Wednesday, September 20, 2006

MasterMind Call Notes: "Don't Do It!"

MasterMind Call Notes:"Don't Do It!"September 12, 2006
"Don't Do It!"

Highlights$500 account credit winners:

Don Riner: Indianapolis, IN
Cynthia Shaw: Mississauga, ON

"Don't Do It!"Featured Speaker: Joel Persinger, San DiegoModerator: Scott Smith, Vice President of Customer Success

Today’s Mastermind has been in real estate for 16 years. He comes with a 20-year background in sales, which has helped him become one of the top negotiators in the real estate field today. His career has included positions as Vice President of Sales and Marketing, Director of Business Development and Regional Sales Manager for major corporations and internet-based companies alike.

It’s this sales and technology background that allows our MasterMind to consistently earn six-figures even as the market continues to shift. Listen closely as Joel shares how he uses technology to continually grow his real estate pipeline. You’ll want to take special note as he shares his techniques for mining his database. In addition, you want to take away the importance of calculating your ‘return on investment’ and why this is key to growing your business.

When sales slow, some agents slash marketing to cut costs. Don’t do it! Joel Persinger, top producer and 6-figure income earner, advises instead to get creative! For Joel, it’s the HouseValues’ system that delivers. During lean times, Joel ramps up business with a “get something started call” to prospects in his MarketLeader database. Plus, he self-generates 60-80 leads EVERY month. Simple, powerful and market-proven techniques produce transactions—even in a shifting market. His MarketLeader pipeline holds pockets full of gold. Yours does, too. Listen in as Joel shows you how to find the gold. Scott: How is the market in La Mesa?

Joel: The market has changed quite a bit over the past year or so. Like many areas of the country, there were a number of years where real estate was really booming and as a result the cost of homes went up dramatically around here. When it started you could buy a nice house for around $250,000-$350,000 where now the median price is $500,000-$550,000 range.Now things have flattened out a little bit. I would actually say it’s more of a normal market. It takes about 30-60 days to sell a house and there are more sellers than there are buyers. So sellers have to be more eager to negotiate and price their houses more aggressively. We are still reasonably busy, it’s just not the slammin’ crazy market we had before.

Scott: What have you done to more creatively shift into this buyer’s market?Joel:Selling strategies have gotten more creative. As an agent who likes to take listings more than anything else, you have to figure out how to get yours sold when there are 80 gazillion on the market trying to get their’s sold, too. So you change your approach to selling those. Part of that is pricing more effectively and getting them ahead of the downward price curve. In our neck of the woods, the downward price curve is the seller’s expectations getting more in line with reality than it actually is houses declining in value. We are still seeing an increase in value, but it is very slight by comparison. So the seller’s expectations are becoming more real in regards to the market.

So you have to adjust the way you sell the property by being more aggressive in your pricing so that you can focus the attention of all the buyers on that particular home as competitive item and hopefully generate multiple offers on it. It’s just a little different strategy. I sold three different houses this month, and did that with each one and we were actually able to get more than the sellers thought they would get out of it.

Marketing strategies are a little bit different. We’ve essentially gone through and looked at expenses and started trimming in various parts of the business, which is what you do when things slow down no matter what type of business you are running. So we’ve made some cuts there.

Scott:So, you educate sellers on the market and get them to understand what is happening in a market they perceive as actually slowing even though they are still actually appreciating. What is the secret to get them to list with you?

Joel:Tell the truth. It sounds like an old trite thing of being honest and ethical, but part of it is just telling the truth. I have a motto, which I got from someone else, of ‘I like to work with people I know and like and trust and with people who know and like and trust me.’ I follow that, so it’s an issue of approaching clients from the standpoint of looking at the business as a representation business not a sales business. Houses sell themselves if you market them right. My goal is to represent my client’s best interest so that their goals are achieved somewhere along the lines, in a way that makes sense for them and a timeframe that makes sense for them and with as little hassle to them as possible. In order to do that, I have to tell them the truth about what is going on with the market and what the possibilities of their home selling at a particular price are. Otherwise, they can’t make well-informed decisions. For them, it is oftentimes the largest commodity they will sell. I sell more houses in a month than most people do in a lifetime, so I have more experience than they do. So it behooves me to communicate that to them and help them by virtue of that experience. If I do that, then getting them to price the house right isn’t nearly as difficult because they don’t look at me like a guy looking for another commission. They look at me as a guy trying to help them reach their goals. As a result, I don’t have clients that think I’m trying to snow them or lead them down the garden path.

Scott:Do you actually use the phrase “I’ll sell more houses in a month than you’ll sell in a lifetime, Mr. and Mrs. Seller”?

Joel: Sometimes I’ll ask people ”how many homes have you sold?” They’ll say “two, three, five, one.” I’ll ask them “would it be of benefit to have someone in your corner who probably sells more houses in a month than you do in a lifetime?” The answer is universally “yes.” And I say “you know what, that’s me. I may not know everything, but I’ve done this for sixteen years and I’ve learned a lot in that time.”

Scott:In the intro we say your mottos is “don’t do it” when it comes to slashing marketing costs. Given your background, can you share how you think through that in a changing market?

Joel:There is a HUGE difference in slashing marketing costs and trimming them. You mentioned my background. My background is with large companies for the most part in some form of management. What I discovered during that time is when things slow down everybody pushes the sales department to go get more sales and cuts the marketing budget like crazy, so the phones stop ringing. This is precisely what they shouldn’t do. Yeah, go push sales but you also want to get the phone ringing. So the time to really focus on marketing is when the market is slow, because that’s when you have more competition. The key is that you must understand what to trim and what not to trim, and how to go about figuring that out. We trimmed our marketing budget. We also had to cut some employees who weren’t producing; basically back down to my assistant and me. So we trimmed some expenses there.

So I looked at marketing, and what I looked at was what is returning money on my investment and what wasn’t. What little marketing things had I done, and what could I trim from that? What I discovered was that I was able to trim $1100-$1200 per month from our marketing. That’s now $1100-$1200 I get to keep in my pocket or my business coffers. There are two ways to make money -- make more or spend less.

But what we NEVER did was look at the hub of our marketing system and start chopping away, and that is a very common thing to do. For example, I look at MarketLeader as the hub of my marketing system; it’s the trunk of my tree. I will never start chopping my trunk apart because that is the main core of my system. What I’ll look at is how am I generating leads to populate that system, and maybe this isn’t working or that isn’t working, but this is working. So HouseValues doesn’t get messed with. What does get messed with is the little things that generate leads along the way.

Scott:So if you were to take a pure strategy of to make more spend less, you would gravitate toward reducing the highest dollar expenses but that’s not what you did. You looked at the ROI on each investment, and additional let me build a core foundation and not touch that as well.

Joel:It is enormously common, particularly in large businesses, and I think the average individuals have the same impulse. I had my bookkeeper pull the income statements for the past several months so I could see what our expenses are. If we were to just look at the profit and loss statements, just look at the expenses and say this one is the biggest expense so let’s cut that, then that’s like a blind man with a chain saw. This would have done away with the trunk of my tree. Instead, what we did was look at the marketing items and analyzed each to see which was being effective and which are not. Then the ones that were not effective, we cut. What ended up happening was we actually reduced the cost of marketing a little bit more than I would have if I had first chopped the most expensive item. As a result, we still have a very effective marketing system, we just don’t have all the fluff that wasn’t accomplishing anything.The impulse to avoid is to start slashing by looking at the most expensive item without regard to whether it is being successful.

Scott:You took a very methodical approach and trimmed things on the fringes. How did you go about that decision process of cutting things on the fringes?

Joel:When I try a new marketing item, I generally try things for three months. When I decide to try something new, I say okay, that’s the end of my marketing budget and I’ll have to look at this for three months to see if it’s generating activity. If it is generating activity, I might continue with it; if it isn’t generating activity then I cut it and go try something else for three months. It doesn’t have to generate business; it just has to generate activity. In other words, is the phone ringing, are people hitting the Web site, are leads being generated that we can then put into the MarketLeader system and then follow up with over time and generate business? I’ll look at the balance of how much activity is being generated, what type of activity is it, and does it justify the amount of money I’m spending on it. The problem is when business is just bopping through the door and you are just slammed all the time, you kind of get out of the habit of watching those kinds of expenses. So what happened when the market slowed down, I had a whole bunch of those going on and I wasn’t so good about saying I’ll try this one and see what happens and then I’ll try this one. So I just tried a bunch of them because I wanted to see if they would work and we had all the extraneous kind of stuff going on. We looked at each one individually and tried to determine what was happening in regards to that. There were also expenses associated directly with the buyer’s agent, so when that person was let go we didn’t need those things anymore so we cut those expenses as well.

Scott:You said something there, you don’t have to generate business but you do have to generate activity?

Joel:Right. Business comes if you have activity. If the phone is ringing, if I’m talking to people, or if people are hitting the website wanting to look at properties or wanting a CMA on their house, if I’m getting that kind of activity then business is going to come because we will keep contacting them over and over again.I have a listing right now in a little town called El Cajon. The lady entered our system as activity, she just wanted a CMA in December of 2004. Well, I just listed the property a couple of months ago and I just got an offer yesterday. So we keep in touch with those folks over time, knowing that over time business will be generated. The key is populating the database with more and more leads by creating activity and then keeping in touch with those people.

Scott:That one came from 2004 and had you analyzed that as business generated in 2004, it would have been a very poor return on investment, but since you analyze it as activity you were able to turn it into business over time.

Joel:Right. As I’ve shared with people a million times, my grandfather was a 40-year real estate broker and he used to tell me that you track the houses, you don’t track the people. I’d ask him what he meant, and he would say “see that house” as we were driving down the road, “I’ve sold that one four times; see that one over there, well I’ve sold that one five times.” He would stay in touch with the people who lived in that house because he wanted to keep selling the houses over and over again. So once there is someone in our database who owns a house, whether came in as a CMA lead or as a house I sold as a listing agent but didn’t represent the buyer, we now know who the buyer is. We keep that house in the database and we continue to keep in touch with those people. From time to time, I’ll pick up a listing that way and people will say “I appreciate you being my agent when we bought the house.” Well, I wasn’t their agent when they bought the house, but statistically we know that most agents don’t stay in touch with people after they sell a house so they ended up thinking I was the guy.Scott:So not only do you have prospects you are working with, you take every property and say I’m going to adopt who ever owns that property?

Joel:Yeah. Then when we update the CMA every six months, if we find in the interim that house was sold, that’s fine. We just update the information from the public records and we continue to send them a CMA every six months to stay in touch. We now end up with a database with thousands of people and thousands of homes in it that we are keeping in touch with on a regular basis and it just dribbles out business.

That’s why I call it the trunk of the tree. The idea is to feed the tree and then out of the top of the tree comes all this fruit. And if you are going to trim your marketing, you might prune the tree, but you don’t take the axe and start chopping at the tree. That is a very common thing for people to start doing when the market starts to slow down; they go chopping down their marketing efforts because they are doing it indiscriminately because it happened to cost more money. As a result they kill their business and have to go get a job.

Scott:You’ve been in real estate for 16 years. As the market is changing back to a more normal market, do you find real is harder or easier than it was before? Have things changed?

Joel:Yeah, a lot has changed. Technology has changed tremendously. But from the standpoint of is it harder to make a living in real estate than when I started? No! It’s easier to make a living than when I started by far because the tools are phenomenal by comparison.There is no way in the world when I started in late 1989 that I had a tool like MarketLeader. I mean everything was done with 3x5 cards and nobody had a cell phone unless you were the top agent in an area and then it only worked sometimes if you were standing just right. The tools today are just tremendous. The major difference I think those tools have brought along with them is that people now have an expectation of instant return on questions and information. They want to use the web and they want to find out things now. So turnaround time is extremely important as a result.But the tools we have now are amazing. Anyway I want to print something, I can order it on the web and it shows up the next day. You used to have to go down to the printers. I remember having to hand-make fliers. I took the pictures, had to take the pictures down to the photo place and then hand wrote or typed up the flier and glued the pictures to the fliers. That’s how you made fliers with pictures on them, and that was only for the really nice houses. Now you do it for every house and you order them on the Web and --- boom -- they are in your office or at the house the next day.

Scott:Do you do electronic postcards as well?

Joel:Sure. We send out e-fliers to agents, all kinds of things that are available. One of which is MarketLeader. As I mentioned, it’s the hub of my system and manages a tremendous number of things for me. I don’t know that I could do business without it as well as I do.

Scott:As we mentioned in the introduction, you generate between 60-80 leads per month outside of what you do with HouseValues. How do you do that?

Joel:That is an average over the year. We generate them primarily by using the webcapture feature, although we do other things that generate leads as well. We use webcapture a couple of different ways, we try to get creative. There are some ways we could pay, but I try to get creative to try and get people to come to the website.One example: A lender and I split the cost of some ugly yellow signs that say ”find out what your home is worth” and give the website. My title rep takes and puts those out in certain neighborhoods, then people visit the Web site and request a CMA. It costs very little because the signs are cheap. The title rep puts them out for nothing because he knows he’s going to get the business, and I’m only paying for half the signs because I took the website and linked it to the lender. So the lender, who is paying for half the signs, is now getting some benefit because: a) I referred that business to them and b) they also have a link on my Web site they didn’t have before. Of course there are lots of other things you can do.

Scott:You are driving people to your Web site, generating 60-80 leads per month, and only paying for a portion of it because your lender is involved.

Joel:Well the signs are cheap. You are buying 200-300 signs that will last 4-5 months before they disappear, and then you go but them again. So it’s not a real expensive item, and I’m not paying the title rep to it, he’s making money as he goes as we send him business.

Scott:You also mentioned another creative marketing strategy in the past around sending updated CMAs and coupons from Chili’s restaurant?

Joel:That was actually Alan, my assistant’s, idea. We had for sometime sent CMAs every six months or so, to update people because it is something of value. People want to know how much their house is worth. We tell them at the outset that we’ll be sending them an update every six months. We used to send the entire HouseValues package every six months with the HouseValues folder and the whole deal, but that got very cost-prohibitive the bigger your database gets. Instead, now we send the HV CMA printed out with three comparables on one sheet from the MLS and the tax record information. In there, we put a coupon from Chili’s restaurant or whatever restaurant we happen to have. At this point we just happen to be using Chili’s because my assistant went to lunch and was talking with the manager and mentioned that we mail out a hundred or two hundred of these per month and I wonder if you have some coupons you could throw in there; maybe we could stir up some business for you. The guy was happy to reach in his desk and pull out a huge handful of coupons for $20 bucks off for lunch or dinner. So it cost us nothing for the coupons and made the manager very happy. So it’s one more excuse for someone to open up the envelope. They have opened it before and seen a coupon so they open it again. Maybe they don’t care about the CMA but they care about the coupon and they still see my smiling, happy face and they’ve got some information about their house.

Scott:You just never know what kind of partnerships you can find.

Joel:Right, and we do that a lot. One thing Alan does in his telemarketing effort on a regular basis is keep a sheet of preferred vendors. Every real estate agent who has been around a while has an electrician, a handy man, a plumber, etc. So we have them in a file on the computer. Then when Alan is talking with, he finds if they are remodeling or whatever and he’ll just ask them “do you have a this” or “do you have a that” and we’ll refer those people to them and we get referrals back. At the same time, it makes us a “go to” company for these folks in our database to call. Oftentimes I’ll get calls from people who don’t care about real estate right now but they need a plumber or an electrician or whatever; we become the hub for them.

Scott:You haven’t trimmed your assistant?

Joel:No, he’s not trim-able. He is a core guy here.Scott:What does Alan do for you and your business?Joel:I call him my assistant, but he is more the marketing guy. He is my assistant as well, but 99% of what he does is chase business. He manages the MarketLeader database, I don’t. I work it from time to time, but my view is that my job is to go spend time with people face to face, talk with current clients, spend time with the sphere of influence, be the chamber meetings, be out and about, that kind of thing.His job is to get on the phone and contact the people in the database we have phone numbers for or a regular basis, and make sure that cycles on a regular basis, putting together the CMAs, make sure the marketing material goes out, that sort of thing. His job is to generate appointments and business. He’ll often generate appointments for me based on those phone calls and contacts.

Scott:Sounds like each of you brings a unique skill set.

Joel:Don’t hire someone just like yourself. We are different enough that he’ll come up with things I never would. I would have never thought of the coupon idea, he just went and did that on his own. He has made some real enterprising steps toward managing the database that I would have never thought of.

Scott:If you had one opportunity to take a new agent and tell them how to think about running their business, what would you tell them?

Joel:Be patient, realizing that if you are starting out brand-new, it’s like any new business. It would be just like if you were a doctor starting a new practice, or if you were starting a $3 million business, or if you were starting a coffee shop or anything else. Starting a business takes a lot of effort, a lot of time. It’s like rolling a giant steel ball. It’s hard to get rolling, but once it is rolling you just have to reach up and push it from time to time and it will roll all by itself. The first part takes a lot of hard work and a lot of patience.The second part? Build it as a business. Realtors tend not to do that. They look at it as job or part time thing or whatever. If you build your practice as a business, then you are going to look at your marketing from a business perspective and you are going to want to build a system that has at its core a systemized way of approaching customers from the minute you get them as a lead to you’ve sold them a house to you’ve followed up with them as a past client to you’ve generated referrals from them. If you work it that way, business just sort of bops through the door through the years. You may not realize where it came from, but it’s probably something you did six months ago, a year ago, or three years ago or as an ongoing thing where you developed a relationship with someone in your database.

Scott:A couple of things I heard right here: 1) think about this as a business -- as building a business; 2) analyze this from a business perspective. Lastly, do you look at this on a lead-by-lead basis when you calculate ROI?

Joel:No, I really don’t sit down and calculate we brought in X number of leads this year and out of those we sold so many properties. I do look at it from a money standpoint, from a profit and loss standpoint. I measure activity. If I look at it from a short-term basis of I got 30 leads and none of them turned into business today, I’m ignoring the fact that will turn into business down the road. As I pick a marketing activity, does it do one of two things: 1) will it help me manage my marketing and home my prospects along or 2) does it provide me with a lead I can turn into a client, and if so how many and how many are real? If I can generate activity that will generate business down the road, that’s good enough for me as long as it is commensurate with the amount of money I spend.

Scott:You can’t have sales without activities, and activities drive sales.

Joel:Let’s take activities one step further. You mentioned salespeople. We used to buy leads for a sales department I ran, and the salespeople would come back and complain about the leads, complain about the leads, complain about the leads, complain about the leads. I had a guy that never showed up in the office and was a top sales guy and I had another guy who showed up at the office all the time but didn’t sell anything and he use to whine about the other guy cause he wasn’t doing anything and he was never in the office. I said “yeah, but the difference you and him is he is out generating business all day and you are sitting here in the office complaining and that’s the issue.” The issue isn’t necessarily are the leads coming in but what am I doing with them when they get there? That’s where MarketLeader comes in. If I just let them sit there and do nothing then nothing will happen. It just so happened that this sales guy made most of his sales on the golf course so he played golf constantly. The other guy made most of his money finally by picking up the phone.

Alan picks up the phone in the evening. I chase business during the day. Between the two of us, we generate business for the company because not only do we generate activity, we are active in our sales efforts and that is required in order to make the business work.

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