Ultimate Guide to your Sphere of Influence (SOI) in Real Estate
Definitions, templates, scripts, and sales techniques for database marketing
As a Realtor, your sphere of influence (SOI) is the most valuable group of people you will deal with in real estate. Your SOI, also known as your center of influence (COI), can make or break one’s career. Nurture and grow these relationships, and your business will thrive. Neglect this top source of leads, and you will be missing the most important source of business.
Some surveys suggest that 64% of your business will come from your SOI. While other surveys indicate that it’s over 80%. Regardless of the survey, most of your real estate transactions will come from your SOI, so why don’t we all have bulletproof plans to leverage this segment? And how can we start building our SOI/COI and nurturing them so that we can expect a steady stream of referrals and connections? That’s what you’ll learn today!
Definition
Your sphere of influence (SOI) is an interchangeable term with center of influence (COI). Both of these terms refer to the same group of people. Another common term is marketing to your database.
Sphere of influence (SOI) is defined as all the people, contacts, and connections that you have, whether real estate related or not. In simple terms, they are the people you would stop and speak to if you saw them in public.
Your SOI is all the people you know in your area. Most of the time, these are people we know outside of real estate. Examples include
Friends and family
Friends of friends and acquaintances
Partner/Spouses friends and family
Previous co-workers
College friends
Neighbors
Parents of your children’s friends
Hairdresser
People you volunteer with
People involved in your hobbies
People from your church
Service providers: car, financial planner, accountant, lawyer, doctor, dentist
People you meet at the dog park
People you play sports with
Politicians you know
And the list goes on
A common misconception about your SOI is that they are a certain segment of your database. Instead, everyone in your network and database should be seen as and treated like your SOI.
This will transform your business.
Regardless of how you met the person, think of them as your SOI and treat them like the valuable human that they are. For example, if you meet someone at an open house, they're now part of your SOI. You show an online lead a house, they’re now part of your SOI.
SOI Flywheel in Real Estate
Prospecting = Marketing Activities + Nurture Activities
To effectively prospect, you need to focus on the top of the funnel (marketing) and your SOI (nurture) with appropriate emphasis on both.
Over Index Marketing: Large database but low conversion rate
e.g. “I have 1,000 people in my database, but my production is stuck at $200,000”
Over Index Nurture: Small database but high conversion rate
e.g. “My whole database is past clients, friends, and family, so I have 50 people in my database and stuck at $100,000”
Balanced Approach: Constantly growing database with high conversion rate
e.g. “I have 200 people in my database, and my production is $200,000. As my database grows, so does my production”
Marketing Prospecting: Discovery Content, Geo Farming, Online Leads, Networking/Volunteering, Hobbies, Agent Referrals (your office, out of town, commercial), Strategic Partnerships (builders, attornies, investors)
Nurture Prospecting: Branding Content, 1:1s, Phone, Text, Emails, DMs, Gifts/Pop-Bys, Email Newsletters, Market Reports, Handwritten Cards
Why it’s the most important
Your sphere of influence is the most important element of your real estate business. Without a doubt, it will form the foundation of your career and transactions. Yet, so many agents overlook the importance of building their SOI in real estate.
There are a few reasons why your SOI is the most important element of your business.
First off, these people already know you and there is trust already built. And real estate all starts with people who know, like, and trust you. In most cases, your SOI already knows, likes, and trusts you. With less effective means of generating business, like online leads or cold calling, these people don’t know us, so they can’t like or trust us.
Second, there is an endless number of people you can attract through your SOI. With other means of marketing, you are subject to them needing help with real estate. People who come to open houses are generally people thinking about real estate. With SOI marketing, you turn this around. Instead, you focus on meeting the most number of people and increasing your conversations. Given you are simply focusing on meeting more people, your real estate business will grow as your network grows.
Increase your number of conversations, and your real estate business will grow.
“More conversations = more friends = more sales”
Third, these clients are much more enjoyable to work with. When you have a relationship with the lead, the transaction is usually more pleasant. There are few objections and resistance to our service. The client asks for and trusts our perspectives. Not to mention we have mutual interests with these people. We can talk about real estate or our mutual interests. This means we have more “conversational ammo” (topics of conversation) to deploy with the lead.
Fourth, the number of transactions you complete in real estate is almost always directly proportional to the number of people you know. Have you ever met that real estate who doesn’t seem overly skilled yet still produces at an extremely high level? That’s because they know a lot of people.
Contrarian opinion: The most important thing in real estate is the number of people you know.
Based on our research, each person in your SOI database has an annual value.
New Real Estate Agent: $600 per year
Growing Real Estate Agent: $800 per year
Advance Real Estate Agent: $1,000 per year
So, each relationship you have, and if nurtured properly (see below), will be worth a minimum of $600 per year.
How to build your SOI
Building your SOI is much more straightforward than most think. At the heart of building our SOI is finding people with common interests. But they can also be people you’ve met in a real estate capacity.
It’s all about the current size of your SOI, instead, it’s about how skill you can become at forming new relationships. Most databases shrink at 15% per year. As such, regardless of the size of our SOI, we need to constantly being think about how to build our SOI.
Here are the steams of business that all filter into your SOI
Regardless of where we are meeting people, once we have a connection with them, they are considered part of our SOI.
Building your SOI is all about increasing luck surface area. What does this mean? It means we need to put ourselves in positions to meet new people. This is a mindset that governs how we plan our day and activities. Here are some strategic ways to increase your luck surface area.
Start With “Yes”
One of the easiest ways to build your SOI is to say “yes” to move activities and invites. As agents, we need to be out in public and connecting with people. Too frequently, agents are quick to decline events, skip networking events, or spend the evening at home.
A simple rule to build your SOI is when asked to do something, say “yes.” This allows you to look for more opportunities to connect.
A friend invites you out - say yes
Interesting event happening in your city - say yes
Desire to try a new hobby - say yes
Opportunity to speak - say yes
Agent needs help with an open house - say yes
Starting with yes means operating with the mindset that you want to be in public and you will capitalize on every opportunity that comes your way. That doesn't mean every event will produce leads, but it will increase your chances of meeting new people and getting lucky.
Your 3 Hobbies
It’s imperative that you connect with people outside of real estate. Hobbies are one of the best methods of building your network as an adult.
This is the beauty of real estate, you can build a thriving business based around doing activities that you love.
Hobbies for real estate agents
Business networking
Political cause
Sports - Playing
Sports - Watching
Crafts
Vehicles
Renovations
Gardening
Collecting
Cooking
Art
Reading
Board games
Pets
Classes and lessons
Camping
Wine, beer, alcohol
Coding
Trivia
Restaurants
Journaling
Podcasting
Or anything that interests you
However, there are a few rules when it comes to selecting a hobby.
The hobby needs to be enjoyed in the company of others. For example, if you love reading, join a book club. If you love cooking, start a cooking group. Both of these activities can be done in isolation; however, the value will come from doing these activities with others
You should aim for 3 hobbies. This allows you to try different hobbies and expand your network on a few different domains.
Help & Volunteer
When thinking of helping in your community, most people instantly go volunteering. Volunteering your time can be one of the best ways to build your SOI, but you can also focus on general ways to help your community.
Examples include volunteering in your community, donating to causes, mowing your neighbor's lawn, coordinating activities at school, and organizing community events.
The fantastic thing about this strategy is that it builds your SOI and is contributing to your community. You’re helping people and building your sphere of influence.
Be Visible
Another lesser-known strategy is the simple act of being visible in your community. The way to achieve this is ensuring you’re leaving the house or office at a minimum 2 times per day.
This act is a habit. Forming the habit of being in public will naturally increase your SOI. The trick to this strategy is to take your earbuds out and casually strike up conversations with strangers.
If this feels uncomfortable, remember that each person you add to your database is worth (at a minimum) $600 per year. So what’s worse, putting yourself out there or missing out on $600 per year in perpetuity?
How to break the ice with your SOI
Ok, so we know the importance of building our SOI and how we are going to add people to our database through real estate and non-real estate activities. Now the big question is what are we going to say to these people?
Here's the good news - you are not going to call or talk to these people with the intention of converting them. This will drive them away and make them feel uncomfortable. Instead, you will have friendly conversations with them about their life, interests, and find common ground.
One of the best ways to discover topics of conversations with these people is to follow the HEFE Model
H: Hobbies - What hobbies or interests do they have?
E: Entertainment - What are they doing/watching for entertainment?
F: Food - What restaurants or food are they enjoying?
E: Environment - What’s around them, such as locations, their house, or work?
Another common strategy is the FORD Model
F: Family - What’s new with their family?
O: Occupation - What’s happening in their work life?
R: Recreation - What are they doing for fun?
D: Dreams - What upcoming plans do they have?
Both models work, but HEFE offers a more modern approach to connecting. Sometimes asking about family and dreams can be less appropriate. As such, HEFE is more agreeable and leads to more interesting conversations.
Also, you need to be in the right mindset. A method you can use to ensure you’re prepared for these conversations is “Be Positive, and Be First.” This topic comes from Peter Kaufman, a legendary investor and advisor to Charlie Munger.
Be positive, be first means you approach everything conversation with positive and friendly energy, and you are the first person to display this energy. Kaufman uses the example of picking up a cat. Pick the cat up by the tail, and you’ll get scratched. Instead, pet the cat at the cat will show you affection. With your SOI, it’s the same. Approach the conversation with positive vibes, and you will get those returned.
Facebook Messager and Instagram DM’s with Your SOI
If you’re new to real estate, you’re probably wondering how to connect with your SOI. The first thing every new agent should do is reach out to everyone they know using social media or text.
Simple Script
Agent: “Hi [Name], it’s been too long. What’s new in your life?”
SOI: “ Hey [Agent], great to hear from you. [Highlights what’s new in their life]. What’s new with you?”
Agent: “I’ve recently started in real estate with [brokerage] and loving it! It’s such a fulfilling career and I’m loving helping buyers and sellers. If you ever need anything on the real estate front, don’t hesitate to reach out”
You’ll notice you are not bring up real estate until they ask you what’s new in your life.
List Building Script
“Hey, I’m new in real estate and putting together a list of fantastic contacts. Would it be alright if I grabbed your address/phone number/email so I can stay in touch with you?”
How To Bring Up Real Estate with Your SOI
One of the main questions when it comes to your SOI or COI is how to bring up real estate. In most cases, when connecting with our SOI, we don’t need to bring up real estate – they will bring it up first. Usually by asking, “how’s the real estate market” or “how’s work.”
But there are times when we need to bring up real estate with our SOI, but this should be secondary to us asking about their lives.
This is particularly important if you are new in real estate. Your SOI unwittingly will forget that you’re in real estate. It takes 7-8 reminders to them that you’re now an agent before it’s committed to their memory.
So, we need a way to stimulate the conversation about real estate. Luckily we have a hack for this. All you have to do is use one of these three opportunities to bring up real estate
Ask them how work is going: They will naturally want to ask about your work.
When they ask “how are you,” respond with something real estate related.
Ask them if they’ve been following the real estate market lately
If you’re wondering if someone is in need of real estate, remember the 9 D’s of real estate (why people move).
Ways Of Connecting With Your SOI
Generally speaking, there are two ways you will nurture your SOI and database: One to One (Connect) & One to Many (Scale)
One-to-One - Connect
In-Person (1:1): Face-to-face interaction with 1 person: Lunch, coffee, walk, sport, wine night, etc.
Ideas: Invite past client for lunch or coffee, hand-deliver something to a clients house, do an activity with the person
Common Errors: Meeting with the same person every week. You must diversify your interactions.
Phone Calls: These are outbound calls that you initiate where you are checking in, touching base, or discussing real estate.
Ideas: Use HEFE conversation topics. Use the opener - “I was just thinking about you” or “I was showing houses in your area and through of you”
Common Errors: These are not standard interactions during a deal. For example, calling your buyer who is under contract is customer service, not nurturing.
Text/Email/DMs: These are outbound messages that you initiate where you are checking in, touching base, or discussing real estate. These are frequently more real estate-focused but not always.
Ideas: Share a new listing or sale in their area, or comment on something you saw on their social media (trip, event, etc.). Send them a happy birthday text.
Common Errors: No deal-related interactions and these can’t be normal texts/DMs with friends that you would be communicating with either way.
Handwritten Note or Gift: Send a handwritten note on a branded card (or include a business card). This could also be a gift that you’re sending to someone (coffee card, local baked goods, etc)
Ideas: Look at your calendar and think about where you have been lately - Can you thank someone? (good service, fun event, thanks) Topics are usually: Thank you, Congratulations, Made me think of you
Common Errors: Do not ask for business. Always include a personal reference where possible.
Casual Conversation (Small Talk With Potential Future SOI): Generally, these are people who are not in your SOI yet. These are general conversations with people in public. However, the conversation needs to go beyond “hi” and “how are you.”
Ideas: These can occur anywhere: neighbors, grocery stores, dog park, kids events, or anywhere in public. A reminder that it needs to be a real conversation. Although it’s not necessary, bringing up real estate with this group is very beneficial since they don’t know you’re in real estate.
Common Errors: Not attempting to have these conversations at all. Not mentioning real estate in these conversations (sometimes it doesn’t make sense to bring this up but, generally, you should not avoid talking about real estate with this group).
One-to-Many - Scale
Email Newsletter: This is your personal email newsletter that you will send to your clients on a regular cadence.
Ideas: Sending a monthly newsletter to your clients. Mass client invite email (client event).
Common Errors: Consistency and commitment to your cadence are vital.
Send Outs/Drop Bys: These are mass send-outs to clients where you will give all your clients a gift.
Ideas: Christmas hot chocolate kits, spring seed packets, summer s’mores kits, fall pumpkin spice latte gift cards
Common Errors: Don’t select only a few clients - people talk. Attempt to deliver to all clients in your SOI.
Mass Mailing: This is mailing your database something of value
Ideas: Bi-annual real estate updates for your city
Common Errors: Sending too frequently may burn your database out. Quarterly works well.
Client Event: Invite your clients to an event
Ideas: Summer BBQ, Photos with Santa, Beer/Wine Tasting, Movie, Skating, Pie Giveaway
Common Errors: The largest error is failing to have client events. Even if your SOI is still growing, an event with a few people will still go a long way.
Need the plan to scale your SOI with the perfect cadence. Try this proven plan.
In summary, your sphere of influence (SOI), also known as your center of influence (COI), is by far the most important lead source that a real estate agent will have throughout their career. Working your SOI is more enjoyable, more lucrative, and not overly challenging.