The truth is, the best-performing brokerages have little in common from a business model perspective. What they do share is culture.
Written by Steve Murray, publisher
When you look at brokerage and sales agent performance data, over time you see important trends. Among the patterns are that the firms and sales agents who sit atop the rankings in terms of sales and sales growth do not have much in common—on the surface.
These top firms come from a variety of business models, whether high commission concept, graduated commission plan firms, low-cost, flat-fee firms or capped-contribution firms. They also come from independent brokerage firms as well as national brands. These top firms come from virtually every region of the country and size of metropolitan area, as well as low- and high-priced markets.
Having further researched top performing companies through on-site reviews as well as extensive telephone interviewing, we find that the best-performing companies and even sales agents have a few things in common:
- They have a strong sense of who they are and what they believe in;
- They have a well-defined objective of what they are trying achieve, whether it is growth, market share, profitability or productivity;
- They can quickly communicate what the most important beliefs and objectives are. They don’t stumble when reaching for answers when asked what makes their firm or their business unique and successful.
When we see firm’s or agents’ performance level off or diminish, and we inquire or are asked to assist, we find that the leaders of such firms (or a sales agent or team) either don’t have a strong grasp of what their true objectives are, have lost sight of them or have abandoned them. There are some who have not adapted to changes in their environment.
Yes, it does matter that your culture and objectives can also be affected by the nature of competition in the market. It is not likely possible for a firm to have a profitable, low-split, graduated-commission plan in a market dominated by flat-fee brokerage models and have a high market share. For example, one could do the first two but have no realistic chance at the third. A sales agent or team may want to be the top seller in a market, and in the luxury end, but if that segment is not very large, it may not be possible.
So, yes, having the right business model and a solid brand can matter. It is just that without a solid foundation of objectives and an identifiable culture, they matter less. What matters first, according to our data, is a clear idea of what you are trying to achieve and the behaviors you believe in to get there.
The Value Proposition
There is no term more overused than “the value proposition.” It is used almost daily with little explanation as to what it means. Talking with marketing professionals from outside the industry we have heard the following definition (simplified for greater understanding).
A valuation proposition is composed of three basic parts—trust, convenience and price. A true value proposition expresses one’s view of what matters most to the proponent among these three attributes for an organization.
Are you the low-price competitor or the high-price? Are you the high-quality participant or the undifferentiated one? You cannot talk about being a full-service, high-quality firm and also have the lowest prices. One of two things will happen: You will end up broke, or your audience will wake up and understand that you cannot deliver, thus ending trust and likely your culture with it.
A true value proposition will state, in as few as words as possible, how you want to be viewed and what you believe about yourself that makes you unique, such as “Like a Good Neighbor” (State Farm) or “Everyday Low Prices.” (Walmart) Those are two good examples of value statements reflecting how these firms want to be viewed. When you think about your realty firm or your sales practice, think about how you would like to be viewed.
Relationships and Trust
In one of our past research projects, we identified 16 firms that had ranked in the top 50 brokerage firms in the nation for growth in agents, closed transactions, per-person productivity and profitability on a per unit basis over a 10-year period. We then interviewed 169 sales agents and staff of these 16 firms to discover why they were with and/or stayed with their firm, how the firm communicated and made decisions and what they thought was most valuable about their firm.
We found that relationships and trust were the two most important reasons why agents stayed with their firms. While technology, marketing, education, brand, management support and facilities were all mentioned, the respondents said over and over that these were a given among competing firms in their markets. It was a sense of belonging to a solid organization, with a definable culture, which mattered the most. They knew what to expect and felt like their individual talent and results were recognized.
Culture Does Matter
It starts with “knowing thyself” and being able to describe your organization in both tangible (benefits) and intangible (beliefs) ways. With all the chatter about the future and technology, every piece of research on housing consumers indicates that the use of agents in a transaction is here to stay. How consumers choose an agent hasn’t fundamentally changed in 30 years. The system of paying for results (commissioned sales) remains the consumers’ preference.
While it pays to stay up to date on technology and how it can be used to improve business processes, the most important objective is to build a strong culture focused on what you believe and what you want to achieve—and not on the newest and greatest app.