Worried about competing with the big-name company down the street? How about all those lead generation companies who keep increasing their market share? No matter whom your competitor is, their model does have a “fatal flaw.” Finding it and turning it to a competitive advantage will keep you on top.
One of the benefits of working with Inman News is I often have an opportunity to interview the leaders and innovators in our business. What’s especially interesting is how each leader positions themselves in relation to his/her competitors. Based upon my observations, there appear to be two different approaches to coping with the competition. The first is what I would term “defending our turf” and the second is the “entrepreneurial early adaptor.”
The “defending our turf” approach focuses on doing business the way it has always been done. Most big-name “traditional” companies fall into this category. They focus on hiring experienced agents, or the company is so big they can afford to buy market share either by purchasing offices or by luring top agents with higher commissions and perks. The “fatal flaw” in this model is the emphasis on recruiting experienced agents. The median age of Realtors is over 50. Most of these experienced agents have already hit their peak. Furthermore, if the agents have not shifted from the “traditional” approaches to the “early adaptor” approach, their production will be negatively impacted by the changing demographics and technology.
Another challenge for the “defending our turf” approach is the inability to quickly respond to rapidly changing forces in the marketplace. I constantly hear complaints about lead generation siphoning off business. In fact, many managers advise their agents to avoid working with these companies. In the meantime, new agents and early adaptors are steadily building market share since few individuals can afford to purchase the Internet and television advertising necessary to compete in this arena. If an agent falls prey to the “defending our turf” argument, he/she will eventually lose out to these aggressive competitors because they’re not even in the game competing. To win, you have to play.
The lead generation companies fall into the “entrepreneurial early adaptor” category. The technology “bust” painfully illustrated the cost of being an early adaptor. Most new companies and most new models fail often because the “fatal flaw” is unrecognized. The “fatal flaw” for the lead generation companies is they must constantly spend capital to generate new leads. For the savvy agent, you pay for the lead only once. If you provide great service, stay in regular contact and work the lead for future referrals, that lead will stay with you rather than returning to the lead generation company.
Models that rely on referrals or focus on creating a “down line” are two other examples of the “entrepreneurial early adaptor” approach. The “fatal flaw” in these two approaches is the agent has no control over when the referral database or “down line” will produce income. The only way to avoid a downturn in income is to control how your income is produced rather than relying on someone else to do it.
Which approach is right for you? As an agent, you need a combination of both. If traditional techniques are working for you, continue with what works, since you don’t want to lose ground to competitors. Second, if you want to retire from this business with a decent income, you need to invest in real estate, not just sell it. These are both ways to effectively “defend your turf.”
In terms of being an “entrepreneurial early adaptor,” identify and implement at least one new approach to doing business every six months. Make sure it complements how you conduct your business and is something about which you are enthusiastic about trying. If it increases your income, continue with it. If not, test something else new. The goal is to constantly search for areas where you can create a competitive edge.
The best way to capitalize on your competitors’ fatal flaws is to conduct “competitor reconnaissance.” Visit their Web sites. Ask other agents what they like about their existing company, as well as where they have challenges. The goal is to identify your competitors’ fatal flaws and strengthen your business where they are weak. Ultimately, to stay on top, you will need to “defend your turf,” be an “entrepreneurial early adaptor” and clearly articulate the strengths you bring to the table that your competitor lacks.
Bernice Ross is an owner of Realestatecoach.com and can be reached at bernice@realestatecoach.com.
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