I work around the real estate industry. It amazes me how in the middle of the worst real estate recession since the Great Depression, so many people survived, some even thrived. How did they do it? They reinvented themselves. I will focus on that industry for a moment, and then compare how individuals and companies can use these events to go to school and prepare as well.
Consider the circumstances going on back then. The market had overheated, and many clients were given loans that they never should have been granted in the first place. What comes up must go down. First, the market time started to increase as home sales slowed. The media, which loves to tell us bad news and how bad things are for us, were on a feeding frenzy reporting the now sluggish market. As homes began to sit, prices started to drop. Enter homes that had little or no equity now going into foreclosure. Prior to this, there were areas where people were buying new construction with no intent of living there but simply selling the home upon completion. Couple all of this with unemployment on the rise and concern over job loss.
During this time, about 400,000 real estate agents got out of the business. Many of those were part-timers and newbies, but some were veterans that had been thinking of retiring and did so. Many agents were affected during the downturn, and some changed the way they did business. Agents who did luxury real estate became experts in working with short sales. Some that specialized in working with builders focused their attention on securing to get bank owned business. After all, builders were not building, but banks were being forced to foreclose and take on inventory. Then, short sales became a solution to prevent the banks from taking over inventory it didn't want, getting the seller out from under the property and getting a buyer who could afford the home. Many agents had never worked in an environment like this. Some agents actually moved out of their offices and opened an office in a specific zip code to get these coveted Real Estate Owned (REO) properties or short sale leads. While this occurred, others sat on the sidelines waiting for the market to change.
Today, in the same industry agents must reinvent themselves again. You see, while the market is improving and prices have been moving north, there is still mild improvement in some agents production. There are several obvious reasons: shortage of inventory, unemployment issues, lack of new home construction and some people that still don't have the equity to move. Then, you have the less obvious: some couples are living together with no plans of staying married because the economy kept them together. Some consumers added, improved, or remodeled during the crunch, they decided to stay put. You have kids that can't find a job in the field they were educated in and living with Mom and Dad. These were first time home buyers in 2004. Then, you have the individuals not in the market because they gave the keys back to the bank or short sold. This last one, in my opinion, is the missing link.
These are people, in many cases, that are renting today. Many are working, but they got in over their heads. In some cases, they only have one income now. This is why agents today need to increase or rebuild their SOI (sphere of influence). They need to replace those clients that don't own their own home anymore. In this industry, the number one best source of business is repeat customers. Many associates want to get back to the point that they can work simply by referral only. Today, I believe even the best agents need to look at their missing SOI and replace it. This can come from several sources.
First, they can affiliate with a company that offers brand. The experienced agent is somewhat a brand to their clients. The client knows how they have preformed and is happy with the service received. Thus, they are a proven commodity. A brand allows you to capitalize on the image or perceived value to gain business. Agents may have to reach beyond their own customers that see them as a brand and add customers that recognize a national or regional brand. Given the chance, they can now let this client experience what their past customers know.
Second, you can promote or advertise for new clients. This may be the most expensive approach. When you advertise, you are marketing to the masses. Even if you target your advertising. You are paying based on the audience, media, and reach. However, there is no guarantee you will reach your client.
Third, you can reach out to your SOI, determine what you still have and enlist their support to recommend you. This is best done belly to belly.
Fourth, you can affiliate with a company that supplies a new source of business.
Lastly, you can buy leads. You can always buy a source of business. Many today are buying internet leads from vendors. An alternative that I see trending is agents building a team to try and create a wider reach or passive income through the efforts of others. In other words, create horizontal growth through other people. Yet another alternative is building a business alongside a practice to leverage other's income potential and create the most ideal form of passive income, the type you don't have to create, generate, or participate in. I have another article on my blog which talks specifically to these to concepts.
Why must an agent take action? Everybody can learn from this. As the market improves, the industry will grow in practitioners again. This means the pie gets split. The market increases, but so do the number of agents. The best agents always get their piece. Consider that for five years, clients have been losing their homes. There is a point that their clientele was affected. Part of the SOI is gone. If as an agent, you build relationship with investors, they may not use you to liquidate. They are investors for a reason. They do things that make financial sense. This means that they may seek a cheaper way to sell the product: for sale by owner, rent to own, rent forever, sell in bulk, sell at auction etc. These may not be better options, but they are alternatives. The good news is there will be business and more of it, but the agent must figure out a strategy on how to win in the future and right now!
Reinventing has been going on with the best companies for years, Let's go back and look at McDonalds. To me, they are the classic re-inventors, Once they sold nothing but hamburgers, chips, shakes, and coke, today they sell everything from salads to ice cream to coffee. They went from being a walk up window in California to having lobbies. Walk-ups don't work as well in the winter in a place like Fargo, North Dakota. Then, they moved to dine-in, while developing the drive-thru. Look at the menu today. Originally they opened at lunch time and stayed open until late evening. Then one day, they opened for breakfast with four items on the menu: an Egg McMuffin, a cinnamon roll, orange juice, and coffee. Today, it's a much wider menu. If you drive by a McDonalds in the morning, you will see a drive-thru with several cars waiting in line. They took that first bold step from being a hamburger place to fast food. They are constantly introducing new products or trying to grab more of the market share.
You can look at Subway and Jared. Subway entered an industry that was stereotyped with a lunch pail type of product mentality, the submarine sandwich. Today, moms buy this for their kids because it's a healthier choice than a lot of other fast food options.
Krispy Kreme couldn't have picked a worse time to expand. It was building the donut factory stores while the whole low-carb Atkin's Diet was gaining momentum. It sure was cool to see the donuts go through the assembly line. I remember my youngest seeing the factory store assembly line for the first time and watching the glaze pour down onto the donuts, and he said, "I just want to be a donut right now." Their problems may have not been completely the no-carb crunch. In fact, Dunkin Donuts were popping up and growing at the same time. Dunkin may have grown because of their diversification. Many had ice cream for that afternoon or evening client. Some offered sandwiches as an alternative, but they all had coffee. Dunkin had what Krispy Kreme did not. A loyal Dunkin Donuts coffee fan base. So much so, they started selling the product in grocery stores. They also offered muffins and breakfast sandwiches. The reinvented themselves.
Another great example of reinventing is of an organization bringing something back from near death. I'm talking about the Chicago Blackhawks. The Blackhawks are the epitome of a hockey franchise today. They have won two Stanley Cups in the last four years and sell out every night. In fact, they have a season ticket waiting list from here to tomorrow, a list that started long before they won in 2010. The interesting thing is that this franchise was in trouble. Rocky Wertz turned this franchise around in record time. His father, nicknamed "Dollar Bill Wertz," had refused to air the home games for years. Even when the Hawks played teams like the Detroit Red Wings, when the game had sold out. He still refused to air the games. The fan base was dwindling due to poor performance by the team and a disdain for the owner. Rocky's first move was to bring in a new president to help with the marketing. He brought back a beloved announcer. He developed a strong relationship with past fans by bringing back fan favorites as team ambassadors and held the first Blackhawks fan convention. However, the biggest move was done right after his father passes away. He started televising home games. Now people that had never been to a Hawks game found out what they had been missing. By airing the games for free, he started selling out night after night. If you have never seen the National Anthem preformed before a Hawks game at the United Center, it needs to go on your bucket list. This was the opposite of what his father thought would happen if people could watch the game for free. Of course, it didn't hurt that he had two very young, very marketable players in Patrick Kane and Jonathan Toews. However, Rocky did not wait for these players to become household names and begin winning. Instead, he reinvented the franchise.
One major reason for reinventing yourself is that there is always somebody ready to knock off what you do. I interviewed a guy once that had this cool process. They could take a CD and duplicate it in mass for a fairly inexpensive cost. While trying to sell what he could do for companies he stumbled upon AOL. Yes, he made the sale of a lifetime to AOL. Remember seeing those discs everywhere to download AOL years ago? Why was this guy interviewing for a job? The next year after his big sale, they knocked it off in China and produced the disc for a fraction of the cost. Of course, today most programs are downloaded without a CD period. It's downloaded from the internet. It was a great concept for a few years. So, what we can all learn from this is that change is around ever corner.
I hope this brings to light that we have to reinvent ourselves and why. We want to look at new ways to capture business. We need to reestablish past relationships and repeat customers, but more importantly, we must ask for their business or recommendations. We can wait for something to change, or we can reinvent ourselves.