How does agent productivity affect your bottom line? It seems obvious that if your staff is more efficient, the business will be more profitable. Yet, agent productivity is rarely a main consideration when big decisions are being made for a brokerage, such as which technology solutions to adopt.
Windermere Real Estate has experienced this correlation first-hand. For far too long, they suffered from ‘shiny tool syndrome’ which was disruptive, inefficient, and caused a lack of cohesion across their organization. When the organization shifted to focus on a sphere selling methodology and put a fully integrated, flexible open platform in place, things changed. Five years ago, Windermere did approximately 60,000 transactions with 6,000 agents. Last year, they handled 83,000 transactions with 6,500 agents.
So… focusing on agent productivity and seeing the average agent increase their annual sides from 10 to 12.8? Not bad for your brokerage profits and growth, but how do you get there? It can be difficult to track the ROI of productivity, so we decided to break down how agent productivity and brokerage profits are interconnected.
Agents can focus on the things that matter
What happens when effective productivity tools are in place is that people have the ability to rely on those tools for the things that make them unproductive. Traditionally, agents are juggling hundreds of little tasks at a given time, trying to maintain relationships with their clients post-sale, trying desperately to acquire new leads, planning open houses and completing transactions, and much, much more. The home sale process has a lot of moving parts, so when a defined process is in place, it relieves the agent from unnecessary stress. Agents spend less time on busy work such as data entry, transaction management, managing their schedule, and client research, and more time developing relationships and closing deals.
Brokerages that have adopted the sphere methodology understand the importance of building strong long-term relationships. Agents need the unique ability to be able to nurture relationships with clients over a long-term period of time to stay relevant in between home sales and gain referrals. With the right systems in place that focus on productively nurturing these relationships, agents can maintain routine touchpoints with their clients in the long-run. What does this result in? High quality referral leads, repeat clients, and easy sales.
Agent recruiting and retention improves
We all know that turnover is expensive. Agents are quick to make the switch from one brokerage to another given the right reason. Work/life balance is a priority for agents, which means productivity is key. The more productive agents are, the better balanced their life is, and the more money they’re making. Providing tools that allow your agents to reach a balanced, lucrative workflow will, in turn, improve your brokerage profitability. Take a manager dashboard, for example. Agents feel more supported, because managers have a level of visibility and become aware of coaching opportunities as they arise rather than after the fact. When agents are used to using a system that makes their business operate more smoothly, they’re less likely to leave. Happy agents make successful brokerages.
As a productivity tool provider, we live and breathe this stuff. Our goal with the Moxi Cloud is to improve margins for brokerages by leveraging technology.
So, what should you do? Take a step back and look at your business critically. Ask yourself what the three major pain points are for your brokerage right now and think about whether they’re linked to productivity and, if so, how brokerage profits might be getting affected.
York Baur – CEO, Moxi Works
Redfin went public last week, raising well over $100M at a valuation of $1.5B. That’s what all the media is focused on, but what does it mean to you the brokerage owner?
The bad news is that you should be concerned. Redfin has deep pockets, deep technology, and now has access to the public markets to raise more capital as needed to grow further. They invest tens of millions of dollars in their technology annually, have a great website, and spend lots of time and money driving traffic to it. Like it or not, they’ll be a factor, and they’re going to put pressure on you to deliver better technology and a slicker experience for both your agents and their consumers.
The good news is that you have everything you need available to you to compete successfully. How can I be so sure? Because Seattle-based Windermere Real Estate has had Redfin operating in its home market of Seattle for 12 years with $200M of capital, and despite all the hype, tech and money, Redfin still has only 2.6% market share compared to Windermere’s 21%. Even more important, Windermere did 38% more transactions last year than 5 years ago in the tightest inventory market we’ve seen in a long time.
How can Windermere continue to dominate in the face of Redfin? And Zillow for that matter (also based in Seattle’s tech-centric market), supposedly siphoning away business by selling leads to the highest bidder? And how can you do what they’re doing? The answer is:
- Continue to focus on agent’s sphere of influence – the people that already know, like, and trust their agents. Sound obvious? It is, but I’ll bet you’re not doing it enough. We talk to brokerages across the country every day who are distracted by chasing a lead generation battle that they can’t win. How are you seriously going to compete with the billions of dollars of capital that Redfin, Zillow, and Realtor.com spend every year driving consumers to their sites? You can’t. Period. Lead gen will continue to be a small piece of your business, but that’s it – a small piece. The biggest piece of your business is the core business, which is transactions coming from consumers an agent already has a trust relationship with.
- Quit focusing on buyer leads. Every realtor and broker wants a seller, not a buyer if they have the choice. Redfin generates buyer leads. Zillow generates buyer leads. What’s the overwhelming source of seller leads? It’s an agent’s sphere. Control the inventory in your market by concentrating agents on their sphere, and you make money. There are only around five million homes transacted every year no matter how many buyer leads are generated – don’t you want to control the seller side of that equation?
- Control and centralize your data. Windermere decided years ago to put an open platform in place. It’s like a power strip where they can plug in all their agent tools and have them work together. How? By putting all their property data, agent and brokerage data, and consumer data in one place. Windermere currently has over 2.6M consumer names in that platform, allowing agents and the brokerage to market to those consumers to generate listings, using dozens of tools in various markets to do so. Do you have a centralized database of your agent’s contacts? What are you doing to help them stay in front of their sphere of influence?
- Quit creating islands of data and technology. Windermere has taken the platform concept to heart, and has solved the problems of tools that don’t work together, redundant data entry, and not being able to get a comprehensive view of their business. A technology platform allows them to save millions of dollars annually in office staff time, custom software development, and management overhead. This is in sharp contrast to most brokers, who don’t have a technology strategy. They buy the latest shiny technology object, and don’t even ask the question of how it works with the other technology they have now or might use in the future. Agents are demanding a better experience, and that means not having to start over from scratch with every new tool you provide them, upload their database for the 17th time, or having to rekey data.
- Training, coaching and sales discipline. Redfin has made much out of the fact that they hire agents and support staff as full-time employees, not contractors. But that’s not the big difference – we hire contractors in the tech world all the time, and they contribute just as much as our employees do. So what’s the difference? It’s not the person, it’s how they’re trained, coached, and held to a standard of how to do business. That means having a training program, providing good coaching (which means training your coaches), and having a technology (specifically a CRM system) that reinforces the sales discipline every day as agents do business. Windermere has trained over two-thirds of their agents in the Windermere sales discipline (heavily influenced by Larry Kendall’s Ninja Selling), puts an emphasis on managers doing agent coaching, and has built their discipline into their CRM to provide ongoing reinforcement.
With Redfin beating its chest on Wall Street, you need a response for your agents and your consumers – now. Do nothing and you’ll lose agents, because they won’t tolerate inaction. And don’t forget the Millennial agent who isn’t just comfortable with tech, they demand it as a necessary tool for doing business. But despite all the hype and money spent, Windermere did eight times as many transactions in the greater Seattle market last year than Redfin did. With performance like that, we’d all be well served to look at what they’re doing right.
Find out more about brokerage open platforms and how they work by clicking here.