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Posts tagged ‘trust’

15
Jun

The Battle Lines have been Drawn between Service and Price

case studyAwhile ago I was speaking to a friend of mine about diapers. Yeah, that’s an odd way to start a blog. More specifically we were talking about all the diapers she was going through and how grateful she was to Diapers.com for the speedy delivery and awesome service. I had to admit I never heard of the company even though they have been around for about 7 years or so. Thankfully my diaper changing days are well behind me. The fact is that this was a company that came out of nowhere and turned into a half a billion dollar company. I asked my friend about it. The first word out of her mouth was ‘service’. I decided to take to the internet and do a little research on the company and lo and behold I found some interesting details that parallel the real estate industry closely. Maybe I should be more specific. They way they ran their business is the way I want to run my business.

Consider that Diapers.com had lots of competition. They knew they couldn’t win on price but they recognized that having a baby was a challenging time in everyone’s life. Sleepless nights and general chaos and mayhem. Mothers needed help, assurances, guidance, and faith that, when ordered, the diapers would arrive on time. By their very nature diapers are heavy and bulky and expensive to ship so Diapers.com decided that they did something different. They couldn’t compete on price so they poured all their energy into customer service. They believed that their brand would only be as strong as their relationship with the consumer. They poured their efforts into shipping and tracking software, creating supply chain efficiencies and using data to anticipate the needs ahead of time. If they didn’t make money on their first order, they bet on the long-term strategy… build trust and the money will come. The strategy paid off as they figured that 35% of their business came as a result of word-of-mouth. As a start-up, the two founders boot-strapped their business part-time for a few years working nights and weekends. In fact they didn’t do any real marketing until 3 years after they launched. Consider other internet businesses that build a website and pour millions of dollars into marketing in order to gain traffic then try to figure our how to make money from it.

To me this is the ultimate business case for service over price. We can learn a lot from other’s experiences. In real estate we are trusted to help our clients buy or sell their largest asset. For the busy or uninitiated, they want it to happen quickly with the least amount of hassle and for the most money if they are selling (and the least if they are buying). Ok so maybe my title is a bit over dramatic. In the end, I believe there is a place in our world for both sides and quite frankly the customer should have the opportunity to do it all themselves if they so choose. At the end of the day however I think that an agent’s referral business comes from them doing a great job and building and maintaining their relationships with their clients and not for doing it for less money.

mark mclean is the Broker/Manager at the Bosley Real Estate Queen St W office and President-Elect for the Toronto Real Estate Board. The opinions expressed here do not reflect the opinions of TREB or Bosley RE.

10
Apr

What Does It Cost To Farm A Neighbourhood?

farming So you want to be a Realtor? Well most books you read out there will tell you that you need to farm a neighbourhood. Hey, I’m not saying that rule is written in stone because in this day and age you can prospect from your social groups or by targeting a particular age or demographic through tools like Facebook. But there are advantages to working one neighbourhood…especially one that you live in. Obviously you are familiar with it. People see you out and about (maybe with your dog) so there maybe some recognition. You go to the local stores and of course you tour properties in the vicinity to gain expert knowledge. Your geographic farm is only as big as you determine, but the realities are that the bigger the area, the more expensive it is to farm it and promote it. I like to tell new agents that you should target one or two buildings or about 500 homes before taking on more. So, last week we did a little noodling in our office about just how expensive farming can be. We outlined the action and the cost associated with it. Here’s what we came up with;

farm 2

farm 1

As you can see there is a healthy mix of the good old tried and true techniques that I believe should not be disqualified. They still work and provide the public with name recognition. They include newsletters, flyers, local paper ads, door knocking, cold calling. Add into the mix some ideas, like joining local BIA’s and neighbourhood committees, holding buyer or seller seminars and sponsoring kids teams and you have the making of a fairly substantial marketing program. On top of those more traditional approaches, social media has given the savvy realtor even more tools. Agents are creating neighbourhood channels, websites and Facebook groups, to speak with authority about what’s happening in the area. They are using video to promote local attractions and businesses and are tweeting out the latest gossip. They aren’t mentioning that they are Realtors right away though. It’s a round-about marketing technique that aims at gaining trust before asking for the business. It’s about proving to buyers and sellers that you are more dialed in to the nuances of the neighbourhood than the next guy.
You do all these things are for the sole purpose of networking (prospecting in real estate parlance). For the most part the things that you do take more time than money, but when you are starting off, you’ve got nothing but time.
Add it up and you have an idea on what it’s all going to cost you. About $20,000 per year. That falls in line with our company’s belief in spending about 10% of your earnings on marketing. The cost associated with the actions we came up with were based on actual costs that agents in my office spent and we tried to limit the size of the farm area to 1000 doors. Obviously there are some economies of scale in farming. For example, the cost to produce a video isn’t going to change depending on the size of your farm but the cost of gifts, newsletters and flyers will. There is one other factor to consider and that is location. A billboard in Rosedale (one of Toronto’s most affluent neighbourhoods) is going to cost a lot more than one in Kingston Ontario. Don’t let these numbers scare you. In a perfect world you would accomplish all this and more. For now though it’s important to recognize that some of the best things you can do is get out there and shake some hands. That’s the most cost-effective farming you can do!
Is there any downside to geographic farming? Sure. a Client you’ve taken out a bunch of times decides to look across town and thinking that you don’t know anything about it hires another agent. The best defense is a good offence so while you are out, let the clients know that you are familiar with all the neighbourhoods of the city.

mark mclean is the Broker/Manager at the Bosley Real Estate Queen St W office and President-Elect for the Toronto Real Estate Board. The opinions expressed here do not reflect the opinions of TREB or Bosley RE.

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