How Administrative Mistakes Can Cost You as a Broker

How Administrative Mistakes Can Cost You as a Broker

What is the real cost of administrative mistakes? As a broker, your clients depend on you to handle things professionally. Administrative mistakes by a broker can have a domino effect and affect everyone involved in the deal. Let’s take a look at some administrative mistakes to avoid and how they can cost you as a broker.

1. Grammatical and typographical errors

Part of a broker’s responsibility is handling paperwork between clients. The correct use of grammar and punctuation is imperative. One misplaced character and failure to carefully proofread documents can cause untold damage. The following incidents are examples of the catastrophic consequences that may arise from such errors.

In 2006, a typo by Alitalia Airlines resulted in business-class flight tickets being sold for $39 instead of $3,900. The result? More than 2,000 people purchased the $39 tickets leading to a $7.2 million loss by the airline. Another incident, albeit more costly occurred in Tokyo when a typing error saw the shares of a renowned company go on sale leading to a $340 million loss. Moral of the lesson? Grammatical and typographical errors are administrative mistakes to avoid.

2. Poor advice and or unethical behavior

When a client hires you or chooses to work with you as a broker, they expect you to act professionally and do your job in terms of giving them good advice. They are paying for your expertise and experience. Doing a half-hearted job and failing to provide clients with honest, accurate, and fair assessments of their situation can result in you being sued if the client loses money in any way.

You may be surprised to learn that as many as 25% of homebuyers said they would never work with their broker or recommend them to anyone. Brokers do get sued for a variety of reasons – fraud, breach of duty, giving advice that’s not within their scopes (e.g. offering legal advice) negligence and breach of contract. These are all administrative mistakes to avoid.

3. Poor data management and failure to document

If there are two administrative aspects of being a broker that should never be overlooked, its documentation and filing papers properly. Poor data management can result in you not being able to find a critical document when it’s needed. There is no excuse for not having a defined records system. This is certainly high up in the list of administrative mistakes to avoid.

4. Hiring the wrong brokers for the brokerage

Do you have a strategy for hiring people? Not having a time-tested solution can result in you hiring the wrong person. This can be extremely inconveniencing not to mention expensive. You’ll want to avoid having to repeatedly post job openings and screen candidates. By following our advice on hiring better agents, you can improve your retention rate.

When you cannot afford administrative mistakes look no further than Real Estate Back Ops (REBO). We’re one of the leading real estate technology and consulting companies in the US. For the best brokerage services don’t hesitate to contact us.

5 Property Staging Trends for the Fall & Winter Months

5 Property Staging Trends for the Fall & Winter Months

Are there people interested in viewing homes during the colder months?

Should you attempt to sell your house during fall or winter?

Do people really buy homes in winter?

Yes, yes, and yes!

If stats are anything to go buy, nearly one million homes are sold each winter between December and February. If you’re looking for serious buyers, the fall and winter months may be the ideal time to stage your property. So, how do you go about property staging during winter? Let’s find out!

1.    First impressions matter – a lot

How important is curb appeal? Extremely important. For buyers, first impressions matter greatly. Do you know that most buyers make up their minds about your house within the first 15 seconds? That’s a lot of pressure. Fortunately, you can do something about it. To help win buyers over, ensure that your yard is well-maintained. Leaves should be racked, hedges trimmed, and the lawn perfectly manicured.

2.    Turn on the interior and exterior lights

You want the house to feel warm and welcoming. So, don’t hesitate to light the driveway and walkway to your front door. Turn the lights on indoors as well. Light is an excellent medium and will help to highlight and draw attention to both the interior and exterior. Lamps and strategic lighting solutions can make rooms appear bigger and make the house feel more inviting.

3.    Keep décor simple and neutral

Are you big on decorating the house during Thanksgiving, Halloween, and Christmas? If yes, you may want to tone it down a notch when you are property staging. Avoid over-the-top decorations such as blown up lawn elements, streamers, and religious symbols. Opt instead for more subtle pieces of décor such as a simple wreath on the front door and electric candles strategically placed around the home.

4.    Evoke the senses with seasonal scents

Human beings are sensory by nature. If you can appeal to people’s emotional side you can influence their decision on a deeper level. Harvard Professor Gerald Zaltman in his book, “How Consumers Think: Essential Insights into the Mind of the Market”, demystifies the buying experience by claiming that at the core, we are emotional buyers. Zaltman attests that 95% of purchasing decisions are subconscious.  So how do you incorporate this into your property staging? Through the use of pleasant seasonal scents; think cinnamon, freshly baked goods, and oranges.

5.    Use clean lines when arranging furniture

How furniture is arranged in a home can make or break the buyer’s experience as they walk through the house. Clean lines are important. Furniture that’s helter-skelter and follows no pattern or symmetry can feel disorderly. If you have a central feature in a room such as a fireplace, organize your furniture around it. Adding well-placed throw pillows and fur rugs can also accentuate the orderliness and comfort of a room.

Selling Your Real Estate Brokerage? Either Way, Get a Valuation

Selling Your Real Estate Brokerage? Either Way, Get a Valuation

If you’re planning on selling your residential real estate brokerage, a valuation is an obvious necessity, since no serious buyer would consider purchasing based solely on the word of the seller. A comprehensive valuation can help the broker to discern what actions can be taken prior to shopping their brokerage to increase its fair-market value. But what if you’re not selling? Is there any reason to get a valuation in that case? An annual physical with a doctor is recommended for your measuring and maintaining your health, and the same is similarly true of a residential real estate brokerage. It turns out, valuations offer several benefits to your brokerage even if you have no intention of selling anytime soon. As the old adage goes, if you can’t measure it, you can’t manage it. Valuations can allow brokers to analyze their brokerage from a different perspective and make changes accordingly to optimize their business.

DETERMINE EXACT RECRUITMENT EFFORTS NECESSARY

Valuations will show a broker somewhat of an ‘X-Ray’ of their business. It will outline each agent’s transaction count, average GCI per transaction, and compare this to business expenses allowing brokers to effectively determine exactly how many agents are required, (by applying average GCI/agent), in order to break even, or how much recruitment efforts would increase the cash flow and profit of the brokerage given measurable recruitment expenses and expected outcome.

SPLIT EXPENSES INTO OPERATING AND NON-OPERATING COSTS

Valuations will additionally provide an actionable guideline with regard to where exactly brokers can cut unnecessary expenses. Any expenses deemed ‘non-operating,’ (not contributive to the bottom line), likewise don’t contribute to the value of the brokerage, and cutting or reducing these costs will increase the value of a brokerage. Any broker thinking about selling their brokerage will definitely want to identify these costs and make cuts where necessary to get the highest possible fair-market value for their company.

IDENTIFY POSSIBLE CUTS IN FULL-TIME EMPLOYEE SALARIES

Valuations can bring to light the agent to employee ratio as it’s applied to profit generation, and spell out how this margin is directly affected by each full-time employee. This allows brokers to first, recognize which employee duties are considered either non-operating costs or extraneous to the brokerage operations, and second, exactly how much this margin will increase by making according cuts and how much that will increase the value of the brokerage.

ANCILLARY BUSINESS OPTIMIZATION

Brokers may elect to include other business models to the operations of their brokerage such as mortgage lending, home warranty services, property management, etc. Often times additional income from these businesses will convince brokers that the functionality of their brokerage is above average by industry standards if the profit analysis of these other businesses is muddled with that of their brokerage. Valuations can help to not only identify where immaterial expenses have crept into their brokerage as a result of these misleading values, but determine how the expenses can be cut, and how to better optimize those ancillary businesses.

IDENTIFY WHAT TRANSACTION COORDINATION EXPENSES ARE NECESSARY

If a brokerage has transaction coordinators employed full-time, (they will soon no longer be allowed to hire them as independent contractors), they are likely lowering their EBITDA during down months when transaction coordinators are processing fewer files due to this excessive expenditure, and thus, lowering the value of their brokerage. Valuations can help brokers to determine if this is the case for their brokerage, and whether or not it would be prescient to consider an outsourced transaction coordination service instead.

Valuations not only provide an accurate assessment of the current value of a brokerage, but can help to point out practical ways to increase that value, and therefore, the profitability, which is a good business practice regardless of a broker’s interest in selling or not. To learn more about valuations and how one could benefit you and your brokerage, contact payton@realestatebackops.com for more information.

The AB 5 Employment Law For Real Estate Agents and Brokers: Anticipate, Don’t React

The AB 5 Employment Law For Real Estate Agents and Brokers: Anticipate, Don’t React

If you haven’t been keeping your pulse on the changing landscape of the real estate industry and the likely future of brokerage structures, agent payment, and transaction coordinator employment status, you may not be aware of the Assembly Bill (AB) 5, the important legal statute passed by California Governor, Gavin Newsom, that just went into effect this month.

What is Assembly Bill (AB) 5?

AB 5 is a bill the Governor signed into law in September 2019 addressing employment status when a hiring entity claims that the person it hired is an independent contractor. AB 5 requires the application of the “ABC test” to determine if workers in California are employees or independent contractors for purposes of the Labor Code, the Unemployment Insurance Code, and the Industrial Welfare Commission (IWC) wage orders.

The ABC test is intended to address 3 requirements:

  1. Is the worker free from the control and direction of the hiring entity in the performance of the work, both under the contract for the performance of the work and in fact?

  2. Does the worker perform work that is outside the usual course of the hiring entity’s business?

  3. Is the worker customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity?

How does this affect my real estate business?

As the real estate industry currently operates, agents and transaction coordinators are usually hired as independent contractors. Federal Law guaranteeing agents’ rights to operate as independent contractors will likely take precedence over AB 5, but the status of transaction coordinators will most definitely be addressed. Most brokerages hire transaction coordinators as independent contractors, and there’s an increasing trend of agents hiring personal coordinators as independent contractors directly. This will likely result in a tumultuous upheaval of business operations for brokers and agents alike for most in California, however, it presents a unique opportunity for those ahead of the curve to gain an edge on the competition. We’ll get to that soon, but first it’s necessary to go over the issue the unprepared brokers and agents will falter over.

What does this mean for transaction coordinators?

Of course, coordinators will no longer hold the opportunity to be hired as independent contractors directly by brokerages, but what about agents, (assuming they are afforded the privilege of maintaining their independent contractor status), who hire transaction coordinators directly? Independent contractors are responsible for paying their FICA taxes quarterly, (typically 15%), while employers of standard employees are responsible for paying half of these costs, and the employee the other half. Does this mean in the instance an agent contracts a transaction coordinator directly that the agent will now be responsible for half of the FICA fees incurred by the coordinator?

There’s no Federal Law in place advocating for the coordinator’s continued role as independent contractors, as is the case for agents, so someone, whether the agent or the broker, will now be paying this additional tax. If the broker has a degree of separation from these coordinators, since they hire agents as independent contractors, who then hire the transaction coordinators, the cost may very well fall to the agent.

How can brokers and agents capitalize on this impending shift?

While the future of employment status for agents is still an undetermined proposition at this time, there is good news for agents and brokers concerning the new requirement that transaction coordinators must be hired as employees. Outsourced transaction coordination services, like REBO, allow brokers and agents alike to circumvent these new incipient tax implications.

Transaction coordinators working for these services will uphold the new requirements as full-time employees, but they will be employees of these services, not of the brokerage or agent. Contracting these services, and allocating transaction coordination responsibilities from the broker and agent will effectively maintain broker and agent compliance with Assembly Bill 5, while passing the new tax costs to those services. It is apparent that these services are invariably the future of the transaction coordinator – agent relationship, and any broker or agent that resists this change breaks the law and invokes the wrath of the IRS at their own peril.

To learn more about adjusting the transaction coordination process of your brokerage or personal real estate business, contact REBO at payton@realestatebackops.com

Reasons Not To Hire A Transaction Coordinator

Reasons Not To Hire A Transaction Coordinator

Providing real estate agents with all the tools necessary for them to effectively conduct business is at the forefront of every broker’s docket. Ideally, they can do this while simultaneously reducing legal exposure, lowering expenses, and reducing the risk of agent turnover.

Achieving this perfect balance between functionality and security is difficult when brokers hire transaction coordinators as salaried employees for the following reasons:

Salaried Employees Get Benefits

Having transaction coordinators on payroll can be costly to a brokerages bottom line both in terms of cost/sale and benefits provided to employees.

Legal Exposure

A large number of TCs are unlicensed or have expired licenses.

A growing number of states like California are requiring transaction coordinators to be certified.

The ambiguity and volatility of these laws between states makes them difficult to interpret, and puts the broker at a greater legal risk by continuing the practice of hiring transaction coordinators who aren’t certified.

Agents are Loyal to their Coordinator

Agents often align their loyalty with their in-house transaction coordinator.

If the coordinator is poached by another brokerage, the agent may very well leave with them and vice versa.

If a transaction coordinator retires, this can create an unstable relationship between the agent and the brokerage if the new coordinator assigned to them doesn’t meet their standards, resulting in the agent leaving the brokerage.

Transaction Coordinators Don’t Use the Same Transaction Software

There’s often a difference in opinion among coordinators as to what the best transaction coordination software is.

This can result in the broker subscribing to multiple transaction coordination platforms, which is an unnecessary cost.

Alternatively, the broker could force the coordinators to all use the same platform, which will result in disgruntled employees and raise the likelihood for error by the coordinators who are forced to learn a new software, increasing legal exposure.

No Regulation

Each transaction coordinator has a preferred method of carrying out their tasks.

Some prefer to use DropBox, others use Docusign. Some store their PDFs in a folder on their Desktop, others in Google Docs, etc.

The non-conformity between how each transaction coordinator carries out their coordination responsibilities and how they store their files results in a greater hassle when file or correspondence retrieval becomes necessary, and in extreme cases, loss of files.

REBO CAN HELP

Fortunately, there is a simple solution for all of these issues.

Brokers that sign up with REBO instead of employing transaction coordinators:

  1. Save money
  2. Reduce legal exposure
  3. Reduce risk of agents leaving

Ready to find out more?

To learn how about how REBO can help you today and take advantage of our special offer click below!

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Event Marketing For Real Estate Agents – Step by Step Guide

Event Marketing For Real Estate Agents – Step by Step Guide

An often-overlooked marketing opportunity for Realtors is the power of hosting local community events.

Hosting community fundraisers or events is a great way to rub elbows with your neighbors and get your name known.

This demonstrates a philanthropic inclination on your part and will make your clients feel a sense of attachment to your charitable contributions by signing with you.

You can inform surrounding community members of the event by going door to door, which is a time-tested lead generating technique. However, since you’re going door to door to promote a charitable event, it will come off as less intrusive.

Hosting an event is one of the best ways Realtors can establish themselves as the local go-to real estate market guru in their community.

However, event hosting tends to fall off the map of viable marketing techniques for Realtors for one reason: it’s hard.

The amount of energy and resources spent successfully organizing, marketing, and executing a community event can appear to be a daunting obstacle.

Despite the work involved, the windfall of new business resulting from this more than offsets the woes experienced during.

This topic has enough moving pieces and creates so much opportunity for expressing your personal brand as unique, it could be an eBook in and of itself. Making the details specific to your brand and community is largely left to your discretion, but here we will outline the basic stages of pulling such an event off.

DETERMINING EVENT LOGISTICS

When deciding what activities, speakers, performers, and hooks you will use for creating an event with a favorable turnout, keep in mind the ultimate goal of the event: generating, nurturing, and converting leads.

Nurturing and converting patrons of your event will rely heavily on how you display your brand at the time of the event. Generating these leads will be done largely through marketing leading up to the event. That being said, a crucial component to generating leads at the event depends on your ability to incite guests to provide their contact information.

Before we go any further, understand that setting up the event will require a decent amount of leg work on your part, so learn from the mistakes of Fyre festival founders, and give yourself enough time to arrange all necessary amenities. Schedule your event at least ten weeks out from when you begin marketing.

Type of Event

Consider what type of event you want to host for your community. Your idea should include activities that require guests to provide contact information before-hand to secure entry like contests, raffles, talent shows, trivia competitions, or auctions.

Choose a charity to sponsor and advertise that proceeds will be donated. By adding a philanthropic aspect people in your community will feel more inclined to attend and participate.

Both the type of event you choose and the charity you support will depend largely on your audience. Consider the demographics and interests of your surrounding community to help you decide what these themes should be.

Fundraising for a local cause or organization is a good way to kill both these birds with one stone. For example, you could do a fundraiser for the local football team and hold football related competitions like NFL trivia or combine events. What you choose should not only reflect community interests, but your personal interests as well to ensure passion and knowledgeable delivery.

The decisions you make here will likewise guide your decision for time and location of your event. Since you’ll be marketing to a large number of people in your surrounding community, make sure to secure a location that is flexible with regard to maximum capacity. The last thing you want is to have more attendees than your location can handle.

Choosing Co-Hosts/Sponsors

It will be difficult to pull off a venture like this on your own, so secure help early in the process. The help you employ should be both active in the community and ideally, local idols that embody your selected charity and activities.

If it’s a fundraiser for a local school, ask teachers or prominent PTA members. If it’s a sports team, ask coaches or team administrators. If you are promoting and raising money for a local organization, the chances are good that anyone involved with the organization will be eager to help.

These will be essential contacts for helping with set up, spreading the word, and offering insights to best execute your event.

Performances/Speakers

The co-hosts and sponsors you select for the previous step will additionally make good speakers at your event, particularly if they’re already well known within the community as the local arbiter of your event theme.

If you want to utilize performances, try to employ performers that likewise are representative of your theme in the minds of the local community. To paraphrase Mark Zuckerberg as to why FaceBook became popular, “people don’t go online to look at people. They go online to look at people they know.” Performers that are personally known by attendees will be a cheap and effective way to engage your audience.

Reach out to those you know personally in the community who are capable of participating in whatever activities you have planned. Tell them to share their participation on social media to attract other potential contestants.

MARKET YOUR EVENT

Now that the event location, time, and logistics are in place, you’ll want to market the event for a few weeks leading up to it to achieve maximum reach and attendance.

Brand Your Event

Before distributing any marketing materials, it’s a good idea to brand your event with custom logo and slogan.

Your logo and slogan should tie together the symbiotic relationship between the organization the event is helping, activities involved in the event, and your personal real estate business.

Independently contracted graphic designers are cheap on Fiverr, and with guidance, can help generate a totally custom logo for your event.

This logo can be printed on T shirts, flyers, and any merchandise you may be giving away at the event, increasing awareness for the next time you host it.

Your slogan should be something catchy and easy to remember. Have it in some way convey the contribution of your personal real estate business to the event as well. Additionally, you should also connect the slogan geographically or by a local indicator if you can for SEO improvement. For example, if you’re raising funds for the local school soccer team by hosting a musical talent show, try something like, “Support Leighton Soccer by Judging Rockers! –  an event powered by Jane Doe Realty.” This is a good opportunity to express your creativity and make the event unique to your personality.

By branding your event successfully the first time around, if/when you decide to host the event again another year, you’ll have the advantage of having an already established recognizable brand within your community.

Traditional Marketing Tactics

Marketing your event is a good excuse for going door to door and introducing yourself as the local Realtor. Make flyers or brochures to hand out to neighbors when you do this.

If you really want to go all in on this, invest in display ads at local grocery stores or park benches. Traditional real estate marketing will work better if you’re advertising an event than the typical Realtor photo and phone number technique.

Local media spots also provide good reach at relatively low costs within your community. Get a local DJ to advertise your event on air or buy newspaper ads in your neighborhood paper.

Keep in mind the audience likely to see your ads based on where and what platform they’re being deployed. Adjust your advertisements accordingly to speak more directly to your audience.

Notify Leads

If you’ve been employing any of the lead generation techniques we’ve discussed in prior posts, you probably have the contact information of a set of warm leads in your local community. Use your event as an opportunity to engage another touch point and connect with them. If you advertise the speakers, performers, or other people they know in the header of your email you’ll increase the chances they view it and attend.

Hyper-Local Influencers

Hiring social influencers to promote your business or event can be costly and won’t necessarily reach the ideal target audience. However, if you can hire people within your target community with large local followings on social media, you can better target your audience for a cheaper price. They may not necessarily have done any social media influence work in the past, and will probably be excited by the opportunity. These people can be the heads of local clubs or organizations, including people involved in local civic groups, schools, churches, business owners and nonprofit (nongovernmental) organizations. 

If one of your co-hosts or sponsors fits the bill for a local social influencer, be sure to ask them to promote the event on their social media channels as well.

Blog + Podcast

Earlier we discussed setting up and gaining a following for your personal website’s blog and podcast. Event marketing provides relevant content to your audience and promotes your event. It is a perfect content piece to blast out from all your marketing channels.

Keep in mind the keys to improving your SEO score when constructing your articles promoting your event. Use local words, include the names of all co-hosts and sponsors, performers, speakers, organizations, and clubs involved and tie their names to your local community as often as you can to see to it that any Google queries remotely related to your event returns your article at the top of the list.

Social Media

Sharing the content created for your blog and podcast on your social media channels is just the first way to promote your event over social media.

It’s also imperative that you create an “Event” on FaceBook and invite your contacts to join. Be sure to include organizations and people being helped, organizations and people helping to administer the event, activities to be held, prizes to be won, handouts, performers, and any other relevant information to the event. Allowing people to see everyone else who has been invited and who has responded to the invite will not only help establish credibility for your event in the local community, but instill a sense of ‘FOMO’ for those on the fence about going.

Be sure to use this medium as a way of accepting applications to perform or speak as well, (after they’ve provided their contact information of course!)

After posting articles and other advertising content on social media, boost your ads and set your target audience to make sure your ads are seen by local residents repeatedly.

Include a “tag” to be used in every social media post so other people can easily post about the event and refer back to it. You may want to use multiple tags so you can direct some tags at the event activities, performers, etc., and at least one that’s directed at your real estate business.

Partner with Local Businesses

Allowing local businesses to participate in the event will not only help provide more merchandising and event activities, but open the door for cross promotion.

In exchange for allowing participation, see if local businesses will help promote your real estate business in their facilities. This will bulk up your event for free while simultaneously promoting your personal brand.

Incentives and Free Giveaways

Everyone loves free stuff! Be sure to include some sort of giveaway for a raffle, or prizes for competitions, and advertise exactly what merchandise attendees will be getting in your social media posts, flyers, articles, etc.

The merchandise and prizes to be given away can include your personally branded logo and slogan. This will serve as a reminder to patrons of the event that you are the local real estate guru for as long as they keep their prize or gift.

Your event should be free entry, and this fact should be advertised as well. Remember, you’re in the business of generating leads for your personal real estate venture. You’re an event planner only as a means to accomplishing this, not generating revenue.

Leverage Other Events and Public Forums

Anytime there is a gathering of local residents, this is an opportunity to promote your event.

Ask your local church if they’ll allow an announcement. This can also be done at PTA meetings, sporting events, etc.

ENGAGE GUESTS AT YOUR EVENT

There are two focal points for when your event is taking place to be used for the purpose of generating and nurturing leads: Getting guest contact information and capturing new content.

Capturing content at the event will allow you to market yourself further long after the event has ended. This is content that can be reused in your social media marketing, blog, podcast, etc. It will also provide marketing materials for when you decide to host an event again. There are several ways to create this content:

Encourage Attendees to Share Their Own Content

One way to maximize your reach at your event is to create circumstances in which attendees will capture their own content and share it on their social media channels. Offer post-event prizes to whomever captures and shares the best photo of an activity or event with the predetermined hashtag attached.

In a previous article about how Realtors should advertise on digital platforms, we talked about utilizing Snapchat Geofilters for community events. Implementing Geofilters through Snapchat’s advertising platform and informing guests of this feature, they’ll send out snaps to their friends using your branded advertisement.

Hire a Professional Photographer

You’ll want to additionally employ a professional to capture fun moments from your event. These will be better quality and better for sharing than any content generated by attendees.

If you really want quality video to share, get a drone to capture aerial images and footage of your event. This will help convey the appearance of professionalism and legitimacy of any event you decide to host in the future.

Collect Contact Information

You’ve already collected contact information from your marketing efforts for the event, but the event itself presents an opportunity to gather even more.

Don’t charge fees, but rather require contact information be provided for entry into any event performances, giveaways, donations, or general queries. These can be added to your CRM later, one of the ultimate goals of hosting the event to begin with.

FOLLOW UP

Use the contact information you’ve gathered to probe for suggestions, reviews, and feedback for your event. In addition to growing your customer database, you can use replies to refine any future events to provide an even more beneficial experience for you and attendees at your next year’s event.

These contacts can also be used as a foundation for employing hosts and sponsors for your next event. Ask if anyone has or knows of any other reputable organizations within the community that could benefit from an event like the one you just hosted.

The extra data you’ve acquired from attendees can also be used for more relevant retargeting of event guests that visited your personal website either before, during, or after the event. More specific ad retargeting is a great way to funnel warm leads into conversions.

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