Predictive analytics is the use of data, smart algorithms, and machine learning to identify and predict future events based on historical and transactional data. When it comes to real estate, it’s all about using what we know about buyers, sellers, and inventory to predict consumer behavior—to determine who is likely to buy, sell, in which neighborhoods, and when.
Why, as a real estate professional, should you care? Simply put, with reliable predictive analytics, you can better target the most likely buyers and sellers in your market and have better insight into which homes and neighborhoods are likely to produce transactions. In other words, you can spend less time marketing, have better conversations as a result of the marketing you do, and explode your overall conversion rates.
The Close Is VERY Excited about Predictive Analytics: Here’s Why
- Data-driven: Predictive analytics are based on data. As we get more data points about consumers and observe the results of our earliest predictions, we can better understand where our algorithms are accurate and where they need to be tweaked. The result: Predictive analytics marketing is only going to get better as time goes on.
- Listing-focused: A lot of real estate marketing grabs the lowest-hanging fruit when it comes to leads: buyer leads. Though there’s nothing wrong with working buyer leads, we all know that there’s only so far you can scale your business as a buyer’s agent. Since a predictive analytics marketing approach is very listing-focused, you have the opportunity to grow your business further and faster.
- Exciting for investors: For those of us working with real estate investors (or who are investors ourselves), we know that real opportunity for profit is tied directly to timing. With predictive analytics, investors may be able to identify opportunities earlier and more often, thereby increasing their profits on each transaction and outpacing their competitors.
Predictive Analytics in Real Estate: A 60-Second Explanation
Need a quick refresher on how predictive analytics actually work in the real estate industry? Don’t worry, you’re not alone. Watch this video to get up to speed.
How Predictive Analytics Real Estate Marketing Will Get You Twice as Many Listings
According to a case study conducted by AccuData, direct mail marketing driven by predictive analytics saw response rates more than double that of marketing without algorithmic smart targeting. Why?
It all has to do with conversion rates. When you use predictive analytics in your real estate marketing, you’re focusing your message on people and property that are more likely to produce transactions.
Armed with data on the most likely buyers, sellers, and productive neighborhoods, you can laser-focus your efforts where your opportunities truly lie, rather than spending your time and resources blanketing neighborhoods and prospects that may not be interested in your marketing.
How Predictive Analytics Will Slash Your Marketing Budget (& Still Make You Money)
Agents using the traditional scattershot approach to real estate marketing need to hit a large swath of prospects with their messages to be profitable. Since their conversion rates are so low (often less than 4%), they need to deliver hundreds or even thousands of marketing emails, texts, postcards, and more every single week.
Sure, this approach can be profitable, but it requires a hefty investment just to get people into the top of your funnel, and it can be very labor-intensive. With predictive analytics, your marketing outreach is focused on the most likely buyers and sellers in your area. This approach drastically decreases the amount of cold, initial outreach you need to do—saving you time, money, and effort.
THE BOTTOM LINE: This targeted real estate marketing lets you reallocate many of your top-of-funnel marketing resources toward generating referrals and maintaining relationships with your existing sphere of influence. You’ll increase your overall business strength and diversify your lead sources. Predictive analytics aren’t just good for new clients—they’re good for your business as a whole.
OK, So What’s the Catch?
It’s important to note that while predictive analytics are likely to produce quick wins here and there, the typical nurturing time on a predictive analytic-powered lead is relatively long—sometimes as much as 18 months. This makes sense, since you’re establishing a relationship with these leads in their curious-about-the-market stage, and sometimes even earlier.
However, since most of us are in this business for the long haul and are looking for career-sustaining strategies, this only means that you’ve got to add patience and consistency to your recipe for success when working with predictive analytics.
The Close Recommends Smartzip
If you’re sold on predictive analytics as part of your marketing strategy, we suggest checking out Smartzip as a data provider. Smartzip provides all the data you need to craft targeted marketing campaigns, a solid CRM for managing your leads, plus the ability to sync with just about every real estate CRM on the market. You’ll also gain a host of other related options you can use to power your business.
What Realtors Get When They Join Smartzip
When you become a Smartzip agent, you immediately get access to the Smartzip CRM, which is prepopulated with the contact profiles of buyers and sellers identified by the Smartzip algorithm as highly likely to become active in the next 18 months. Each of these lead profiles includes details about residents and the homes they own (courtesy of tax records and MLS data). You’ll gain access to their contact information, including phone numbers, email addresses, social media profiles, and more.
Other Smartzip Tools Worth Checking Out
When you join Smartzip, you can opt in to their Smart Targeting tool, which can automate your marketing to more effectively cash in on the leads Smartzip generates for you. You also can opt in to their Reach150 program, designed to solicit and manage online reviews.
Their Sphere program applies predictive analytics principles to your personal sphere of influence to give you a better chance of cashing in on referrals and repeat business. It can help you prioritize your relationship nurturing.
Each of these programs comes at an additional cost, but for agents who can use the tools effectively, they provide a solid return on your investment.
Smartzip’s cost depends on the median property value in your market plus the amount of Smart Data you’re investing in. The minimum monthly spend with Smartzip is $350. Most agents report their typical monthly spend is about $1,000.
Want to learn more about Smartzip? The Close did a deep-dive review of Smartzip. Check it out to learn about features, pricing, and more. If you’ve had success using Smartzip in your part of the country, we’d love to hear from you in the comments.
Looking for more real estate marketing advice and strategy? Check out Managing Editor Emile L’Eplatennier’s real estate marketing plan template every agent needs, and join us in our Facebook Mastermind group, where you can learn from weekly conversations about how realtors, teams, and brokerages can more effectively market their services and expertise to their local community.