What is a Smart Business? We define it as a business that is sustainable over time and gives you a high economic return on your investment of time and money.
By Larry Kendall, author of Ninja Selling and chairman Emeritus of The Group, Inc. Real Estate
To build your smart business, start by helping your sales associates build their smart business, as well. Most of them are not business people, and they are easily distracted by shiny objects designed to take their money and time. Show them how to build a smart business and they will love you for it. They will stay loyal and help you recruit others who want a smart business too.
To build a smart business, you’ll need to re-focus your associates in three key areas:
- Building relationships
- Referral thinking
- Build a database/CRM and flow activities
My observation is that most sales associates are not focused on these three areas. Instead, they spend their time and money chasing strangers (internet leads) and looking at screens. Why? Let’s look at these three keys in detail.
- Focus on Building Relationships. A recent Zillow study of 13,249 households asked this question: “Did your Realtor® contact you after closing?” Here are the results:
- 74% said they never heard from their Realtor again!
- 20% heard from their Realtor occasionally (once a year).
- 6% heard from their Realtor regularly (at least once a month).
This state of the industry was confirmed recently by Lee Cockerell, retired executive vice president of Disney in charge of Disneyworld. Lee was the keynote speaker at the Colorado Real Estate Convention when he paused and said, “Can I give you an observation on your industry? My wife and I have purchased and sold 11 homes in our lifetime. Never once did the Realtor follow-up with us after closing.”
Why don’t real estate professionals follow-up and build relationships? Why are they always chasing the next lead and running their businesses like a series of one-night stands? The next two areas are the reason.
- Focus on referrals. Most real estate professionals think only in terms of the transaction. Here’s their mindset: “These people bought this house, and they are good to go for the next seven to nine years. I need to look for another lead.” Point out to your associates a Harris Interactive survey of Americans that showed on average they knew four people who moved last year. Think referrals! Think relationships! The two are tied together.
Lee Cockerell went on to say, “As the head of Disneyworld, I was interviewing two to three executives a week who were looking for housing. Had my Realtor built a relationship, I could have made their career!” Relationships and referral thinking are the greatest missed opportunities for most real estate professionals.
- Build a database/CRM and flow activities. Why do most real estate professionals not follow-up and build relation-
ships? They haven’t built a database or Customer Relationship Manager (CRM). A study of 20,000 real estate professionals by Efficiency by Design found that 60 percent of them did not have a database or CRM. No wonder they don’t stay in touch. They can’t even make a phone call or write a personal note. The 40 percent with some level of database earned 251 percent more income!
Relationships are built through frequency of interaction—face-to-face, voice-to-voice, email, text, mail and social media. We call this frequency of interaction flow. Setting up a consistent flow system requires a data base/CRM. Help them set this up and it will pay huge dividends for them and for you.
In my 44 years studying sales associates with the highest income per hour and the highest percentage of net income, they have all had these three keys in place. This is a simple business. Show your associates the benefits of building a relationship business. Next, remind them to focus on referral thinking. Then, help them put together their CRM and flow system. Help them build a smart business, and you’ll have built a smart business as well.