Make it happen!

As Bob Dylan sang out in the 60’s, “the times they are a’changing”

The real estate marketplace has seen eight to ten years of unbelievable growth and prosperity and it was unrealistic to believe that this trend would last forever. The good news is that the transition to a more ‘normal’ marketplace seems to be a ‘soft landing’ rather than the catastrophe that fell upon the real estate industry in 1990. And many market analysts are predicting a bottom to the slide by the middle of 2007.

No one likes to have lower numbers. For some, the response to slower sales is a ‘knee-jerk’ reaction that would cut everything that can be cut and weather the storm. This of course, is not a bad strategy, but it should not be the only one. There are other opportunities for reducing costs, increasing revenue and getting set for the next wave of better times to come.

In the boom times, everyone was too busy to review existing business operations, processes and procedures. Why bother when the cash flows are high and the profits are a ‘given’? However with a marketplace that is less hectic and profitability is the key to continued success, now is the best time to take stock of your organization and make the improvements that the busy times would not allow your organization to do.

Implementing new proven technology solutions is one area that can create tremendous benefits and provide real measurable value to your organization. Older technology that is antiquated can really cost your firm more money than upgrading and will most certainly inhibit future growth when the marketplace, once again, shows signs of rapid growth and prosperity. Will you be ready?

The marketplace is what it is and impossible for anyone to control. You have to work with what you have. This means squeezing every dime of profit from every deal your firm makes. Proven technology solutions allow your company to get more accomplished with less people and apply profit-making strategic plans that can see your bottom-line grow even when the number of transactions is down from that of previous years.

To grow you business during these transition times and ready your firm for the future, here are ten great reasons to upgrade to the next generation technology today and take advantage of the opportunities that proven solutions can bring.

Using the David Letterman count down method, here are ten great reasons for using proven technology solutions to add more profitability for your real estate operation.

Number 10 – Take control of your future - develop a post marketing campaign for future sales

Now that time permits your administrative team to do so, take control of future clients. When sales are busting at the seams, nobody considers the market conditions seven to ten years out, but ‘good’ businesses become ‘great’ businesses by doing those things that their competitors are not doing.

Everyone in the real estate industry knows that the buyer and seller that just closed that deal today will be a prospective client in the next seven to ten years. Marketing 101 clearly states that it is far less expensive to maintain an existing client than to create new ones, so creating a ‘post-marketing’ campaign to earn the loyalty of existing clients just makes good sense!

Leaving this vital task to your sales associates is a weak strategy of false hopes and assumptions. Very few sales associates are disciplined enough to create and maintain a ‘customer loyalty’ program and even if you have some that are motivated to make the extra effort, it is unlikely that the sales associates with your firm today will be with you seven to ten years out.

Sophisticated real estate firms understand the importance of ‘owning’ the buyer or seller at the start of the selling cycle. Many firms are wrestling with the ‘agent-client’ relationship and very much want to modify that relationship to one that is more ‘company-client’ where the sales associate is a minor player in the sales process.

There are many reasons to create this loyal relationship between the company and prospective client, but the overwhelming reason is sound economics, even possible survival of your real estate organization. In an era of all time low profitability on real estate sales, it is imperative that real estate firms find new revenue opportunities without the interference from the sales associate.

Clients want ‘one-stop-shopping’ (see Reason # 9 to be posted soon) and they are willing to pay for the convenience, but to take advantage of this exciting revenue opportunity, the relationship with the client must be started by your real estate firm so that mortgage, title, insurance, home warranty and other ‘services’ offered by your strategic business partners are not re-directed to other service providers by your sales associates.

Here’s an example of how your company can increase profits, albeit more long-term, when clients are ‘company-owned’. Past buyers and sellers that have been involved with your organization can become future ‘leads’ that can be distributed by your firm to new agents and where your company can receive an off-the-top ‘referral fee’ for the lead, just like any referral lead given to an associate. Let’s do some math to illustrate the economics of this strategy.

Assumptions (multiply by your actual numbers):

1 branch office
25 agents
25 transactions per month (300 sides per year)
$200,000.00 sale price
3% gross commission per side
50% of agents will leave your firm within the next 5-10 years
75 past customers will be orphaned each year (out of the 300)
50% of orphaned customers will return to your firm when buying or selling (37.5 clients) through customer loyalty campaign
25% off-the-top lead referral fee paid to your firm because customers are now ‘owned’ by your company ($1,500.00 referral fee commission)
$56,250.00 additional commission revenue earned
$100.00 per client per year customer loyalty campaign cost ($30,000.00)
$26,250.00 net profit received from customer loyalty campaign
Using NAR $100.00 average profit per side the $26,250.00 would be like adding 262.5 more sides to your transaction total for this branch office

This illustrates the significant potential increase in profitability and for just one branch office. How many extra sides would this branch office have to make to generate this kind of additional profit?

The easiest way to ensure that you have total control of the client relationship is to create a post-marketing loyalty campaign that has those precious clients coming back to your company and not the sales associate that has long left your firm.

Implementing modern back office technology such as Profit Power can properly capture the buyer and seller data at the time of the sale including the post-sale address of the seller and automate the customer loyalty campaign activities.

All that is required is a simple operational change that asks your administrators to take a few extra seconds to properly collect some additional contact data and you are well on your way to creating a sound strategy for future prosperity and taking ‘ownership’ of the sales process. More to come!