The Changing Broker to Broker Referral Landscape
Relocation Directors who are part of a referral or brand network typically operate under annual broker-to-broker closing goal expectations. Some networks keep it loose, and some are a little more goal-oriented.
In the past, some networks were really strict and punitive. “You don’t give us enough referrals, then we withhold business to you from our sister company.” And because of the immense pressure, it led to widespread cheating to achieve said goals.
One thing I know is that brokers like to win awards, particularly if it increased their rotation in the network which equaled more incoming business. And it became apparent that some would do anything to achieve what had become very unrealistic goals.
Thankfully, many of the hardline tactics that I (and many of my counterparts) personally had to operate under for years have gone by the wayside when they were finally legally challenged. Nonetheless, referral networks still expect brokerages to feed the network with referrals. And they should.
Keep the referrals within the family.
Referrals out mean referrals back in. Networks encourage brokers to refer to like brands and companies that have all agreed to perform in a certain manner. There is immense value in sharing best practices and industry knowledge among network members who operate with the same values and expertise. The networks themselves often offer excellent training and other valuable resources. There is a lot of money to be made by taking a cut of agent-generated out-of-area referrals, and it helps keep the money and transactions in the ‘family’ while supporting the additional benefits delivered from the network.
Part of the revenue from agent-generated referrals sent through their relocation departments contributes to the bottom line and supports the staff person who facilitates the referrals by ensuring it is placed with a trained agent and an approved, vetted broker, providing follow-up, ensuring the company and agents get paid, etc. By feeding network brokers referrals, hopefully, those brokers will reciprocate.
The traditional referral process is about to be challenged in a big way.
Some agents like to control the outgoing referral process, and some would just rather have the relocation department handle it. There used to be a lot of talk about ease of use. But as it becomes easier to target a quality agent anywhere in the world and handle it themselves, relocation departments and their networks are going to have to figure out how to continue to keep hold of those referrals. In the new Uberization of services, individuals can also do a quick search and zero in on a real estate professional where they are moving, giving them control. Some entities are auto-routing referrals and doing matches based on agent profiles and success rates. It is becoming less about personalized service and more about automating the process and increasing the conversion rate through systematic matching with less manpower.
The ability to search for agents by looking at reviews and profiles has continued to lessen the agents' need (and subsequently the client’s need) to use the relocation department to send their out-of-area referrals. Many brokerages financially punish the agents if they don’t go through their relocation department to send their out-market referrals, and others make it a ‘requirement’ for their team agents. Some use the carrot method and reward them financially for going through the department. But that takes me back to the control issue. Other players want to exert some control.
MLSs want in on the action.
MLSs are looking to continue to provide value-added services to their members while offering efficiency and cooperation. They have a built-in network of agents, so why not help connect those agents for referrals or to promote listings? With the help of Immobel and their very slick and easy-to-use back-end referral software system, CRMLS is offering up a self-serve model that bakes in the security of the process with ease. And they aren’t taking a portion of the referral fee or charging for the referral service in any way. Agents can charge what they want for their referrals, search for other agents they feel are the best match for the referral, and place them through the system.
You can be certain that many MLSs are going to follow suit. Here is an edited excerpt from a recent HousingWire article:
“California Regional MLS (CRMLS), the largest MLS in the country, has teamed up with technology provider Immobel to roll out two new products, MLS Match and Xomio, the company announced on Wednesday.
MLS Match is an agent referral network program, while Xomio is internet data exchange (IDX) software that helps agents create websites in 19 different languages. MLS Match will be available to the more than 110,000 members of CRMLS for free, while Xomio will be sold at a discount via the CRMLS Marketplace.
‘CRMLS is always looking for ways to streamline business for our users, and Immobel offers some of the most efficient systems we’ve seen,’ Art Carter, CEO of CRMLS, said in a statement.
‘Keeping in compliance and satisfying the legal requirements of referrals can be a consuming process, but MLS Match really cuts down on the time and creates a win-win scenario.’
MLS Match enables CRMLS users to connect with other agents not only within California but also nationwide and in key international markets such as Mexico. The platform ensures legally binding referrals and secure sharing of client’s information.”
Full article: The nation’s largest MLS is offering a new agent referral network program
Repurpose the position.
This new service provides many of the assurances that the relocation department has touted for years but without the human touch of a relocation coordinator. But it’s time to take a look at the cost of the human touch for out-of-area referrals. If the agent gathers enough information on the wants and needs of the customer, and the referral is sent to an agent who is very knowledgeable about the market area they are going to, how much value is an outgoing coordinator really providing? They don’t know the market where the customer is moving; they depend on the receiving relocation department to choose the agent. Statistics prove that auto-routing and thoughtful agent selection create the same conversion rates if they are done based on a series of specific criteria.
I believe the incoming counselor is of great assistance when a customer is uncertain about where to live in a general market area. But for the most part, the outgoing referral process is perfectly suited to be automated with high-level administrative oversight to ensure updates are being met and referral fees are paid. Repurpose the outgoing coordinators into business development people who might work with the agents to educate and remind them of the value of generating out-market referrals, particularly sending them within your network, and provide the tools to help them generate referrals, such as social media and drip campaign content. Focus on generating more instead of the actual process.
Pull back the curtain on referring.
In California, agents can’t pay referral fees directly to another licensee because the responsibility of payment ultimately rests with the broker. I believe it is that way in most states. So, I question how an agent is signing the agreement when the broker is ultimately responsible for the payment of the referral fee. We never allowed our agents to sign referral agreements (only leadership who were designated by the broker of record could sign), but that must be changing.
How are you going to continue to encourage your agents to refer through you? What is your value proposition to them and the client? How can you let them have more control if they want it? One of the downfalls of this situation is that sometimes agents refer off-brand because they like the agent, taking the money outside of your network family. They fail to see why it matters because they are just focused on helping their client and earning a referral fee.
To combat this, brokers and their network representatives had better figure out the dialog with agents and their clients to explain the value of referring through their network. Instead of saying, ‘We have goals’ or ‘We are required to,’ be transparent and explain the value to the company and subsequently to them. The client also needs to see the value of letting an agent refer them instead of doing it themselves.
There is a lot of talk about transparency these days. Brokers need to have a dialog with their agents about why staying in the network and generating referrals helps the brokerage and indirectly or directly benefits the agents through referrals and revenue fed back into the company.
“CRMLS is creating more referral partners, more markets, more opportunities, and more transactions. MLS MATCH Referral Network is changing the way cooperation looks.” ~Janet Choynowski, Founder/CEO, Immobel Global Real Estate Technology
