How Clients Buy - The Marketing Funnel

In my last post, I talked about about how clients decide to buy or sell a home. In this post, I will talk about the marketing funnel.

Marketing is a funnel. You start with all sorts of prospects who have yet to be qualified or evaluated for their motivations to buy. Over the course of the process, you lose a few - some decide not to buy, some can’t get financing, and some go with your competitors. Those that stick with you through the funnel learn more about who you are, why working with you will benefit them, and eventually become your clients.

Each of the stages in the marketing funnel coincides with stages in the buying process. In the diagram below, you’ll see a funnel broken into 5 stages of the buying process as we described above. The picture shows how different types of marketing relate to each state of the buying process.

Awareness
In this post, I’ll focus primarily on the first stage of the buying process - that moment when your prospect becomes aware he or she may want to buy or sell a home and all of the details that go along with that potential decision.

No one buys a home on impulse - as they might pick up a candy bar or beverage while waiting in line at the grocery store. They must first become aware that buying a home may be an option for them. When do people think about buying a home?

• When they read an article in a magazine or newspaper about now being a good time to buy
• When their neighbors have just sold their home for a large sum
• When friends just buy their dream home
• When their landlord signficantly increases the rent
• When they or their spouse gets a new job and needs to relocate
• When they’re about to get married or have just married
• When they get a raise at work and decide renting is no longer for them
• When they realize that there are funding options available to first time homebuyers
• When they’ve filed for divorce
• When they become pregnant and need more space for the kids
• When something tragic happens to their previous home
• When the kids leave home and they need a smaller place
• When they hear about how much friends love the new vacation home they purchased
• When they retire to Florida

As you can see, there are numerous life triggers that can make people aware that they may soon be ready to purchase a home. At the awareness stage, people realize that the time may be right for them to purchase a home - though there are still many uncertainties, fears and doubts.

Until someone becomes aware that there is a definite possibility they could purchase a home, they won’t pay attention to any of your prospecting efforts. In many cases, no matter what you send them, it won’t be enough to convince them that they should buy a home right now. This is one of the ways selling products and selling services are different.

If you were selling magazine subscriptions or collectible items, you could fairly easily make a compelling case for your product with a mailing that includes a brochure, sales letter, order form and envelope. By targeting the right mailing list, you could command a response of 1-2% or higher. In other words, your mail piece, alone, can convince a certain percentage of those who read it that it’s worth it to subscribe to the magazine or buy the collectible item. Why? There’s minimal risk involved - usually they’ll get a free gift, flexible payment terms, the ability to cancel at any time, and a money back guarantee.

Convincing people to buy a home is a much more complex process. Where they currently live is part of their lifestyle and moving would disrupt their daily lives. If they have a spouse or children, they’re not only disrupting their own lives, but also the lives of their family.

Buying a home is also risky. There’s no money back guarantee. In fact, buying a home is a huge financial commitment - and their monthly mortgage bill will remind them of that each month. What if they make a mistake? What if they can’t afford their mortgage payment? What if their real estate agent is more concerned with their commission check than their fiduciary responsibilities?

Looking at all the “what ifs” can be scary - which is why most people buy or sell a home only after careful consideration or during or after a major life event.

Yet there is the potential you can reach some prospects and get them to realize moving may be a possibility. If you target renters, perhaps they don’t realize the cost savings and tax write offs of owning a home. Perhaps they don’t realize they don’t need a 20% down payment on their new home. Perhaps they don’t realize that there are numerous financial options available to them now. Perhaps they don’t realize that they can afford it.

Do you see where the opportunity lies? If your marketing materials focus on the particular concerns renters may face and clearly explain to them the pros and cons of each side, it may get them thinking that yes, perhaps they should look into this option.

Does this mean they’ll choose to call you right away and sign up as your client? Probably not. But if your materials were valuable to your prospect, they may recognize your name on other materials or even save your piece for the later date when they’re ready to hire a real estate agent.

In my next post, I’ll talk about how prospects go about gathering information to educate themselves - and how you can use that step in the buying process to get your foot in the door.