BrokerageTechnology

The mistake even top brokerages make and how to avoid it

Get past your feel-good efforts to run a smarter business

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Takeaways:

  • Clearly defined goals keep you from wandering.
  • Effective goals usually relate to agent recruitment and retention, profitability, durability and legacy.
  • Goals help define criteria and lead to decisions that produce desired outcomes.

I work with brokerage owners all over the country, and I help them determine the experience they want to deliver to their agents. While everyone has good intentions, they all fall into one of two camps — those who define their goals and those who don’t.

Brokerages without clearly defined goals tend to wander aimlessly, and they try to do a little bit of everything and end up accomplishing almost nothing.

Most have broad, fuzzy goals such as, “Create a great place where agents want to come and work.” It’s easy to fall into this trap — after all, it sounds good, and it’s what you want. But these aren’t goals.

They’re more like mission statements, so let’s think of them as that and get back to goals.

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Goals map to the mission but have clear boundaries. For example, top-performing brokerages have concrete and measurable goals around customer satisfaction, agent training, brand awareness, technology offerings, website sessions, market share and more.

Unfortunately, it is the rare day when I have a brokerage owner tell me, “My goal is to decrease agent churn by X percent and increase profitability to X percent.”

When asked about these things, most owners say they want more of just about everything — more agents, more offices, more leads, more listings, better client satisfaction, more revenue and more profit.

Well, sure, who wouldn’t want more? But they don’t have these things defined, and they have no idea how they’re interconnected — and they’re all interconnected.

Without definition and understanding, everything starts to look like it might help, so people test-drive everything. They mix and match products and service providers. The result is a mosh pit of offerings that barely help agents and usually do nothing for the consumer.

The resulting chaos makes recruiting agents a challenge, and squeezing out meaningful profit margins is even tougher.

Defining your goals

Clearly defined goals enable crisp decision-making. Creating those goals is a pretty straightforward process.

First, take a look at how your brokerage is performing relative to your peer brokerages. Do a simple strengths, weaknesses, opportunities and threats (SWOT) analysis by evaluating your brokerage and your peers.

Be honest and list one or two points in each category for each brokerage. Doing this helps get your head around the issues to help you survive and thrive.

Second, define your goals — in writing. And make them measurable. If it doesn’t have a number and a date, it isn’t measurable. Your goal should not be “Generate more revenue”; it should be “Increase revenue by $X this calendar year.”

You can have any goal you want, but they typically fall into these four areas:

  1. Agent recruitment and retention – Often a key growth driver; perhaps you want 50 more agents next year.
  2. Profitability – How much you make from the business. Perhaps you want to make $75,000 more next year, or you want to expand your profit margin by 5 percent.
  3. Durability – How well your business can weather the storms. Perhaps you want variable costs to increase by 10 percentage points relative to fixed costs.
  4. Legacy – What will happen after you leave? Maybe you want to solidify your brand’s reputation.

With goals in hand, now you can start building your business in ways that will achieve those goals. Goals help you define criteria for your decision-making.

For example, if you have a goal to have 75 percent of your transactions be from your agents’ repeat and referral business, then your criteria for agent training systems would support that.

You’d provide training to help agents stay in long-term relationships with their clients, and you might not provide training on how to convert Internet leads. Your time gets focused on the meaningful few meeting your criteria. Decision-making becomes crisp and business velocity increases.

Achieving your goals with technology

In discussions with brokerage owners, many don’t understand that technology is a critical means to achieving goals.

Instead of viewing it as “something shiny to give to agents,” (Ken Jenny got it right) in a vain hope it will attract or retain agents, technology can be put to work on activities that achieve goals.

Technology is what everyone touches every day throughout the business. It’s the enabler in your business.

Done in a thoughtful, integrated fashion, technology can make agents more productive and make clients more satisfied. It can also save you money, which is often counterintuitive.

What we’ve found is that once a brokerage is delivering integrated solutions that support their goals, they can eliminate a bunch of technologies that don’t. This happens more than you’d think, and the savings are often substantial.

With goals clearly defined, you can also start defining criteria for your technology plans. Remember, agent success will lead to your success, so things that enhance their productivity will likely map exceeding well to your goals.

What tools, data and processes will save them the most time and make them the most money? With your criteria in hand, it’s time to develop a short list of partners who can provide it.

Here again is where I see brokerages getting distracted and not considering what will work best for their situations.

Consider, for example, the durability of the provider. Often they are technology features masquerading as companies. Certainly consider their technical capabilities, but perhaps most important of all, consider their cultural fit with yours.

For example, if you don’t have much technical expertise in-house, you’ll need partners who can provide it. Importantly, consider whether their business model is aligned with yours. In other words, work with partners who align well with your goals.

Once you’ve chosen technologies that align with your goals and integrated them together into a quality agent experience, the magic starts to happen.

The tools and technology start helping everyone generate activities that move the whole business toward your goals. They do it every day, with or without your help. This is how technology enables your business.

Top brokerages have clearly defined goals. Their goals help them make decisions every day that move them toward those goals. For these brokerages, growth and profit are a regular experience.

York is CEO of Moxi Works, a residential brokerage services company spun out of Windermere Real Estate.

Email York Baur.