The Sales Process: In Sales, You Get What You Measure

By Laura Compton
Business Support Manager, RightNow

Ask 10 salespeople in our industry what their commission goal is this year, and only 1 or 2 will be able to answer with a solid number. Most will say something like, “Well, I don’t know where the industry is headed, so I hope to earn at least what I did last year.” We also commonly hear “I work as hard as I can every month, bringing in as many orders as I can, and that’s the commission that I will make.” The reality is that only 1-2% of all title industry sales and marketing representatives will tell you exactly how much they want to make, and exactly how they are going to do it. With great precision, they will also tell you the number of “no’s” they need to hear every day in order to achieve their goal.

There is no doubt about it. Many salespeople in our industry have done very well for themselves “working hard.” Just take one look at your parking lot on the day of your staff meeting and you’ll see. But as Bob Dylan said a long time ago, “The times, they are a changin’.” In this case, if you keep doing what you’ve always done, you won’t necessarily get the same result you’ve always achieved in the past.

So let’s play the numbers game.

We suggest that you work these numbers with each person on your team individually, since they won’t be the same for everyone. One performer may be better at converting cold calls to appointment than another. Start with the commission they want to earn in any given “commission period,” usually one month’s time.

Commission Goal for Bob = $5,000 per month (This allows Bob to make his annual goal of $100,000 total gross income, because Bob’s base + car allowance is $40K.)

• Bob’s commission breakdown is the following:
• 3% of the premium dollars that he brings in, and
• 0.5% of the "house" or branch revenue (Accounts Bob did not bring in , but helps maintain)

On average, the monthly amount Bob earns from the ‘house account’ at 0.5% is $1,000. Therefore, he needs to earn $4,000 on his own. In order to earn $4,000 with a 3.0% commission rate, Bob needs to generate $134,000 in revenue. Are you with me so far? ($134,000 x 3% = $4,000). The average fee per file (FPF) in Bob’s office is $1,950. Therefore, $134,000 divided by $1,950 would be equal to 69 closed orders. (We could get really complicated here and separate resale and refi and any other streams of business Bob can generate, but we’ll just use an average FPF to simplify things.)

So, Bob needs to bring in 69 closed orders on his own, given his commission structure, in order to meet his financial goals. But wait, we’re not done yet. We need to make sure that Bob’s goal of 69 closed orders, combined with the revenue from house accounts is (a) enough to make the branch profitable, and (b) enough to also meet the branch goals. (For simplicity, let’s assume that if Bob brings in 69 closed orders, the branch achieves its goal of 21% profit retention.)

Now we get down to the fun stuff
Quite simply, we all know that sales is about activity. But in concert with the activity, it is also about time. It takes a certain number of calls over a certain amount of time to get an appointment. It takes a certain amount of appointments to get a commitment for an order. It then takes a certain number of “commitments” to actually convert to an order. Know on average the numbers associated with each of these activities for each of your team members, as it may vary, and select a span of time in which to conduct the activity. Bob may need to ratchet up activity in order to get the results he needs and wants. If 10 office visits a day “talking to as many people as he can” doesn’t get him there, help him to set specific goals around calls, contacts and interviews.

As you meet with your team members regularly, help them to set goals and track their progress on an ongoing basis. You will start to identify best practices that help elevate everyone on the team. You win, and so do they!

RightNow suggests, at a minimum, that salespeople should have monthly results goals for the following categories: revenue, new clients and orders. They should also have monthly activity goals for both (a) outbound contacts made and (b) interviews with prospects and clients.

So, if you don’t set goals with your sales team now, make it YOUR goal to do so by the end of the month for the final quarter of the year. Then, do the same for the entire year of 2008. Our research consistently shows that the mere act of setting goals, and writing them down, helps individuals and operations attain greater numbers for financial success. 2008 will be upon us soon, and we want you to be prepared to take your team to the next level of success.

Owning a Niche

I keep running into this subject. Niche Marketing.

In a changing real estate market with insane stories coming out everyday predicting the downfall of society as we know it (OK I'm embellishing a little bit here) it's more important than ever to create and/or identify, and own and niche. Think about it. Look around and find real estate agents and loan officers that have grown in 2007 over 2006 and will continue to do so in 2008 and you'll find one commonality. They own a niche.

Here are 4 sectors in the real estate space that we've noticed are growing today:

1. Reverse Mortgage
2. Private Banking
3. Real Estate Owned (REO)
4. Preforeclosure Sales (commonly known as "short sales")

Spend some time over the holiday and figure out what niche you're going to own in 2008, create a strategy for how you're going to research it, target the right people, communicate your value to that niche, then work like mad to interview those prospects so you can provide the value based solution that allows you to negotiate a percentage of their business in 2008, not just their next deal.

Happy hunting...

From the Lips of a Top Producer

I just had this section of an article forwarded to me by a rep (thanks TT) and think it's incredibly apt. It's by Walter Sanford and here's a link to the full article.

"Your only question remains 'How do I affect the top real estate agent in my town?' My answer is, 'Learn the real estate business!' Any top salesperson knows that the fastest way to provide a market for a product is to make sure that the product provides solutions for their day-to-day business. This means understanding their business. If you were selling copiers to a pharmaceutical company, you would pore over the company's financial statements and annual reports to determine the potential need for your product. The same goes for your potential real estate agents. After identifying them as a potential or realistic top 'elephant agent,' ask the appropriate questions to find out what the greatest needs are that can be supplied by you..."

Need a 90 Day Plan?

Need a 90 Day Plan?

Keeping sales teams focused on a quarterly plan, (inclusive of both results goals and activity goals), will keep the odds stacked in your favor to reach your company's goals. For a complimentary copy of the "RightNow 90 Day Plan" template, please visit our eStore for a free download. http://www.rightnowconsulting.com/store/index.php?p=catalog&parent=4&pg=1 The download is provided as an Excel file, with permission to modify and use.

Sharing a template such as this will help keep everyone focused on achieving their goals, and at a minimum, help track the right activities every step of the way. Tracking over time provides you, in retrospect, the perfect documentation to evaluate not only what works best in your marketplace, but also what activity works best for each representative.

So, Now What?

Creating plans, setting goals and communicating expectations is a waste of time UNLESS you have a plan for following up, measuring and holding yourself or your team accountable for their progress.

As you create your expectations, think about (a) how you are going to measure your or each team member's activity and/or (b) know how/if they are accomplishing their goals. Using a standard rule of thumb as a sales manager, you should be asking yourself or connecting with each member on your team individually no less than once a month (ideally weekly) on a few key questions:

• What is your revenue goal for this month? Are you on track? If not, what is your plan to get on track? How can I help?
• What is your “new client” goal this month? Are you on track? If not, what is your plan to get on track? How can I help?
• Who are your difficult prospects? Is there anyone in the company who can help you move this prospect along the sales process? (Dual meeting with management or escrow?) Can I help by assisting you on a visit?
• Which clients are you targeting for growth? What is your progress? How can I help?

Consistency is The Key
Checking in consistently with your team members realigns their focus on the right activities, which in turn achieve the right results. Consistent communication will help you, and your team, focus on the necessary activities which will help you achieve your first quarter goals and ensure a good start to a successful New Year!

Let us know how the sales and escrow planning tool works for you in your organization. Have you found it to be a useful tool for open discussion with your team members? How can we help drive your success in 2008?

Goal Setting for a Successful 2008

Do you have clearly defined sales and revenue goals for first quarter of 2008? Does each of your sales and marketing representatives know how many orders and new clients they need to bring in on a monthly basis? What about the escrow side? Establishing sales (and escrow) goals is one of the most important things for you to do in order to start the year off right.

By now, you have the 2008 budgets for your operation. Surely this will include the amount of business, broken down into exact open and closed orders, you need to be profitable.
Next step is communication. COMMUNICATING your expectations NOW will substantially increase your chances of hitting budget during the crucial first quarter. Communicate this often. We can't emphasize this enough. By helping each team member establish goals that are in direct alignment with your organizational goals, you will also help increase feelings of belonging and importance of each team player.

Why do client demands and expectations eclipse sales activity?

Most employees will tell you that they perform better when they know exactly what is expected of them. Although this may be the case, it is so easy in our industry to approach each day reactively, regardless of known expectations. Some may even feel they might not be able to meet a client's 'always untimely' demands if our days were in fact planned, right? Wrong. Planning sales activity ahead of time, instead of “fitting it in” when they can, is one of the highest predictors for success a salesperson can have.

In fact, you CAN help employees plan for, and execute on, specific sales activities on a daily basis. By creating and setting minimum daily expectations, you give the sales team a tangible goal that can help them determine if they “won or not" that day.

Set expectations for:

• a number of prospect contacts
• a number of interviews with prospects
• a number of referrals obtained
• a number of contacts who were asked for orders, etc.

If you don’t already have minimum activity expectations, use the New Year as motivation to do things differently. Many folks resist anything that can be interpreted as micro-managing. But do keep this in mind - the person who doesn’t want you to know about his/her daily sales activity, may just have the most to hide.

Interviewing: The Art of Asking Questions

To be effective in interviewing clients or prospects, you should:

• Learn, not teach or preach
• Hold off on presenting products or solutions
• Get the prospect to like you
• Uncover history, goals, and needs
• Identify one need and qualify that need
• End by obtaining a commitment to a tangible next step

Here are several categories of questions you can explore when interviewing your prospects and Client...

Kickoff Questions (Questions that get the agent focused on themselves and their own glory.)

• Tell me about your past career success. What 3 things did you do as a new agent that you would credit for your current success?
• I know you haven’t always been a Realtor. what 3 skills did bring with you from your previous career that were essential in getting off on the right foot in real estate?

Goal Oriented Questions (Questions about goals the agent wants to achieve or has achieved in the past.)

• How many transactions would you like to close in the next 90 days?
• What do you want to learn more about this year?
• How many correctly priced listings would you ideally like to carry?

Needs-Gap Questions (Questions that restate needs in relation to a future goal to help the agent prioritize.)

• Would you consider efficiency issues or income growth as the primary focus of your business efforts over the next 90 days?
• Are you on track to achieve your transactional goal?
• How would you like your assistant to more effectively serve your needs?
• What types of things would you like to see your computer achieve for you?

System Oriented Questions (These detail how a current system works and may start to point out deficiencies or flaws in the current system. Think “how.”)

• How do you keep in touch with past clients?
• How do you manage your database?
• How do your vendors help you to close more transactions?

Solution Oriented Questions (Help the agent to determine what type of specific system would lessen the needs gap. Think “would.”)

• Would an outsourced flier delivery system help you to save employee costs?
• Would an off-site database management company help you to save money and ensure consistent contact with your past customers?
• Would a list of asset managers help you to penetrate the REO marketplace?
• Would a system that performed your cold-call prospecting help you to maxi­mize your prospecting time?

Relationship Definition Questions (Help determine how the agent is willing to compensate you for your time, energy and involvement in his or her business.)

• What percentage of your directable transactions would you feel comfortable sending me over the next 90 days?
• If I get involved in your business and contribute in a positive way. is there any reason you could not start directing transactions to my office?

Start to master different types of questions so that you can add the most value to the appointment AND walk away with a commitment to a tangible next step.

Happy Selling.

Trends in Top Producers - part 2

TRENDS IN TOP PRODUCING REAL ESTATE AGENTS
Part 2 of 2

So, what will drive Top Producers to select your company over the competition? The key herein lies in developing a business partnership that will help them to amplify their success. Remember, it is all about them. Based on our countless interviews, I recommend implementing the following sales approach when working with any prospect, but most importantly with Top Producing Agents:

• Target – Build and evolve your detailed target list of prospective top producing clients, including extensive business-related information. This allows us to be more prepared for each call.
• Conduct a Sales Interview – Be prepared to answer the following question “What’s in it for me?” spoken from the target’s perspective. The salesperson will then conduct a sales interview aimed at uncovering specific needs and opportunities.
• Provide Solutions – The salesperson should create tailored solutions based upon expressed clients needs and wants. Review this with the prospect.
• Obtain a Business Commitment – The salesperson obtains a specific business commitment from the client.
• Follow Up for Orders – The salesperson should create meaningful, consistent contact with the prospect, by solving transactional challenges, further building the business relationship and to insure receipt of multiple orders
• Ask for Referrals – The salesperson continuously adds to their target list by soliciting referrals from their new client.

The effective execution of this sales approach is far more important than any programmatic tools, resources or services we can provide. Top Producers want to feel like we are providing customized solutions. Recalling from our last discussion, since top agents have stated in their interviews they clearly aren’t interested in ‘stock’ solutions or services, I’d like to share a few specific ideas you can implement, or might already be implementing, on their behalf. Most agents and lenders have also said that the following issues are very important to them:

We should truly function as their partner. They want their clients to feel as if we are a part of their team, including the way we speak as well as the way we operate. How often do we hear folks say “My attorney says…” or “My doctor says….” “My CPA says…” This should be the same for you. “My business partner says…..” It is all about owning half of a business partnership.

We should be an extension of their sales machine. They want us to actively see ourselves as an extension of their business, asking for referrals and reminding their clients of the great services they received as a result of choosing their agent.

They want a high level, action-driven problem solver. The agents don’t want to have to “do our job for us,” meaning they expect us to help uncover, resolve, and communicate challenges in a way that keeps the transaction running smoothly.

Conclusions:

The most successful agents view their vendor partners as an extension of their team, not as a separate entity. As a business consultant, look for ways to make a direct impact with the very information we know they want to learn. This information will challenge them, and will offer solutions to their priorities for the next 12 months. This can only happen by asking them individually what their wants and needs are for their own unique business. The Bottom Line: Ask More Questions, and don’t provide “stock” solutions.