One of the most common traps that estate agencies fall into is to assume that the more applicants you have, the more sales you make. However, the law of diminishing returns holds true and from an applicant database perspective, big is definitely not necessarily better as this article reveals!
Data provided to me by agents around the country constantly reinforces the aforementioned principle that too many applicants causes untold problems.
For example, every firm who has studied the available applicant statistics finds that less than 10% of applicants who register ultimately buy a house through them. It is sobering to realise over 90% of applicants simply cost you money.
Furthermore, a number of companies have also looked at where offers come from. One company recently reported that of all the applicants who had made offers through their branches during the first half of 2012, 93% of them had been on the database for three weeks or less at the time they made their offer.
Running a leaner applicant database has improved sales performance for a significant number of companies we have trained, as well as enhancing profitability by driving down unnecessary costs. The typical starting scenario that these firms found themselves in had certain common elements.
Firstly, the policy was to put every applicant who contacted the company straight “onto the system”, where they would remain indefinitely until they bought through the firm or until the applicant requested to be removed. There was no quality control as to who initially went onto the database.
Secondly, the true quality of recorded applicants was impossible to assess, as information on each was limited. Doubtless there were some real gems among the hundreds sometimes thousands of applicants, but they were lost in a mass of mediocrity.
Thirdly, ongoing contact with applicants was minimal. They were often served solely by emailing, often for months on end.
Thus the classic “triple whammy” scenario emerged – no initial quality control, limited information taken from applicants and lack of follow-up contact. In other words, deficiencies in prequalification, qualification and requalification.
Training in “best practice” principles in these three key areas always has a positive effect. A selection of these principles is detailed below.
Failure in the area of “prequalification” means all and sundry are welcomed onto the mailing list, regardless of quality.
Applicants either make you money or they cost you money. The former category would include the genuine buyers who are ready, willing and able to purchase imminently within an agent’s catchment area, and the local applicants with properties to sell who provide instruction opportunities.
Effective agents quickly identify this important minority and focus maximum effort and time on them.
Initially establishing an applicant’s reason for move, timescale and ability to purchase will enable the agent to assess how likely that person is to make them money, and therefore how much time, our most valuable commodity, to trade with them.
Many agents have changed their initial approach from the old chestnut “Do you want to go on the mailing list?” to the more considered “Does this applicant deserve to go on the mailing list?”
Skilled and thorough “qualification” is critical to success. Asking the right questions and paying attention to the answers will immediately highlight which category the applicant falls into.
It is evident from our Mystery Shopper exercises that the ability to qualify varies enormously from individual to individual, often leading to insufficient information being gleaned. It also hinges on which software system is employed, as many of these have severe shortcomings.
For example, establishing that an applicant wants to move “as soon as possible” is virtually meaningless. Specific timescales need to be established – “When do you need have moved by?”, “What is the absolute latest deadline you’re working to?”, “What problems would it cause you if you don’t move by then?”. The responses to these questions help sort the wheat from the chaff.
Ongoing contact and “requalification” carry similar weight of importance. Many applicants who register on mailing lists ought to be removed within days because they quickly change their minds about the area or even moving at all. However, in reality they often remain on an agent’s database for weeks or even months due to the lack of an early follow-up call.
Some agents do not “officially” put applicants onto their mailing list until they have made such a follow-up call, typically within three days of initial contact. A high percentage of these calls result in the applicant not going onto the mailing list, thereby saving the agent considerable time and expense. Calls made to the better buyers lead to more viewings and an early opportunity to requalify.
“Best practice” also demands regular ongoing calls to establish changes in requirements, price range and ability. This enables the proactive agent to steal a march on the competition.
One firm has dubbed these three key areas as “The Holy Trinity” as they have seen such a massive leap in results after ensuring that staff follow the principles every day.
Julian O’Dell – TM training & development