Estate agents as businesses must be proverbial basket cases. If houses are not selling and people can’t get mortgages, what can they do other than go bust – which, of course, many are.
Here are four key actions to improve business performance, and we put them to the test with our estate agent client:-
1. Don’t Drop A Ball
Managements have to juggle with FiMO – Finance, Marketing and Operations. Most managements focus on what they do best – making their products, providing their services – so Operations always gets lots of attention. Marketing for many is a necessary evil that is never as predictable in its results as the books and MBAs suggest. And Finance? Well, in the good times it looks after itself, and in the bad times it becomes the absolute focus of attention – often to the detriment of Marketing.
Our estate agent was doing just that: but they had their “backs against the wall”.
2. Put Your Prices Up
Easy to say, and the statistics are utterly compelling: if a company has a 30% gross margin and reduces its prices by 10%, it has to sell 50% more to make the same income: put the prices up by 10%, and it can sell 25% less - and still make the same income. But very hard to do when all your competitors are cutting commission rates just to get houses to sell: surely you’d simply lose business by being less competitive? Absolutely – if that’s all you did.
3. The 80:20 Rule
What other estate agents are doing is packing their windows and what advertising they can still afford with properties, in the hope that something will sell.
What our estate agent was doing – but didn’t realise – was being picky. They knew the local market, they knew what would sell and at what price. Wrong property, wrong price, no thank you, let our competitors have it. We turned that into a strategy – and a marketing proposition. We’ll only take on the 20% of properties that will appeal to 80% of buyers.
So, when prospective vendors did their “beauty parades” of agents to sell their house, our agent stood out like a sore thumb: no, we’re not desperate for your house. No, we won’t take it on if we don’t think it will sell – or you can’t agree with our valuation. And yes, we do have a higher commission rate than our competitors.
BUT the difference is this: if we take on your house we will sell it.
“Trust me. I’m an Estate Agent” “Yeah, right! As if”.
That’s the brand pillar that we recommended: Trust.
It is contrary to what people think of estate agents – and that’s the point!
4. Grow Your Sales
Two facts shone out: people buy people (who came round to value their home meant more than the agency itself), and “nobody” visits the agent’s office or considers it important. There we had the basis for the Virtual Agents Strategy: a cunning, 21st Century way of “owning” a sales territory.
Recruit a redundant agent who really knows “her/his” area, who has lots of contacts and a good reputation, locate him at the main office (overheads are decimated to a desk, a PC and extra phone calls) – and pay commission at very generous rates (but not salary). Add a new territory to your advertising, add web pages presenting the person and his/her knowledge of the territory, and have a dedicated phone number and email address.
Now you’ve added a whole new territory at minimal cost, minimal overhead, and with maximum chance to at least tootle along in the recession – then really accelerate out of it.
There, as they say, we have it. Four theory tenets not just put into practice, but applied so as to make a real, short and long term difference to a “basket case” business without significant risk, without significant up front expenditure, and with a bright new future to look forward to – even in a recession!