calls, networking and canvassing.
Enter the new world of lead generation
If you read Predictable Revenue by Aaron Ross, you will learn a whole new approach to generating leads and growing your business. Aaron was the guy who designed the scalable sales and prospecting strategy for Salesforce.com. His book is a must-read for any commercial real estate agents and entrepreneurs.
Aaron broke down the Salesforce.com’s prospecting approach into multiple basic functions and re-invented the sales process into methods that yield predictable results. One of the key things Aaron talks about is that salespeople, including commercial real estate agents, do too many things at once, and they are not scalable.
Commercial real estate agents not only have to be constantly researching new potential clients, contact them, meet them, search for spaces for them, schedule tours on their behalf and negotiate with landlords. This is just a hell of a lot of work for one person, and it doesn’t scale at all.
Aaron broke down the outbound sales approach of researching new potential clients, contacting them and scheduling meetings with them as a separate function and hired newer, entry level people to carry it out. He called these entry level people, Sales Development Rep (SDRs). They did all this work all day long, and whenever an SDR discovered a new hot lead, the master salesperson could take over and focus on closing the sale. This approach has wonders for Salesforce and has enabled it to quickly become a billion dollar company.
Another interesting fact is that SDRs are almost exclusively used outbound email to make contact with these prospects. Remember how we said cold calls yield about a 2% response rate. Well, now think of this — email has proven to yield some companies up to a 25% response rate. That means that if you email 100 prospects, up to 25 of them will respond (instead of only 2). So the likelihood that you’ll find someone who needs space today or in the future is more than 10 times higher.
Email is a great medium to find new prospects, but you have to be disciplined and have the right processes in place accompanied with an intelligent CRM to help you keep track and automatically follow up with these opportunities, so they don’t fall through the cracks.
Build your email list, send carefully crafted (and personalized) outbound emails and watch your number of leads grow. A few good tools to use to automate your outbound emails are SalesLoft and ZenProspect. But if you can afford it, hire someone who wants to break into the commercial real estate industry and have them run outbound email campaigns with these tools as your personal SDR.
If you have any questions, please reach out. I’m glad to be of help and can be found on Twitter @AndrewBermudez
About the Author: Andrew Bermudez is a former Senior Vice President of Lee & Associates and the Founder/CEO of Digsy. Digsy is an on-demand tenant rep platform that helps business owners save time finding Office, Warehouse or Retail space with the help of local market experts.