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The True Cost of Incompetence

Leaders often think that the cost of having an incompetent salesperson on the team is the wage paid to that person. There is a lot more to lose with an incompetent salesperson. The salary is just the beginning.

Let’s say you pay $50,000, but if you are in Australia you have 9.5% superannuation on top of that so now you’re at $54,750 – we’ll forget Pay Roll Tax and other expenses for this exercise. MORE

Business lost through incompetence

Now let’s look at loss through incompetence. Is it reasonable to expect that an incompetent salesperson will lose 1 listing a month? That’s conservatively 6 sales lost. At an average selling fee of $15,000, that’s $90,000 per year. Add that to the lost salary and now your losses are $144.750.

Opportunity lost

In 1993, the average production of a salesperson was $135,000. In 2018, despite a recent boom, there was no evidence that it was much higher.

Let’s say your salesperson writes $140,000 in fees per year – a very common figure. Now suppose that IF you had effective hiring and induction systems, you could have hired a salesperson who produced $300,000 per annum.

If you could have hired that person, but didn’t, your losses in opportunity cost are $160,000. Add that to the $144,750 lost through incompetence and the salary paid, and you lose $304,750. These are serious losses.

This is the true cost of incompetence!

Even if you pay commission-only, you’re only better off by $54,750, making your loss through incompetence $250,000. It’s still a lot of money.

The trouble is that it is easy to dismiss these losses because you never see the money – only the salary is money that you had and then paid to your incompetent salesperson. You never had any of the other money, hence the tendency to not take it into account.

Real money

But you’d better believe that this is real money, even if you didn’t get it because of incompetent salespeople.

Imagine I walked into your office with a briefcase. Inside the briefcase is $250,000. I tell you that this money is all yours at the end of the year, BUT I will be deducting the equivalent of one selling fee every time I detect business lost through incompetence by one of your salespeople.

A salesperson walks in after two hours out of the office. He’s been on a listing appointment. “Did you get it?” you ask? He replies, “No, but I’ve got a good relationship with them. If they list with anybody, they will list with me”.

And right then, I reach into your briefcase and remove $15,000. Would you believe then that incompetence is costing you real money?

This is the point – money you had, but lost, always hurts more than money you missed out on, but never saw. It’s the same money, and it buys the same things, IF you can get it.

Four incompetent salespeople cost an agency around $1 million in lost expenses or income. Do you want some of this for yourself?

Then train your people. Make incompetence a thing of the past in your agency.

Gary Pittard

Great Expectations

In this short leadership session, real estate agency profit consultant, Gary Pittard, explains that a team will never exceed its leader’s public expectations of the team. If the leader aims high, the team will do likewise. If the leader has low, or no, expectations the team will almost certainly be mediocre.

Great expectations lead to great results.

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The Impossible Gap

Agents who inflate the likely selling price with sellers in order to win the listing – who ‘buy the business’ – might get away with it during a boom market, but in a down market this horrible practice no longer works. Many agents paint themselves into a corner.

In our sales program, Winning Ways – A Smarter Sales Career, we teach real estate salespeople that when an agent quotes two figures to buyers by way of a range, the lowest price in that range becomes the de facto list price. MORE

Say an auction property is passed in with only one bidder. The sellers’ reserve is revealed to be $4.5 million but during the inspections buyers had been quoted $3.6 to $3.8 million.

The agent that quoted $4.5 million to the sellers while quoting $3.6 to $3.8 million buyers now has a negotiation gap of $700,000 at best to $900,000 at worst.

The agent has created the self-imposed problem of The Impossible Gap.

Let’s be clear: if you are not a good enough negotiator to tell the sellers the truth at the time of listing about their likely selling price, and take on the listing on a foundation of honesty, you are not good enough to negotiate a $700,000 price gap, especially in a down market.

No doubt I’ll be howled down by those who say this practice is not widespread, just a strategy used by a few ‘bad apples’. But let’s get real. In Victoria, many high-profile cases have seen agents fined hundreds of thousands of dollars for this practice. One day NSW and QLD will follow suit, if they are serious about stamping out the practice.

But integrity aside – from a salesperson’s perspective, why would you resort to tactics that create a no-win situation for you and your clients?

The truth is a wonderful sales tactic if you know how to deliver it with tact. I cannot recommend it highly enough.

Gary Pittard

Before the Close

In this short sales session, real estate agency profit consultant Gary Pittard explains that closing is not like a Wild West gunfight, with six shooters at ten paces and only one walking away. There is nothing adversarial about closing. In fact, it’s the opposite.

Closing is the simple act of helping somebody make a decision. But before the close, there are important things that must be covered if you want to lead the client to the right decision.

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Four Steps to Turn Around Struggling Salespeople

Struggling salespeople – we’ve all had them. They can be frustrating, and they can cost your company a lot of money. So how do you know whether to persist with them or fire them?

In 25 years as a real estate agency profit consultant, I have seen entire teams of strugglers who fail to reach an acceptable performance.

Why do leaders keep such people? Some leaders wrongly believe that inconsistent or poor performance is just the way it is in Sales. But I can show you many Pittard clients who have incredible teams of happy, peak performers. MORE

You can have this too, with some systems, leadership and determination. Poor performance is not a fate accompli. You can – indeed you must – do something about it.

The key to dealing with strugglers is to know which ones you have a chance of turning around. There are only two types of salespeople: the right people and the wrong people.

Identifying the right and the wrong people is easy.

The right people:

  • Have a good attitude
  • Are willing to train
  • Are willing to do the hard actions
  • Work hard

The wrong people are the opposite. These must go. You will never turn these people around, so don’t waste your time trying.

Four steps to turn around struggling salespeople

When you have identified the right people and removed the wrong people, it’s time to begin the turnaround.

First, get your struggler to train hard. Help them set a study program designed to improve their areas of weakness.

If they have difficulty listing, work on their listing presentation. If they have trouble coming to the point, drill them on succinct communication.

Second, test their knowledge. There is no point increasing their level of actions (step three) if they can’t do them competently. Constantly test them on what they’ve learnt.

Are you seeing improvement? If not, they either aren’t studying, or they aren’t absorbing. Either way, you have gone as far as you can go with this person and it’s time to terminate their services.

As their knowledge improves, so will their results, but this is only half the battle. You must increase their actions. This is Step Three.

Get them working hard on the right actions. Work with them to formulate a plan. Get their commitment to follow the plan.

All salespeople, but especially rookies and strugglers, must have a plan and must follow it. They must know where their business will come from, particularly where they will find their listings. How many people do they need to speak with to get one listing?

Some listing sources produce better results than others. You could make 150 cold telephone calls to get a listing, or if you prospect on a busy road, you might get one listing for 70 calls. Help your strugglers identify the warmest listing sources and have them work those sources.

Fourthly, monitor their actions. Are they following the plan? If so, persist with them. If not, terminate. Never pay wages to people who will not do what they said they would do.

Turning strugglers isn’t a complicated process, but it does require the leader to act. Don’t accept poor performance as ‘just the way it is’.

If I can be of assistance, please do let me know.

Gary Pittard

Great Leader or Pretender

In this short leadership session, real estate agency profit consultant, Gary Pittard, points out the difference between great leaders and great pretenders.

If you want quality results, you need quality people. You don’t put your head out of your office window and whistle for winners: it takes hard work, over the long term, to find them, develop them, and to weed out those who do not fit the team.

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Self-Management

Do your results fluctuate? Are they persistently low? Have you ever found yourself blaming outside forces, such as the market or difficult clients, for a run of bad luck? The good news is that this can be fixed.

In my book, Why Winners Win, I name four Success Ingredients: Attitude, Knowledge, Skill and Competent Action. MORE

With the right attitude, you will study. You will practise what you learn in the field. Through this practice you will develop skill and your actions will become more competent.

But you can still be competent and not do enough competent actions, so your results will still be low. This is why self-management is so important.

Some call this time management, but we really don’t manage time; we manage ourselves within the time we have available.

Many salespeople drift through their day without purpose because they don’t have a plan. Those with goals and plans get more done. They manage themselves and their time because they know where they are going, and why.

So… do you have a plan?

The key to skilful self-management is to know what needs to be done and to be willing to do it.

Winners treat their time as a valuable asset. They guard it and give it to the right people. They don’t allow the wrong people to steal their time.

Winners

  • Set goals – they decide what they want
  • Determine the cost of their goals – both in money and in trade-offs in other areas of their lives
  • Calculate sales and listing targets
  • Crunch the numbers – calculate how many people they need to speak to in order to achieve their targets
  • Determine the listing sources they will work on
  • Want their goals sufficiently to focus on them.

With these foundations, self-management is much simpler. No time is lost thinking about what needs to be done next – just open the plan and follow the next step. And by constantly studying and improving, little successes fuel motivation to do more. Gradually, inconsistent performance begins to turn into consistent, climbing results.

You might not be doing enough of the right actions right now, but you can fix it.

With a plan designed to lead you to goals you really want, you will find self-management easier than you first thought.

Give it a go.

Gary Pittard

Doomed to Fail

In this short sales session, real estate agency profit consultant, Gary Pittard, says that salespeople who will not train are doomed to fail.

There are no new objections in Sales. It is possible to learn every likely objection and learn how to prevent it from becoming a barrier to a sale.

Training can be expensive. It might cost $2,000 to attend a seminar to learn how to overcome these barriers. But have you ever calculated the cost of incompetence?

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Talent Scout and Coach

To maximise profit, two of the leader’s most important roles are Talent Scout and Coach.

Gary Pittard

In my 25 years as a real estate agency profit consultant, one of the greatest ‘sins’ I’ve seen leaders commit is holding onto the wrong people for too long – often despite their better judgment.

When an underperforming team member leaves, or is eventually fired, I’ve lost count of how many times the leader has said, “I should have done this long ago”. MORE

An Arabian proverb says, “When the horse you are riding dies, get off!” If you believe you have the wrong person on your team, you should heed this advice.

The easiest way to detect whether a poor performing salesperson has any hope of reversing this trend is to ignore their words and look at their actions.

  • Give them a book and ask them to read it, or ask them to listen to an audio program. If they don’t, that is enough reason to terminate their services. They are unteachable.
  • Ask them to commit to a high level of prospecting – 40 a day for a month. If they refuse, or if they say they’ll do it, but don’t, that’s enough reason to terminate their services. They are afraid to prospect.

Some people are not teachable. Some will not do the actions required by their job descriptions. Keeping these people on your team will lose you the respect of the good people. If you can’t turn these people around, it’s time to put your energy into finding the right people. It’s time to put on your ‘Talent Scout’ hat.

One reason leaders persist with wrong people is because they don’t have anybody to replace them. That’s why good leaders are constantly looking for winners, the right people to join the team.

Once they find good people, they induct them into the company the right way, with induction systems designed to train the person and get him or her productive almost immediately. Culture and action are taught, and standards set. Ongoing monitoring is implemented. All team members know that they are accountable for the actions they are expected to complete.

The leader then moves into the role of coach, working with the team to bring out the best in each person.

These leaders always remain on the lookout for prospective winners. In the best offices, there is always room for a winner but there is no room for a mediocre person with a poor attitude.

I am not suggesting ‘Churn and Burn’, which some ruthless leaders are known for. I do suggest, however, that you quickly part company with people who will not meet your standards of culture, training, presentation and activity, and find salespeople who will.

Many leaders do not have hiring problems; they have firing problems. And because of this, their teams contain people who have little hope of success.

Be a talent scout and coach. Then tell me if your profits don’t soar!

Gary Pittard

Leadership: Not Just Bossing People About

In the 21st century, employees work with leaders, and not for them. “Generational differences have changed the face of employment” says real estate agency profit consultant, Gary Pittard.

Respect must be earned. In this short leadership session, Gary discusses how leaders can achieve this.

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Pipeline of Prospects

“The 30Day Rule states that the prospecting you do in this 30 day period will pay off for the next 90 days. It is a simple, yet powerful universal rule that governs sales. Ignore it at your peril. When you internalize this rule, it will drive you to never put prospecting aside for another day

Jeb Blount – Fanatical Prospecting

Where is your next listing coming from? If you don’t know, you’re heading for a performance slump. All salespeople should have a full pipeline of prospects – warm leads that will soon germinate into listings, then into sales, then into income. MORE

Many salespeople believe that their stock levels, and the saleability of their stock, are at the mercy of the market. This thinking leads them to believe that when the market turns down, so too will their results.

Leave market-driven thinking to your competitors. Fill your pipeline with prospects and you will have a regular flow of incoming business.

Some real estate trainers appeal to the mediocre many by saying that prospecting is dead, that prospecting in the modern age is done through social media. Be careful of listening to these gurus – they will send you broke.

Social media is a marketing tool, best left to your agency to set up and maintain. If you are a salesperson, your most effective method of self-promotion over the long term is face-to-face or voice-to-voice – that is prospect at doors or prospect by telephone.

In other words…

TALK TO PEOPLE!

Prospect – 40 potential sellers every day, or 200 per week –follow up diligently and over time you will have a source of warm leads. Whenever you sell a property, prospect harder and find a listing to replace what you sold. This is a great habit to develop and will insure you against running out of stock.

In the absence of a pipeline of prospects, generated through constant prospecting in high numbers, you will always be desperate for listings. You will always be ‘looking under rocks’ for listings.

The Winner’s Creed is:

“Whenever I make a sale, I will not congratulate myself until I replace the listing I sold”.

Make it your mantra. Talk to people. Fill your pipeline with prospects. Your reward will be a high and consistent income.

Gary Pittard

Price and Time

In this short sales session, real estate agency profit consultant, Gary Pittard, discusses the danger in allowing sellers to stay on the market overpriced for too long. Gary believes you have two weeks to get your listing priced to sell. Fail to do that and you risk losing the best buyers.

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