Blog / Buyer Management
Stephen Jackson, The Emporor's New Business Model
Stephen Jackson from Ryde agency Jackson & Rowe likens his business model to the famous story The Emperor Has No Clothes, in that many agents consider themselves to be highly-skilled practitioners when actually the job could be done as well another way.
After having one of the common real estate conversations with a competitor about the agency’s number of listings, Mr Jackson said he had his light bulb moment. “I told him we were listing 30 properties a month, and he said ‘I’d never want that many, we just list the ones we want to sell’,” he explained.
“We were describing ourselves as people who had a high level of skills that couldn’t be emulated by others but the truth was, what was going on was a high volume of sales and a lot of screw ups and mistakes and some pretty half-arsed efforts,” Mr Jackson said about the traditional real estate business model.
So he set about recreating the model by looking at the traits successful sale people had, and replicating those in a business. He knew he needed incredible prospectors, communicators, listers and influencers. Marketing, listing, selling and customer service were all treated as separate parts of the whole operation under the new model.
“The business should own the marketing and lead generation, not sales people. There may be three or four different models of aircraft, but they still work on the same principle of flight. Once you can get down to what those basic principles are, you can build the model any way you want and it will work,” Mr Jackson said.
Measuring Opportunity
The Jackson & Rowe model uses unskilled staff to prospect with computers and regular direct mail, generating market appraisals. “In Ryde we have a 50 per cent opportunity rate, meaning if 10 properties come on to the market we have interacted with five of those,” he said. Vendors who contacted the agency were selling within the next 17 months, a process which didn’t work for those high-level sales people who wanted to go in and seal the deal straight away. “Once we got rid of the ‘guns’ out of our business and put in farmers, it started to work a lot better,” he added.
It costs the agency $10,000 a month to create on average 80 appraisals and list around 13 properties, a figure Mr Jackson wants to improve. Working under a traditional model the agency’s conversion rate with its contacts was less than 10 per cent, however 85 per cent of its property management clients and 65 per cent of past clients sought out the agency to sell their property. Something was missing in the system.
The marketing department keeps in touch with clients and the sales people don’t come into the picture until further down the track. “We actually instructed sales people to stop following up with anyone other than those who have listed and those who say they are about to sell.” Even then, the sales staff aren’t the only point of contact - the lister communicates with the vendor about pricing strategy and buyers' agents tell people what is going on and give feedback on what people thought of the house. This model uses an entire team to sell a property, not one sale person.
Mr Jackson understands when a vendor asks who is going to be looking after their property, they are really asking ‘will the business be looking after me?’ They want to know their property will be sold, not that it will be sold by one ego-driven agent. “If you said to a surgeon will you be looking after me and he interpreted that to mean I don’t want any nurses, anaesthetists or operating room staff, you would probably die,” he explained.
The conversion rate of existing clients was more than 85 per cent, past clients was running at about 40 per cent – which rose to 60 per cent within five months of implementing the model – and people they had contact with less than six months ago had a conversion rate of one in three, which is fairly standard across the industry. However, the conversion rate for those who the agency had contacted more than six months ago was less than 10 per cent. That figure has now been built to 40 per cent and rising.
The key is regular communication and Jackson and Rowe does this every month with a newsletter. “People weren’t interested in who we were. They called us down to find out what is going on in the market – what is property worth and what is likely to happen in the future. Our newsletters answer that question, they don’t sell Jackson and Rowe.” “If someone makes contact with you, they like you and then you never talk to them again, what do they feel?” Mr Jackson asked. “In six month's time when it comes time to sell, they’re too embarrassed, ashamed, angry or confused to call that agent, so they call three other agents. In that model it would have been better for us if we’d never met them.”
In the new model everyone wins – all staff work to achieve the same goal, sales staff aren’t desperate for the sale and the client has a better experience because the process is about selling their property. “When you take away the pressure of the money and that performance anxiety from the sales person, they can change from 'let me talk about me' to 'let’s talk about you', and instantly the clients like that.” This model produces a saleable business that operates professionally by separating ownership and management – and it can be replicated.
Emotional Intelligence
All Jackson & Rowe contacts are divided into four categories and dealt with separately:
- Existing clients - property management and those who are currently doing business with the agency
- Established clients - buyers, sellers and landlords
- Contacts - people they have done a market appraisal for or have had a contact with more than six months ago
- Customers - people they have had contact with less than six months ago.
“Conversion rates in those groups were radically different and we had to use particular strategies with each group to lift that rate up.”
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