Reward the Behavior, Not the Result

Last time on the Playbook we wrote about Brian Buffini’s suggested strategy of our getting three referrals from each of our current clients during the time of an active transaction, and how we can fine-tune their reticular activator so they’re alert to opportunities to tell folks about us. So, now that you’re thinking about referrals—thanks to that reticular activator—let’s dig into one of the best tactics for delivering on that strategy.

We all no doubt say at least a quick thanks to the person who gives us a referral—and then often times we’re off to contact that potential new client and we maybe even start calculating the potential commission dollars that may roll in. Oh, sure, if a deal comes from the referral, we figure we’ll remember the referral source and do something nice for them. Maybe something even really, really, nice!

But here’s the problem—and the opportunity!

Brian Buffini, in his Peak Producer training, often brings in a guest speaker, a very successful broker/owner from Chicago named Joe Niego. Niego tells the story of how, years ago as he was improving and growing his business, his brother called him up and gave him a solid referral. Five or six months later, that new client closed on a house and Joe, remembering and appreciating his brother’s referral, sent him a nice gift basket. But here’s the rub: his brother called Niego the next day and said “What’s the gift basket for?” He of course made no connection with the referral he’d given months ago and may have even forgotten about it. Talk about a wilted reticular activator! And a missed opportunity.

Niego and Buffini use this example to make the point that, when someone gives us a referral, we need to reward the behavior, not the result!

First of all, if we reward the result, that is, commission dollars in our pocket, our thanks to our referral source may start to feel like part of a transaction instead of part of a relationship. Buffini warns us to avoid making such rewards feel like quid pro quo and instead make them something unexpected as opposed to earned. He also recommends the “reward” be a token or symbol of our appreciation—and something the recipient will enjoy—rather than a significant financial incentive. So would the tax man!

Second, and more importantly, Buffini points out that by immediately rewarding the behavior with that token gift of appreciation, we keep our friends’ reticular activator up and seeking new targets! Niego, in fact, tracked statistics on his referrals once he figured out this approach, and he found that 76% of the people who gave him a referral, and were immediately shown his appreciation of their behavior, gave him a second referral within 90 days!

Now, that sounds like a great way to grow a business!

So remember, growing your business through proactively seeking referrals is the surest way to a steady and growing business, and a major step is to remember to reward our advocates’ referral behavior immediately! Then be ready when they call you up again with another!

David M. Hassler

VP, Director of Business Development

The Reticular Activator!

Late last summer, my car expired after 107,000 miles! I had intended to put another 20,000 or so miles on it but the cost of the needed repairs was more than the car was worth, so I threw in the towel and decided to buy a new one. For a variety of reasons, I decided to consider that ultimate practical vehicle, a Subaru Outback. As soon as I started to think about them, Outback’s seemed to magically appear EVERYWHERE! They even showed up in almost every driveway in my neighborhood. Who knew! Of course, we’ve all experienced this phenomenon, as I had just tuned my attention so that I began to actually notice the Subi’s that had been there all along, because now I was interested in them.

Thank you, Reticular Activator!

Whether it’s a new pair of boots, a new laptop, or a vacation to New Mexico, our brain heightens our awareness of things we are considering and we suddenly discover that nearly everyone we meet has just returned from Santa Fe with a new pair of rattlesnake-skin cowboy boots and the latest MacBook Air!

So, what’s this have to do with Real Estate?

We all know the key to long term success in our business is through relationships with folks—our sphere of influence—who can give us referrals to others who may be considering buying or selling. And who among our sphere would have their Reticular Activator most finely tuned to thinking about buying or selling? Our current clients, of course!

Brian Buffini, in his Peak Producer training, talks about the Reticular Activator and how he uses this awareness with current clients to get three—yes, THREE—referrals from each of them during the period of their active buying/selling process! Again, who knew? Buffini makes the point that, of course that current client is far more immersed in real estate than the average person, and is probably chatting about it with friends, family, neighbors, co-workers, and pals at the gym, ad infinitum. Our current clients’ Reticular Activator for real estate is on high alert.

Thus, Buffini tells us that we need to help our current clients a wee bit by more finely tuning their Reticular Activator since no doubt in all their chatting about the process, they will surely meet other people who might be considering buying or selling, right? Buffini suggest that we REMIND our current clients to think about helping us by being aware in their conversations (that Reticular Activator) and proactively getting someone’s name or giving out our information when appropriate, ie, giving us a referral.

How three? Buffini suggests we should have three separate phases of client satisfaction during our active buy/sell process, and that with each one, our client is highly likely to be happy to do their best to help us in our business by thinking about referring someone.

First, as we begin the process and have maybe done a first buyer tour or a first open house, we’ve impressed our new client with our expertise, our proactive communication, and of course our charm, so, boom, remind them they can help us with a referral.

Second, once we have an accepted purchase agreement, usually our clients are again delighted and excited, so, boom, we can once more remind them how they can help us with a referral.

Finally, of course, as we walk out after the closing and hand them the wine or chocolates or flowers, boom, a third time we can remind them.

Since our clients are always perfectly delighted with our service, that little tweak to their Reticular Activator should yield a referral or two, if not more!

Thank you, Reticular Activator!

David M. Hassler

VP, Director of Business Development

The Larger Questions

This time of year, our coaching and the Playbook focus a lot on numbers as we encourage folks to master their stats and create their roadmap for 2015 as part of an annual business plan. We look beyond sales volume and GCI to things like average DOM and average side price and even average commission rates, so agents can both differentiate themselves and set target areas for improvement. The details are the key to this analysis and planning work.

But this time of year, when transaction activity is typically at a lower pace, is also a great time to step back and look at the bigger picture, to ask some larger questions.

First of all, as you review your business for 2014, you might want to consider what event or experience with a client or transaction was the most rewarding for you. Not in terms of dollars, but in terms of gratification for a job well done, a difficult problem solved, or a client’s perhaps unexpected gratitude. Think about that situation or experience and see if there is some key element or pattern that can be grasped and learned and repeated in your own actions and attitude. Wouldn’t it be great if we could achieve that kind of satisfaction in our business regularly?

Next, think about the opposite, the most challenging situation or event or relationship in your business last year. What went wrong? Who did it impact beyond yourself? What role did your own actions and attitude play in creating the issue? And most importantly, of course, what might you have done differently to prevent or minimize the negative impact, and how can you integrate that learning into your approach to similar situations in the future?

Finally, the most important of these questions: what do you want from the business in 2015 for yourself and your family? How is your business integrated with your overall goals as a person and member of the community, and what is it, beyond any monetary considerations, that drives and encourages you?

Simple questions, really, but ones we all too often forget to contemplate. Let’s all take some time before the snow melts to incorporate these larger questions into our business planning so 2015 can truly be our best year in all respects.

David M. Hassler

VP, Director of Business Development

Continuous Improvement

Last October, I had a chance to chat at some length with Gino Blefari, the new CEO of HSF Affiliates, LLC, when he was in town for our ribbon cuttings to launch our new Berkshire Hathaway HomeServices brand. I took the opportunity to ask Gino what had been the key to his success in growing Intero, a brand new brokerage company, from a couple of people when he founded it in 2002, to the 13^th largest independent brokerage in the USA by 2013. Pretty good track record for 11 years!

Gino’s response, with no hesitation at all, was “Training. Ongoing training opportunities at all levels coupled with solid coaching and mentoring.” Music to my ears! We talked about a number of specifics and Gino then said he felt that outside training from one of the “Big Three” real estate training companies was a an important element of an overall program.

Of course, you know what my next question was!

Again, with no hesitation, Gino recommended the Brian Buffini Peak Producers program. As you’ve seen, I then became a Buffini &  Company Certified Mentor and I’ll be facilitating our first Peak Producers Training class at our Indianapolis office starting February 17. I’ll be following up with our other offices around the state with a goal of starting Peak Producers classes in the ensuing months so all our agents will have the opportunity to benefit.

But, back to my conversation with Gino about training, coaching, and mentoring in the broader sense. One thing Gino said really stuck with me, and that was that, in our business, we have to continuously grow and adapt to changes in technology and market conditions, improving our skills as well as our habits and attitudes. Or we risk stagnation.

Then, just a few weeks ago, I read an article about some different cultural attitudes and approaches to business and life in general and came across the Japanese term “Kaizen.”No, it’s not some ancient Samurai warrior term, but actually a concept that grew out of Japan’s industrial growth spurt of the 1980’s. That was when companies like Sony and Toyota jumped ahead of most other manufacturers in both cutting edge technology and high quality. They made those strides in large measure because of Kaizen, or “Continuous Improvement.”

These manufacturers achieved continuous improvement by focusing on small steps, consistently applied. They encouraged all their tens of thousands of employees to make suggestions every time they had an idea to make their job easier, faster, more effective, or make the product or part better. During that time, employees averaged more than 60 suggestions a year, and many of them were incorporated, thus pushing their products toward the leading edge of technology and quality.

The bottom line was this: being aware of and seeking improvement, in even tiny ways, on a consistent basis, will have a huge impact on your success. Our goal with the training, coaching, and mentoring programs at Berkshire Hathaway HomeServices Indiana Realty is to help provide everyone with those opportunities and tools to find new and better ways to enhance each of our businesses and our lives. And, yes, your suggestions for new training and tools are always welcome!

Kaizen!

David M. Hassler

VP, Director of Business Development

The Word for the Day . . . Every Day!

Recently, I listened to one of Brian Buffini’s coaching tips on Prioritizing Your Day and I realized that that single tip, if we can all remember it, can make every one of our days far more productive, less stressful, and thus more profitable in our business and more enjoyable in our lives! Buffini’s Peak Producers Training Program focuses on building our business by focusing on referrals from our Sphere of Influence, so his suggested prioritizing starts with People. Current clients of course would come first, but if we think about who among our sphere is most important or helpful or responsive, ie, those we might consider our business advocates, and focus our time on them first, we’ll enhance our success. Of course, prioritizing this way can also help us realize on whom we should spent less time!

Buffini goes on to say that once we prioritize the people we want to focus on, we then can prioritize the actions we need to perform to optimize our ongoing service relationships with people, showing our professionalism as well as our appreciation for their business and their referrals. So, what will we do to interact with those important people when we engage with them?

Then, once we have set our priorities of people and actions, Buffini says, we can then more easily prioritize our time. And knowing the impact of proactively working with our key people, we should be more aware of the need to protect and make best use of our time.

Finally, he concludes by noting that prioritizing has two dimensions to it, that of focus and that of boundaries. Keep in mind that focus will be difficult if not impossible if we don’t set boundaries! Buffini reminds us that we should spend our time and energy on the people who deserve it, not just those who only need it! Of course, our business is serving client needs, but we’ve all had those energy sucking clients, friends, or that kindly agent down the hall who loves to chat without asking us if we have a moment, so Buffini suggests a few of the tips we’ve covered in the Playbook before: don’t answer your phone, turn off the dinger on your email device, (oh, no mine just rang!!) close your office door at least part way, and maybe offer that friend/agent a chance to chat later once you finish your tasks. All good ideas, and much easier to implement if we remember the goals of prioritizing and setting boundaries: to enhance our business, reduce stress, and enjoy life and family more and more!

Have you set your priorities for today . . . for next week . . . next year?

David M. Hassler

VP, Director of Business Development

Perfect Pricing

“Price is what you pay; value is what you get.”

--Warren Buffett

Recently in a coaching session with one of our agents, we reviewed their stats for the last year.  The agent had been on fire and had closed a volume considerably higher than any previous year.  Their average side was far above market and their sold listing DOM was well below it.  All great news!

Then we looked at the average commission rate per side and found it was just a touch over 2.5% instead of their targeted 3.0% average.  The agent had done a few relo transactions with their lower fee in return for a near guarantee of a closing, but overall, based on their average sale price, that 2.5% was on the low side.  In fact, when we looked at the numbers, the agent could have added another $25,000 to their bottom line if they could have kept the average rate at 3%.  That’s some real money!

We talked about many of the market pressures on our pricing and yet the agent realized they could take a more proactive approach to their goals.  That’s when I heard Uncle Warren’s voice whispering in my ear:  “Price is what you pay; value is what you get.”  Wise words, since all too often we allow ourselves to be dragged into discussing price instead of value.

In his excellent work, Book Yourself Solid, Michael Port talks about Perfect Pricing and he focuses on value versus price.  He encourages us to think always about the value our services provide and to ask ourselves—and the client—some questions:

How much financial benefit will our service create/provide?

How much pain will our service relieve?

How much pleasure will our service create?

How will our service create substantial peace of mind?

While some of these may sound like “soft” benefits, they’re what really separate excellent service from the mediocre.  And just as importantly, we have to ask how we value ourselves.  Remember, as Port says, people rarely buy professional services based solely on price.  They actually express their own values through what they buy!  So let them!

At the very least, most people love to feel they’ve gotten a deal, so when we believe it necessary or appropriate to discount our fees—yes, we need to consider it as such—we should be sure to help them feel how successful they’ve been in their negotiation and how much we’re giving them.  If we don’t think there’s value in what we’re giving away, why would our clients?

Of course, a discount with a client should produce or strengthen a referral source that brings us more clients and more revenue, so we can sometimes view such discounts as an investment in marketing.  Just make sure that when we make such an investment, the prospects of the return are high!

Remember, “price is what you pay; value is what you get.”

David M. Hassler

Director of Business Development

Less IS More!!

A recent article in Inman News reminded me of something I regularly say when teaching fiction writing: Less is more! In that instance, I mean that “fewer words” accomplishing the same goal is usually more effective than “more words,” but the point is the same: evoking something rather than mimicking it!

The Inman article focused its minimalism on the number of photos we show on our Board’s listing service as well as our own website, Facebook, or other portals. The writer made the excellent point that, just because your MLS allows 24—or 36, or a million—photos, don’t put in poor shots or ugly rooms just to fill up all those slots! Given that so many folks these days search for homes online and do a good bit of decision making on what to go out and see based on those lovely pictures, the writer made the point that we have to put our best foot—or, in this case, maybe a bathroom or family room—forward to keep our listing on the “let’s go see this one” list.

Her point focused on only including photos of the home’s best features and rooms and specifically NOT including that basement bathroom that looks like something from a Steven King movie. Makes sense, since our goal is to attract buyers to come out and see the home. So, remember to evoke the best about your listing and don’t dilute those great features with unneeded shots of boring—or worse—elements. Remember, the writer tells us, our goal is to market the house, not create a detailed Wikipedia entry showing every possible room and/or angle.

And speaking of marketing, I always encourage agents to use a professional photographer or service so your listings will look the very best they can. While it may not make financial sense in some cases, I suggest for any listing at or above the market average in your area, to offer professional photography as part of your listing presentation. If your competition isn’t offering it, maybe it will win you the listing—not bad for around a hundred bucks! And the results are startling—everyone can tell the difference, and those great photos of the great features should help bring more buyers out to the house, all else being equal of course.

Finally, in order to not only enhance the photos of the home, but to really optimize that emotional appeal to grab the buyers when they walk in the door, don’t forget the value of a professional stager! Yep, another hundred bucks out of your pocket, so it won’t be appropriate at certain price ranges and in certain circumstances, but a pro will frankly have a better eye for this than 99% of us, and they can also say things more directly than we can! Again, in your listing presentation, if you offer this and the competition doesn’t, then boom, maybe that and the pro photographer nets you the listing. Even using the new math, I think COMMISSION CHECK minus $200 still equals more than NO COMMISSION CHECK! Remember, the goal of a stager—and those wonderful photos—is to evoke a certain feeling of the home, and that always mean fewer décor items and clutter!

Less can indeed mean more: more commission income and more happy clients!

David M. Hassler

Director of Business Development