I recently read an industry article about remuneration for salespeople, discussing which was best: salaries or commission-only.
While I do not intend to argue that point now, a comment from an industry leader caused me concern.
This leader said that commission-only percentages varied widely, but the common rule of thumb was that the higher the commission, the less support the salesperson received from the agency.
Why is this such a concern?
For any leader to suggest that not supporting any team member is a good idea, this is a clear indication that this leader has not studied leadership and doesn’t understand the importance it plays in results and profit.
If the highest calling of leadership is to bring out the best in our people, how can not supporting any salesperson in our company be classed as good leadership?
Whether we support our people should have nothing to do with their level of remuneration. If they are on our team, they should receive our time, attention and care.
These are the greatest gifts leaders can give their people.
Over the years, I have heard many leaders complain that salespeople are disloyal. This applies especially to those remunerated by commission-only. But are salespeople really disloyal?
Some are, but I wager that most are not.
The real problem could be that leaders have not EARNT LOYALTY. If the leader didn’t support the salesperson, giving that salesperson time, attention and care, can you blame the salesperson for going elsewhere? After all, they owe the leader nothing.
The title of Leader is not sufficient to earn loyalty and respect. We must earn these.
We earn loyalty and respect by giving time, paying attention to our people (especially by listening to them), and showing respect and care.
I believe that bringing out the best in our people is the highest calling of leadership. If they are on your team, that is your leadership mission.
Giving time, attention and care will take you a long way toward “Mission Accomplished”.
I am not telling you anything you don’t know when I say that rent rolls sell for big money. But what about your sales department – how much is it worth?
Many, if not most, real estate agency owners place little value on their sales department. They believe their sales department isn’t as valuable as their rent roll.
There are two reasons for this:
- The sales department’s income and profit fluctuate and are often market dependent.When the market is good, the sales department makes money. Then the market changes to a buyers’ market, the sales department struggles to make a profit.
If you doubt that, think about the real estate groups listed on the stock exchange. When the market was down, so were the share prices of those listed groups. “Profit downgrade” was the term used. At the time of writing, we’re in a sellers’ market and the share prices of those groups are up.
Rental departments seldom experience such market dependent fluctuations.
- The sales department’s income and profit are dependent on the principal’s sales production.You cannot sell yourself. If you are the primary producer of income in your sales department, the value of your sales department is significantly devalued. When you leave, so will the income you produced.
And if your plan is to sell but stay with the new owner and work as a salesperson, seldom does that succeed.
Most real estate business owners have given up on building a winning team. We constantly hear the excuse – and it is an excuse – “You can’t find good people“. That belief alone is sufficient to stop you from filling your team with competent people. They are profit killing words!
At least ten real estate businesses using Pittard systems make profits in excess of $1 million, WITHOUT the principal having to list and sell. How much do you think those sales departments are worth?
There will be people who say, “That’s because the market is booming“. To those people I say, “Are you making a million-dollar profit without needing to list and sell? Isn’t your market booming too?”
Winners, whether leaders or salespeople, are often regarded as freaks by those who aren’t winning. It’s far easier to call somebody’s performance freakish than it is to look at what those leaders and salespeople did to succeed and then do the same.
But that does not mean that it can’t be done; it simply means that those people don’t want to do it.
With the right people, training, and leadership, your sales department can make large profits without your production being required to pay the bills.
You will need recruiting, induction and training systems, and you may need to work on your leadership skill, but it can be done.
If you are up to the challenge, if you want to build a PROFITABLE AND SALEABLE SALES DEPARTMENT, give me a call on +61 2 8217 8500.
With so many offices making record profits, everybody is busy. But for leaders, you can be busy making sales, or you can be busy running a business. What type of busy are you?
Leaders who spend much of their working week listing and selling can, if they are not careful, fall into the trap of being too busy to recruit effectively. Recruiting effectively doesn’t just mean finding help, it means finding the RIGHT HELP and coaching them.
Selling leaders often don’t monitor their teams unless something goes wrong, and they don’t monitor the progress of individual team members either, unless the salesperson is in a slump.
This scenario is common in many real estate offices: when you examine the breakdown of sales production in teams led by selling leaders, you find that the leader is close to being the number one salesperson in the company, perhaps with one, and sometimes two, other solid performers. There is a gap between the higher performers and a pack of salespeople who aren’t doing well.
Stopgap becomes these leaders’ recruiting program of choice – a team member leaves and the leader, who is too busy to recruit properly, plugs the gap with somebody who, had the leader been more thorough with recruiting, probably would not have employed that person.
It is common for selling leaders to say, “I need an assistant“, and probably the leader does. But does the leader need a good assistant or just somebody to fill the gap? Does the leader need help from just anyone, or does the leader need the right help?
Recruiting should be targeted to address a need, not a stopgap measure to fill perceived deficiencies in the team. You can waste a lot in wages and time this way.
What do you really need? An assistant, or more salespeople? An assistant will enable you to work with more clients, but are you a business owner, or a salesperson in your company?
You might do better with more salespeople, but it takes systems, dedication, and focused work, to recruit, train and induct salespeople the right way, so that the ‘help’ you employ is the ‘right help’.
Many leaders put thorough recruiting into the too hard basket. They lower their standards in a desperate attempt to find anyone to help with the workload.
It’s a paradox: in the short term, recruiting properly adds to the leaders’ workload. Inducting recruits properly does also. But the long-term benefits of recruiting and inducting properly are people on the team who know what to do, who know how to get results and create happy clients.
In the long term, having the right people on the team requires less of the leader’s effort to lead, train and coach. The right people stay longer and enhance the agency’s culture. The right people are a pleasure to lead and very profitable.
Yes, I know you are busy. But before you appoint another person to your team, ask yourself, “Do I want help, or the right help?”
There is a big difference, and that difference has a huge impact on your profit.
“Mediocrity requires a big cheque book.”
The quality of a sales team should be the main priority for all agency leaders. Allow incompetence to fester in your sales team and the losses can be huge.
Many agency leaders express concern over their present teams. Leaders say that they wish their salespeople would prospect more, were better closers, would lose fewer listings to the competition. These skill and activity deficiencies are the primary reasons why business is lost to the competition, and the price is not just a lost sale, but a massive loss of income and profit.
If you don’t believe me, calculate the cost yourself. Is it reasonable to believe that a salesperson can lose one listing a month to the competition? Let’s say the number is 10 listings per year. At a list-to-sell ratio of 70%, that’s seven sales lost by this salesperson. Multiply seven sales by your gross average fee – let’s say $10,000 – and this salesperson has lost $70,000 in fees to the competition.
It gets worse, if you have four salespeople who each lose 7 sales to the competition, that’s $280,000 in fees your agency didn’t receive. That would pay for a lot of training. That’s why I say mediocrity needs a big cheque book!
So, what can you do about it?
- The first thing you can do is train your team. Training should be regular and high quality. A one-hour training meeting once per week, a three-day sales seminar once a year, and regular testing to ensure that the knowledge is being retained can sharpen up your team.
Nobody should be exempt from training. Everybody trains. Allow any team member to show a disdain for training and you send a message that training is not important. Training is important, and in the best offices, it’s compulsory.
- Actions expectations are the second thing that leaders can address. Every day, salespeople must be involved in activities that generate business. For example, if you allow salespeople to avoid prospecting, this will cause your agency to slide into mediocrity.
- The third thing leaders can do to improve the quality of their teams is to remove those who will not train, and/or who will not do the actions necessary to get the results the leader expects from each salesperson.
Retain mediocre salespeople and your entire team will become mediocre over time.
Why do leaders keep the wrong people on their teams? The answer is that they have nobody to replace those who leave or who are terminated.
Recruiting is the answer to that challenge. Agencies must have a proven recruitment system that guarantees a flow of new talent into the agency. Every team can benefit from some ‘fresh blood’ and the enthusiasm that comes with a new salesperson.
But a word of warning: recruit without a system for finding, training and inducting new salespeople and you set yourself, and the recruits, up for almost certain failure.
Think about it: how much better would your agency’s results, and profit, be if you had a team of highly trained and active salespeople?
It doesn’t happen by accident – it happens through focused leadership. Focused on training and developing good people, removing the wrong ones, and recruitment of new people who will train, and who will do the right actions.
Do this, or lose business to the competition, and pay a high price for doing so. It’s your choice.
If you doubt it can be done, let me introduce you to plenty of city and regional leaders who ARE doing it.
No doubt you’ve heard of the saying, ‘Same same, but different’, but sadly this does not often apply in real estate. Most agencies are same, same, but not different.
If you’ve seen one real estate salesperson, you’ve often seen them all – they say similar things to win business. They recommend similar methods of sale. They push for expensive marketing campaigns. They offer similar advertising options. And, if you’ve seen one auction, you’ve seen them all – again, there is no point of difference.
A lack of points of difference presents a major challenge to agencies and salespeople.
When sellers interview three agents and they all look and sound the same, sellers will often choose the agent who quotes the highest price or charges the least. They will push for big discounts on the fees and advertising charges.
Many agents are all flash and no substance. We call these ’empty suits’. They talk a good game, particularly about their negotiation ability but ask any one of them when they last read a book on negotiation and you’ll hear crickets. This alleged negotiation ability shows itself as a baseless claim when they discount their fee to win the business.
Hiding behind flashy appearance and marketing, and baseless claims, will only get you so far. If a better competitor comes along, your agency and salespeople will have real competition.
Or, if an agency decides to spend more than you do on branding and marketing (a stupid decision), they’ll look better than you. What alternatives does this leave you except to spend more, or look like a poor relation?
Leaders must understand that skill is still a marketable commodity.
If they took the money they wasted on needless advertising, money lost through discounted fees, and money lost through the incompetence of some of their salespeople, and invested it in training, it would build their teams’ skill.
Training and practice build skill. Skill wins more business. How often do you train your team?
Is your training typical industry training? If so, you will produce typical salespeople. Again, same same, but not different.
Profitable real estate agencies use business systems that work. They have trained salespeople armed with points of difference that impress clients and win business. They set standards and never resort to knee jerk reactions to their competitors’ tactics.
These agencies are different and so are their salespeople. And they’re impressive – they earn high profits, month in, month out.
How is your office going for listings? Would you sell more if you listed more? In Australia and New Zealand, many real estate people are facing the same challenge.
Some offices that complain about a shortage of listings were suffering the same affliction pre-COVID.
If that describes you, it’s time to do something about the problem. If you don’t build stock, you will waste a good boom.
There are some ‘levers’ you can pull to boost your stock levels.
Your agency must become a ‘marketing factory’. There are three ways to market for listings and you must have all of them working for you.
This is hardcopy marketing. You should blanket your area with proven, effective leaflets and direct mail. It takes time to build momentum from marketing and you must be consistent. Every month, every property owner must hear from your agency. This is branding in action.
You should have an effective social media marketing campaign, but more importantly, you must have a consistent direct email marketing campaign. Sure it takes time to set up, but you’re missing listing enquiry if you aren’t contacting potential clients as often as possible.
How much prospecting for new listings is your team doing? Regardless of the market, some salespeople will always say they’re too busy to prospect. But is there a higher priority now? You can’t sell what you haven’t listed.
Leaders often say that the standard of their salespeople’s follow-up needs improvement. Now is the time to work on that improvement – diligent follow-up has never been more important.
As the leader, do you speak with every client who’s listed with your agency? It is important to know that your clients are being looked after by your salespeople.
- Present better
If a salesperson is losing listings to competitors, you must work on improving their presentation. It takes as much time to get a listing as it does to lose a listing. The better the listing presentation, the higher the present-to-list ratio and the higher the number of listings the agency has available to sell. Incompetence is a huge cost to a real estate agency, and I mean huge!
- Close better and more often
Are your salespeople getting the listing at the initial appointment, or do they often need to return for a second attempt?
If they aren’t closing most listings at the first presentation, they may need a better presentation and they will almost certainly need to learn to close better and more often.
A good way to improve your salespeople’s listing presentations is to have each one present to you in a role play.
Replace what you sell.
A good discipline for every agency and every salesperson is to replace what you sell. If you made 5 sales in the month, you must replace them with at least 5 listings. Keep this discipline alive and you won’t run low on stock.
I’m a great believer in fixing persistent problems and fixing them properly – once and for all.
Listings are out there and if we want more sales we must find them. More marketing and more prospecting carried out consistently and over the long term will have you saying, “Low on listings? Not in this office!“.
If I asked you to identify somebody in your team whom you’d prefer not to have working in your company, would a name or names come to mind?
Let’s focus on your salespeople. Do all have good attitudes? Do they contribute to the company? Are they supportive of you and fellow team members? Do they work hard? Do they have good client reviews?
Tolerate a bad attitude and behaviour and you validate them. Culture goes out the window and toxicity takes its place.
No doubt you know the type I’m talking about – they complain that there isn’t enough marketing, or that the support isn’t up to standard. They threaten to leave and go ‘up the road’. Perhaps they ask for a bigger commission percentage, or bully other salespeople, particularly rookies.
If you worry about losing such a person, you are being held to ransom – “Do what I want, or I’ll leave!”.
Have you ever had somebody like this leave…. and then the stories come out? Team members tell you things about that person you’d never heard before. It’s as though the company breathes fresh air again.
If you have a person like this, ask yourself whether they are really such a great loss.
Conduct a ‘Valuation’ of this person.
Is he/she a true top performer? How many of this person’s listing sell each month? How much does this person produce in gross fees per annum? If it’s under $300,000 you can replace this person with little effort.
You often find that the ‘600-pound gorilla’ isn’t the great performer he’d have you believe. Often such people are highly-paid low performers.
Next, ask the question, “How much business would you have lost if that salesperson had not been with you? Would another salesperson have got those listings and sales?”
Another question: “How much net profit would have been lost?” It’s usually too low to worry about.
Instead of being held to ransom by salespeople with a bad attitude and obstructive or toxic behaviour, get into recruiting. Despite what you may believe, there are good people out there, people who have been laid off, or who don’t like their current jobs.
You need systems for attracting applicants, sorting and testing, and induction systems to get your recruits as productive as possible in the shortest time possible. Pittard can help you with these systems or you can design your own.
But whatever you do, use a recruiting system, or you will resort to the worst recruiting method possible – poaching competitors’ salespeople. This is a sure road to mediocrity.
Don’t say, “I can’t find good people”. These are profit-killing words. Thanks to COVID, the pool of potential recruits is deeper.
Don’t be at the mercy of toxic salespeople. Don’t be held to ransom. You won’t believe how good business can be until you have a winning team made up of the right people.
Stagnation. It is the last thing a leader wants to see happening with the team. Yet, in the absence of new challenges – focused activities that challenge the team, putting a month’s focus on high-intensity activity designed to boost results – stagnation is a real possibility.
For example, many offices across Australia and New Zealand are short of stock. Why not set a challenge with the team and plan an Operation Stock-Up?
An Operation Stock-Up is a listing blitz that focuses on achieving a record number of properties listed by the agency in one month.
The leader and support team set up a marketing blitz that commences ten days before the month of the Operation Stock-Up. Print material is organised and ordered from the printer, marketing distributors booked, and the entire area is blitzed by office marketing. Social media is also ramped up ten days before, and during, Stock-Up month. The office does everything possible to generate incoming listing enquiry.
The sales team prospects heavily. Salespeople cannot rely on incoming enquiry alone – they must generate listing enquiry for themselves during Stock-Up month. Salespeople’s targets will be higher during Stock-Up, perhaps scarily high, but within the realm of reality. To achieve high targets, everybody must pull their weight. The office markets for listings, the sales team prospects for listings.
Offices have listed more than 90 properties in a single month with a team of 5. We are talking serious targets for each salesperson here!
Buyer appointments are scaled down through strict qualifying to allow time for prospecting, as are open homes.
If you are selling everything you list, and you don’t make time to get more listings, you will run low on stock.
List more, sell more. It takes focused effort to stock up.
Operation Stock-Up takes a lot of organisation over the 6 weeks leading into Stock-up month. The leader must sell each salesperson on higher targets and the higher activity levels that go with achieving those targets.
But it’s worth it – you will have plenty of stock to sell and receive the bonus of your competitors wondering what on earth is going on. That’s always a lot of fun.
Operation Stock-Up is just one challenge leaders can implement with their teams. In Pittard’s Agency Profit System®, a five-day business management program for leaders and managers, leaders learn many new challenges to stretch their teams to higher results.
Some of these challenges require thought, planning and organisation, but the reward is higher results for the office, higher profit for the leader, and higher income for the salespeople. Sure beats sitting around and waiting for business!
We recommend that leaders run a new challenge every 6 months. More often than that tires the team, and you will get pushback. Less often and you risk stagnation.
Think about it – one month in 6 or 7 you plan a month of high results, then execute that plan. Everybody sprints for one month and then you all celebrate.
It does wonders for team spirit – not to mention profit!
PS If you would like a hand planning an Operation Stock-Up, please do contact me on firstname.lastname@example.org.
Happy New Year. If you’re just back from a break, I hope you’re refreshed and ready for a new year. A new year of results and profit.
Some real estate businesses did well throughout the pandemic (with the exception of certain state lockdowns). Previous and post lockdowns, trade results appeared to be healthy.
But some leaders complained that their salespeople treated COVID like a holiday. I suggested that the chance of these people succeeding in the long term are next to none. If you have people like this, it’s time to brush off those COVID cobwebs and get to work.
Begin your year with a team meeting. Review the plan that you completed at the end of 2020. The purpose of an annual planning meeting is to target your agency’s results for the following year. It is a key component to high profits.
If you did not hold a planning meeting with your team in December last year, you are strongly advised to hold one as soon as possible. It is not advisable to allow this to spill over into February.
You should ask yourself the following questions:
- Are they back from holidays and focused on the year ahead?
- Does everyone know what needs to be done?
- Do your people have clear goals for the year?
- Do they have clear targets and plans to achieve their targets?
You really need to know these things.
Sometimes people’s bodies come back from holidays, but their heads don’t. They can waste a week, or more, cranking up.
In the absence of clear goals, targets and plans that show the path to achieving them, your people will drift. They may obtain the odd result here and there, but lack any consistency. Not only can they waste the first week drifting, but wasting the first quarter is common.
I say, if we’re back to work, let’s work!
It’s time to brush off the COVID cobwebs and get to work.
Business has been good for many agents in 2020, despite the COVID-19 pandemic, but it’s not forecast to stay that way. Experts are forecasting difficult times in 2021 as the economic fallout of the pandemic bites.
Please don’t think that I’m trying to scare you, or talking the market down. On the contrary, I’m trying to prepare you.
Are you carrying any unnecessary baggage into 2021? If you are, it could weigh you down and hurt your profit.
The biggest danger you face in 2021 will not be recession or a down turning market. Your greatest challenge will be underperforming salespeople.
Mediocrity is a major cause of lost profit, but more so when the economy is in recession.
The cause of poor performance can be that a salesperson is poorly trained, doesn’t do enough of the right actions, has a bad attitude, or is resistant to change.
Another challenge is the ‘600-pound gorilla’ – the agency’s best performer who threatens to leave any time you try to make changes.
This person may be the highest performer in the agency, but that does not mean that their overall performance is impressive. Often the ‘gorilla’ is not a great salesperson, it’s just that their performance is better than everyone else on the team.
Have you ever fired somebody and had team members congratulate you for ridding the agency of this overbearing person? Then you just got rid of a gorilla.
You undoubtedly know the typical behaviours of the mediocre salesperson. Here are just a few:
- They complain that there isn’t enough being done to generate enquiry
- They discount their fees
- They blame the client – complain that clients are greedy, are bargain hunters, are stupid, or won’t reduce their prices
- They’d rather read a newspaper than prospect
- They teach new salespeople bad habits
- They claim every lead they can as their own, including those prospected by newer, more active salespeople – “They’re my clients, I sold them that property 10 years ago!”
Take these people into 2021 and you will struggle. You’ll be listing and selling just to cover their wages.
Even if they’re commission-only, they still cost you by taking up space a winner could occupy. And let’s not forget the massive amount of income they lose for the company because of their bad attitude, incompetence and inactivity.
Trim the fat. Do this sooner rather than later. As Mike Weinberg says, “Free them to succeed somewhere else”.
Take winners into 2021. Only winners. Drop the baggage of mediocrity.
“One size fits all” is said to be the biggest lie told in retail. And we all know it’s untrue.
It’s the same with leadership. One management style does not fit all. Leaders who manage all salespeople the same way risk losing their best performers.
Pittard has a complete business system for building a profitable real estate agency called the Agency Profit System®. The newest version was ready for release in early 2020, but due to COVID-19 we have been unable to present it live.
Essential Element 5 is Training & Coaching. It is an important element that all leaders must continually develop.
There are three stages to Training & Coaching.
Stage 1 – Rookie Stage – Micromanagement
A salesperson is a rookie from when they start until they achieve ‘Professional Level’ – $300,000 gross fee production annually.
To get a rookie off to a flying start, and to make them as productive as possible as soon as possible, a leader must work closely with them to the point of micromanagement.
- Daily one-on-one meetings with the leader
- Examination of actions completed each day, monitoring of actions, especially the number of prospecting calls and appointments set
- Monitoring mandatory study requirements
- Testing on material studied
- Practising listing presentation in preparation for presenting to clients in the field
Failure to work closely with a rookie almost certainly dooms them to mediocrity.
Stage 2 – Leadership Stage – Managing the Professional
Micromanagement ceases in Stage 2. Once the salesperson has achieved Professional Level, they are no longer a rookie.
Professionals can be trusted to do the right actions. In this stage the leader becomes more of a guide than a manager.
Guiding by the leader is more in the way of suggestions. For example, “Your listings seem to be low – what do you think may be the cause?” Or, “Are you happy with your prospecting levels, or do you think you need to up the numbers?”
If the salesperson achieves targets, the leader continues guiding. Should the results fall below target, the salesperson is said to be in a slump and micromanagement recommences until the salesperson gets back on track.
Stage 3 – Mentor Stage – The Success Partnership
When the salesperson achieves a Gold Badge in Pittard’s Winners Circle®, the salesperson’s Training & Coaching moves to the Mentor Stage.
In this stage, the leader offers advice when the winner asks for it. One-on-one time is less formal – perhaps in a coffee shop, or over lunch.
Guidance by the leader takes the form of, “Is there anything I can do to help you?”. The leader constantly asks the winner what can be done to give him or her more support.
It is important that all team members are shown care, support and respect, but many leaders think their high achievers are ‘set and forget’. This is a dangerous practice, one that may see the winner walk into the leader’s office and resign.
Feel the Love
High achievers must ‘feel the love’ from their leaders. The relationship becomes a success partnership. Many of our leaders have given their high achievers a stake in the business, or they partner their winners in property investments.
Our goal as leaders is to help our high achievers become rich, to invest some of their high income, to grow and prosper. This is how you keep winners and prevent them from being poached by competitors.
When you look at this this way, Training & Coaching takes on a whole new meaning, doesn’t it? One size certainly does not fit all!
It’s more than just running training meetings – it’s bringing out the best in your salespeople. And isn’t that the leader’s job?
Agency leaders often complain that they can’t find good people. This mindset can lead you to tolerate poor performers. And if you don’t believe you can find better people, you won’t try to replace them.
It’s true that before the COVID-19 pandemic, there was a lot of competition for the right people.
Smart leaders recruit nice people with little or no real estate experience, and then teach those salespeople how to sell real estate the right way. With proper training systems, that is more straightforward than you might think.
Smart leaders don’t use the recruiting system so typical in our industry – poach competitors’ salespeople. That’s a recipe for failure.
If a salesperson is doing so well where they are now, why would they want to leave and come to your agency? The experienced salespeople who are prepared to ‘jump ship’ are often the worst people you could hire.
But pre-pandemic, other industries were looking for the same type of people we were. We are looking for semi-skilled people who are well presented, well spoken, and who learn fast. Many industries seek people like this. The hiring pool was very shallow.
Well, the ‘pool’ just got deeper!
I do not make light of the hardship that the COVID-19 pandemic has caused for many people, but the pandemic has an upside:
There are now many good people looking for work.
Now is the time to recruit, to build a winning team – one that will help you navigate the rough waters that many economic forecasters are predicting for 2021.
There are many potential winners out there who are looking for a dynamic company led by a focused leader, who can train them, bring out their best and help them to achieve their goals.
To recruit effectively, you need a few things working for you – an attractive offer (hint: the typical industry reward systems do NOT attract winners), a proven recruitment program, training systems, induction programs, and a company that is well-led and a desirable place to work.
All these elements are under your control, even if you don’t have them now.
Pittard’s Agency Profit System® offers leaders a recruitment program that works. The average production of Pittard salespeople is three times the typical industry average. With results like these, who wouldn’t find space for more winners?
Winners are out there – now more than ever.
Are you ready to dive into the pool?