Realtors love sales and marketing. Get in a room filled with real estate brokers and agents and one simply cannot escape the conversation about selling, marketing and "relationship building."
This somewhat obvious point was recently reinforced when I attended RE BarCamp Ocean City in Maryland, a wonderful event with an amazing setting: starlight, waves lapping against the piers, swaying masts of various boats tied up next to the restaurant, and awesome conversation. The organizers deserve credit and thanks.
But I do not write to review that evening. Rather, I write to expand on a topic from that evening as introduced by my partner Jeff Corbett: money.
Specifically, Jeff asked the assembled group of Realtors how many of them had incorporated themselves. Perhaps five people out of 60 or so in attendance raised their hands. "Well," said Jeff (or I dreamed it, and am putting words in his mouth), "that means most of you are paying perhaps double in taxes as you could be if you were incorporated."
That is when I realized that Realtors love sales and marketing — but many of them love sales and marketing more than they do money. Now, it may be that many of the Realtors in attendance like paying taxes — which apparently is a patriotic duty, unless you’re a member of Congress responsible for writing tax laws.
But chances are, most of them simply hadn’t thought about keeping more of what they made. Put another way, many Realtors dislike operations and finance almost as much as they love sales and marketing.
May I suggest you take at least some interest in boring things like operations and finance? A few suggestions.
Keep more of what you earn
Not being a certified public accountant, and certainly not being a financial adviser (my wife would laugh at the thought), my first advice is to go seek professional advice from a qualified CPA. However, seeing as how the vast majority of Realtors are independent contractors, most of you really could benefit from fairly simple tax-planning strategies such as incorporation.
Set up an "S corporation," set up a limited liability corporation, set up something, and have the brokerage company pay your commissions to your personal company. Then start deducting many of your business expenses — again, your accountant can advise you as to what you can and cannot claim.
You’re not breaking any laws; if anything, the point of tax policy in the United States is to take the cost of creating that income into account.
Again, if you really like paying taxes — if you believe that it is your duty to maximize the amount of money you give to the public coffers — you can always write a check directly to the U.S. Treasury. …CONTINUED
Stop throwing leads away
In the name of all that is holy, consider doing some lead management.
According to the National Association of Realtors, 50 percent of Realtors respond to an online lead within 54 hours — that would be over two days — and 50 percent of Realtors never respond to an online lead. Meanwhile, 32 percent of consumers expect an immediate response and another 19 percent expect a response within 30 minutes. Those numbers have "FAIL" written all over them.
If you or your brokerage actively practice lead management techniques, you’re ahead of the game. But seriously, far too many of you are so busy doing sales and marketing that you’re simply letting leads wither on the vine.
In some of the companies that Jeff and I have personally worked with or spoken to in recent months, we’re finding that anywhere from 20 percent to a mindboggling 70 percent of the total leads are going straight from the Web site into the great circular filing cabinet in the sky.
The agents, however, are complaining about not receiving enough leads, not closing enough business, and not getting enough value from the brokerage or agent team leader.
The natural response of the sales- and marketing-loving Realtor is to … do more sales and marketing. But in a situation where seven out of 10 leads are going completely unanswered, might I suggest that more lead generation is not the answer. It’s like pouring water into a bucket with a giant hole in the side.
Lead management — the process through which a random inquiry ultimately becomes a customer — isn’t simply a matter of setting up round-robin lead-routing. It requires actual management, by some person with actual authority, who might give a damn about making actual money.
This isn’t specific to the real estate industry. Any sales-driven organization has to do something to monitor quantity of leads, quality of leads, who’s acting on them, what they’re doing, how successful those doings are, what the conversion rate is, and how they might be improved.
Even if you’re a one-man shop, you have to manage yourself and your own process in how a lead moves from an inquiry, to a verified inquiry, to a prospect, to a qualified prospect, and to a customer.
Know what’s working and what’s not working
In the same NAR survey, one finds out that 65 percent of customers never hear from their Realtor again after the closing. This might seem like a sales and marketing thing … but it’s actually an operational issue. …CONTINUED
Do you know what you do that delights your customers? The key word is "know" as opposed to "think you know" or "guess" or "believe." The only way to know is to ask them. On the flipside, do you know what it was that one of your agents did that pissed off the customer? Again, the only way to know is to ask them.
Customer surveys in the real estate industry are used more or less as sales and marketing materials. Realtors and brokers often run them just to get something else to brag about: "95 percent of my customers just LOVE me!" or "We have a 99 percent Customer Satisfaction Rating!" Just about every agent Web site in existence has wonderful client testimonials that make it obvious that the agent is the god of real estate whose perfection can only be dimly understood by mere mortals.
All of these things are useful, and you should be doing them. But the other incredibly important insight that such surveys are supposed to yield is how you can improve your operations. Did the transaction go smoothly or not? Was the communication adequate? Was whatever advice given useful or incomprehensible? Did the forms make sense? And so on and so forth.
Unless you are, in fact, the god of real estate and your operations are perfect, asking for and getting honest feedback have to be near the top of your list of things to do.
Surveys are just one method to do this. You can just as easily call your client, ask your client to coffee, and have a nice chat. As long as you’re doing more than asking for testimonials, as long as you are genuinely interested to know how the process went from your customer’s perspective, you’ll get something useful out of the exercise.
Then, once you know what is working, keep doing that. Once you know what wasn’t working, fix that. Manage the operations so that you are continually improving rather than papering over those flaws with yet more sales and marketing.
The joy of operations
Granted, many real estate professionals find the whole mundane details of operations and finance boring. They’d much rather be writing blog posts about the neighborhood or making new friends on Facebook. I mean, if they really enjoyed poring through spreadsheets and managing sales forces, they might be in a different line of business altogether.
Fine — find someone who sees the joy of operations and hire him, or form a partnership. Because there really is a joy of operations. When you can get a group of individuals working smoothly together, toward the same goals, constantly improving processes, transactions, containing costs, making more money (by converting more of the incoming leads), and keeping more of the money you make … it’s a lot of fun. Plus, the money is nice, too.
And there is this one other thing: Operations speak louder than marketing. We’ll discuss that in a future column.
Robert Hahn is managing partner of 7DS Associates, a marketing, technology and strategy consultancy focusing on the real estate industry. He is also founder of The Notorious R.O.B. blog.
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