Why Referrals Beat Paid Ads for Real Estate Agents and Service Professionals

Justin Stoddart (00:00)
So for those who are like, don’t really want to run a business like that. I really want my name, my brand, my reputation to be one that is high service. it’s, you can’t necessarily, you can’t spend a ton of time chasing leads that you’re not going to get, right? Cause that’s time that could be kind of repositioned to be serving your clients.

So it’s like, how do I get business and spend the majority of my time serving versus chasing? Well, it’s building relationships, both with the people who know you, your sphere, as well as other people who have a warm sphere.

Dylan Silver (02:03)
Hey folks, welcome back to the show. Today we’re joined by Justin Stoddart, the CEO of ProInsight, author of The Upstream Model and the host of the Built on Referrals podcast. He specializes in helping professionals and business owners scale through trusted referral relationships and strategic partnerships as well. Justin, thanks for taking the time today.

Justin Stoddart (02:26)
Of course, Dylan, my pleasure. Happy to be here.

Dylan Silver (02:28)
Now, most people think scaling comes from more leads, more marketing, more ad spend, but you built an entire model around referrals and strategic relationships. Where are most entrepreneurs getting it wrong about working their sphere?

Justin Stoddart (02:45)
I think they believe that their sphere, in order to have a referral-based business, is how you do it. And so they tire themselves by trying to make more connections. And again, I’m all for more connections, but with true relationships, relationships take time. And you only have so much time in the day. And so many professionals who are relationship-based and want to build a referral-based business,

they find themselves capping out because they can’t access more, they have time for more personal warm relationships. And so by default, they have a choice. They can either A, I guess I’ll just settle for the amount of time that I have within my personal sphere, or I’ll totally change the way I do business and start buying and chasing leads. Neither of those are optional or are a good option if you are an ambitious relationship-based professional. And so what.

what I believe they’re getting wrong and what we help them to do is to actually leverage the warm markets of other professionals in their local community towards still a sphere, but it’s not just their sphere. So we’ve built strategic alliances through a technology platform that allows these professionals to get the added leverage of the relationships that have been built for decades by the professionals around.

Dylan Silver (04:00)
Now on a granular level, if someone wanted to identify steps that they could take to better work their sphere, what would be your feedback for that individual?

Justin Stoddart (04:12)
Yeah, if we’re talking about their sphere, I think it’s identifying first and foremost, who are the clients that light me up? Who are the ones that I actually love to serve? Not the ones that I’m like, I guess I’ll take that because it came by referral, but it’s actually the ones who I’m really excited and I’ve got something unique to offer that crowd. Could be a niche around maybe seniors, could be veterans, could be first time home buyers, could be whatever, right? You decide kind of which group of people you feel like you’re uniquely positioned to serve.

And then once you have that, then you identify who are the other professionals who also serve this particular demographic of people. In doing so, you formulate a bit of a team that allows you to serve your sphere at a higher level. And it’s really, you’ve created something remarkable now, right? The challenge that many of us have is that we’re the only ones out promoting our business.

but if you can create something remarkable, which I would define as a group of collaborative professionals who serve a unique niche

of people, once you’ve identified that and build even just a slight, you know, a small relationship with each of those professionals and begin working together with them, now when you go to your sphere, you have something remarkable to talk about, because you’re talking about other people. It’s awkward at times, kind of beat your chest, keep talking about yourself, but if you can start to talk about the other professionals who are fantastic around you.

who formulate kind of a bit of an Avengers team, a bit of a superhero team. Now all of a sudden you have something unique and it’s not just calling to ask if they can give you more business, right? You’re asking, you’re coming to them contributing, giving, not just asking.

Dylan Silver (06:40)
We say this at the show quite a bit, being a go-giver, right? And the idea that you’re able to give and put into people and put into your sphere without expecting anything in return may feel, especially for someone who’s just starting this, may feel like, well, what’s in it for me type of thing.

but you start to realize over months and then years that this has a compound effect. Like you mentioned, your sphere is not just potential clients, but it’s also those professionals. And so if you’re referring someone to, you know, someone who may be a contractor, if I’m a realtor, you bet that contractor is gonna be thinking about me when they’re referring someone out to a realtor.

Justin Stoddart (07:26)
sure. Yeah, it’s when you surround yourself with good people. ⁓ if you can give to those good people ⁓ they’ll always be trying they’ll always be working to out give you right. Humans don’t like being imbalanced when it comes to people out giving them right. There’s this kind of innate sense of of of I don’t know if it’s obligation I know if that’s the right word. ⁓ but this this sense of if you do something for me there’s some built in loyalty.

So especially when you’re around people who are the giving type, and that can oftentimes be the litmus test. If you start giving to people and all they do is take and never return, that’s a sign that you’re around a taker, which it’s good to start to distance yourself from that person. But if you give and they return or give and they try and out give, surround yourself with those people and just give and give and you’ll be surprised at how much comes back to you.

Dylan Silver (08:17)
Do you think people maybe rely too heavily on paid marketing and paid leads early on instead of focusing on some of these strategies, these relational strategies?

Justin Stoddart (08:30)
Yeah, absolutely. You know, I think it really is a different business model. And again, because I have a tendency towards one of building to build relationships. I obviously favor this. Others who are maybe more transactional, who it’s not like it’s not about building long term relationships. It’s about service and a client that’s in need right now. ⁓ Two different kind of mindsets and both are okay. But if you find yourself of the type

that wants to build what I would call a legacy business, one that actually deepens relationships with people over time, then yeah, I would not necessarily try and start off your business by buying and chasing leads. The reality of that is that you’re a commodity that when you play that game, it’s who can get there the fastest and who will do it for the least. And so you’re obviously have slimmed up margins, right? There’s some upsides to that, but that’s the downside that most complain about is that I feel like I’m paying for the business. I’m dropping everything and running.

so that I can get it first. And once I’m there, I’m cutting my margin so that I can actually secure the business. So you’re doing a high volume, low service business.

So for those who are like, don’t really want to run a business like that. I really want my name, my brand, my reputation to be one that is high service. it’s, you can’t necessarily, you can’t spend a ton of time chasing leads that you’re not going to get, right? Cause that’s time that could be kind of repositioned to be serving your clients.

So it’s like, how do I get business and spend the majority of my time serving versus chasing? Well, it’s building relationships, both with the people who know you, your sphere, as well as other people who have a warm sphere.

And as you build those relationships, it opens up the door for you to start to get business ⁓ that you aren’t competing for, that you aren’t chasing. It’s business that’s yours to lose.

Dylan Silver (10:55)
One thing that I’ve noticed about working a sphere, even when we look at tech tools like CRMs, is that you could have a sales pipeline where the end goal might be to sell a home or to ⁓ close on a property, And it might not work out for this one lead. But if you start to look at each individual lead in a CRM as not just an opportunity for a transaction, but as an opportunity for a referral.

as an opportunity for someone who might write you a review, right? Or as an opportunity for someone who, you know, down the line could become a referral or a review. Then it starts to open up all of these possibilities where each lead represents, you know, multiple positive outcomes.

Justin Stoddart (11:44)
Yeah, and I’ll even take that a step further that when we look at people, oftentimes through a transactional lens, it’s like, well, they don’t need my services right now, I’m out. So take the same thing that you just said and flip it the other way of what value can I bring to this person right now? Right? Although they might not need my services right now, is there something that I can give to them that would make their career, their business, their life better? Great, I’m gonna do that. Doesn’t mean you can commit a lot of time to it.

But again, if you go around with that go giver mentality of not who’s ready for me now, everybody else is dead to me, right? But it’s like, no, how can I serve anyone and everyone right now? Right, of course, being prudent with, you know, the time that you’re giving to situations like that. But if you really do have a heart and a mind to be looking for ways that you can give, you’ll find that again, you won’t stay in balance for long, is that people will find a way to come back and kind of level that score.

in giving value to you in return.

Dylan Silver (12:44)
We were talking about this in the green room, Justin, about checking in on people. And I saw a reel that you had on your Instagram page, I believe, about making phone calls and reaching out to folks to check in and say hello. And one of the things that I’ve noticed ⁓ living in the States, living in the US, and then also living abroad is that for whatever reason, ⁓ it’s not exactly part of our culture to just check in on a whole rolodex of people. It’s typically like a very short list, like parents,

and maybe some friends, if that, right? But how often do you get calls out of the blue? Living abroad, I actually had this happen all the time where people were checking in on me. They didn’t necessarily know my parents, but they’d be like, how’s your mom? How’s your dad? How’s everybody? And I’d be like, we just met yesterday. And now I’m seeing that that approach is applicable here, but it often, in many cases,

puts a smile on people’s faces and what would have been what I thought would have been an uncomfortable conversation because you know why am I checking in on this person they don’t know me from a hole in the wall actually has become something that I enjoy doing and I think the receiver you know is thinking wow this is a nice gesture.

Justin Stoddart (13:54)
Yeah, it’s so rare, right? We have to look at what’s, in order to be and create uncommon circumstances for ourselves and for others, we have to take a look at what’s common. And then decide is like, what can I do that would be uncommon, that would be memorable, that would be remarkable? And it’s not common, like you said. I mean, maybe even a text message saying, hey, I was thinking about you, just checking in, how are things? That alone is often very rare unless,

want something from you, right? And so, you have to like start to train yourself to say, I don’t want anything other than to just give value and check in and see how they’re doing. Again, as you do that, you’ll be building real relationships, right? Relationships are simply a matter of time, effort, and and value given to somebody else without anything in expecting in in return. And I think when you start to live that way, you start to have, you start to build an army of of champions, right? Not everyone’s gonna reciprocate, not everyone’s gonna appreciate.

but those who do, even receiving a handwritten thank you card, right? We’ll take this even a step further. Those kinds of things are so unique. Picking up the phone and calling somebody just to check in. I was thinking about you. I was driving through this neighborhood and it reminded me of you. Hey, I just heard a funny joke. It reminded me of one that you told, right? Just start to open your mind to the relationships and people around you and start to bring people up and call them and say, hey, I thought of you today.

How are things?

Right? And just, don’t have to have anything to say. And I think that’s the reason why people oftentimes fall short in the development of relationships in their sphere is because they feel this pressure is at the end, I’ve got to ask for referral. go, by the way, like, do know anybody who’s looking to buy cell and rest in real estate? Right? And when you start to think that way, you, you like, that’s not, that’s not what true relationships do, right? That’s, to ask for something. Now it doesn’t mean that it’s not appropriate at times to ask, right? You absolutely should.

But if every time you reach out to somebody, it’s trailered with, ⁓ know, are you willing to do something for me in return? Then it cheapens the whole call. It cheapens everything that you’ve done, right? So just be a giver. Be somebody who actually genuinely cares about other people. And you’ll find that actually picking up the phone, the phone gets way lighter. It gets way easier. Life gets way more fun. And you start to actually have people that are out advocating for you because you actually express an interest in them.

Dylan Silver (17:03)
When I started applying this, one thing that shocked me was I, at some point, would bring up that I’m a realtor, I’m an apartment locator, know, podcasting, and you say that enough times, you assume people know what you do, right? Well, there’s a restaurant in San Marcos, which is just outside of Austin, Texas that I frequent. And I’m there like multiple times a week, right?

I’m sitting down one time and I hear that one of the people working there is looking for an apartment. And she’s like, yeah, we really need a locator. And I’m thinking like, do they know? Like how many times have I been here? They have to know that I do this. And I realized that as much as I’m physically there, I’m there multiple times a week. I see this person quite often, right?

it’s not always going to be that I’m the first on their mind. Now I could take that one of two ways. I could take that like, man, I’m here all the time and you don’t know what I do, even though I’ve spoken about it and I’m here with my laptop out and et cetera. Or I could take it like, hey, here’s a golden opportunity to re-remind this person what I do and offer some, you know, on the spot support. And so when that happened, I realized how many people in my sphere, even though I’m checking in with them,

Today might be the day where they need a apartment locator or a realtor. Today might be the day. It wasn’t yesterday, it wasn’t two weeks ago, but now they need somebody. And so if I can thread the needle of opportunity with conversation, good things happen.

Justin Stoddart (18:33)
Yeah, no doubt. No doubt. Well said.

Dylan Silver (18:37)
Now pivoting here, Justin, there’s a lot of talk lately about where does automations and AI and technology fit into all of this. I happen to be a big proponent of AI and I love the way that it can interface with some of these things. But I also understand there’s some people who frankly strongly dislike AI and don’t want it at all in their business. What’s your

perspective and feedback on how AI integrates into this as a whole.

Justin Stoddart (19:08)
I’ll use an example. I’m married, I’ve got six children, family’s very important to me. If within any one of those relationships, if I said, hey, I want you to meet AI dad, anything you need, he’s right here, he’s even smarter than I am, he’s more accessible than I am, and he’ll be very kind you. never have impatience with you. I’d like, that’s kind of weird, dad. And over time, they might be like, okay, this is actually pretty handy.

But what’s happened is they’ve missed out and I’ve missed out, right? Now I use that as an example of there’s a proper use for AI and it’s not to replace relationships. I believe AI fits very nicely in the back office when we have true relationships is it helps to organize us, it helps to ⁓ create wisdom within us, to give us access to resources, to knowledge, to insight.

that we wouldn’t have otherwise so that when we are with our relationships, right, we can be more helpful to them, more knowledgeable, more valuable. If we try and replace what I call front office work, now I’m not saying if you’ve got leads coming in and you’re trying to sort through those, right, that’s probably a good use because that’s not a relationship yet. But once you have a relationship, you need to be the primary point of contact. You need to be the one that they,

they have a relationship with, right? Because if not, you’re essentially open the door for something to replace you. But again, I’m a big proponent of AI, especially when it’s used properly to take care of the back office stuff so that we can spend more time doing what you’re doing. Most people don’t pick up the phone and call somebody like we described because they’re too busy with back office stuff. So AI is a perfect way for you to be more effective, more efficient with the mundane, the things that.

matter as much to people who did it or how they did it. It’s it’s when you use AI for those things, it frees you up to actually be more personal, more valuable, more present in the relationships that you have. So, I love AI as long as it’s used properly.

Dylan Silver (21:22)
We are coming up on time here, Justin, any new projects that you’re working on and then also anything you’d like to say directly to our audience.

Justin Stoddart (21:30)
Yeah, and I appreciate it. You know, for the past three years, I’ve been working on a platform that just turned a big corner kind of earlier this year. It’s called the Homeowner Concierge. It was built by the company that I lead called ProInsight. And the Homeowner Concierge allows a professional to ⁓ scale their warm market relationships, scale their referral relationships. As I mentioned before, in most cases, people run out of sphere before they

before they reach their ambition, right? They’ve got big goals and they only have so many relationships and can only cultivate, especially in the real estate market where sales are off 40 % where they have been previously, right? The same amount of relationships are producing almost half as much opportunity as they were before. So what do you do? Go double the amount of relationships you have. That’s hard to do, right? But the reality is there are professionals around you who don’t compete with you, but collaborate with you serving your same ideal clients, okay?

So those professionals, and for every industry, it’s slightly different, right? But if you’re in real estate, right? It’s financial advisors, it’s lenders, it’s property managers, it’s insurance agents, it’s tax professionals, right? It’s roofers, painters, plumbers. Those professionals, the relationship-based ones, have been also building a sphere. So rather than you trying to go and just expand your sphere all by yourself, you can essentially adopt someone else’s sphere. Our technology allows you to do that. In each community across the country, we’re identifying

the very best professionals in that community. We’re putting them onto our platform, which is essentially the homeowner concierge app that then gets offered out to all of the clients directly of each of the professionals. So if I’m a real estate agent, before I was just trying to offer value to my maybe 500 clients, right? But if now all of a sudden my tax professionals offering value to their 500 clients, my financial advisor to their 500 clients, and there’s only one professional per category on that list, right? Now all of a sudden I have

exclusivity, so to speak, on the preferred list across thousands, if not tens of thousands of homes in my local area. So that’s what we’re excited about. We’re again, we’re rolling it out across several dozen markets across the country right now and getting great feedback and really believe that the future of service professionals is collaborative, collaborative with the other professionals around them. Because as I mentioned, as you can create a team of people who serve client, the same homeowner from a different angle.

Now you’ve really created a value proposition that’s unique. Our technology makes that easy.

Dylan Silver (23:59)
Justin, thank you so much for joining us today. Thanks for your time.