I'm number one, so why try harder?
This was the slogan on the front cover of Fat Boy Slim's debut album. Number one is not about the awards, nor is it something to post to Instagram. It's a philosophy, a pursuit, an ideology to do whatever it takes to enter the market and command the first position.
First, it has more benefits. You meet more people, do more opens and more auctions, more sold stickers, generate more revenue, and have more opportunities. More, more, more.
Aspirational Goal
It's always day one. There was a day when Amazon didn't exist, and there was also a day when you weren't in the industry. We all have our day one. On day one, you are hungry, naive, and keen to do anything it takes to get your first listing.
Set an aspirational goal - let's become the number one in each of our chosen markets. It's measurable, has tremendous benefits, and is a better way to do business than being the distant 15th in the market.
A Better Way of Doing Business
Business is about flywheels. Acquire knowledge (learn about your market), get exposed to customers (signboards up in the physical world and ads up in the digital world), get exposed to transactions (sold and let stickers apply), build winning routines, enjoy the benefits of social proof (being the go-to), and then scale your service.
The faster the flywheel, the quicker the momentum. What prevents business success? Surging. Surging is tiring. It can be really good one month and fall flat the next. It is better to be consistent over the long haul than a hero one day and gone the next.
Define Your Market
First, you need to define your market. You might choose a postcode, a council area, a type of property and/or a price point. What's critical is that you learn everything you can about that marketplace. From school zones to dominant local builders, from sale prices to rental yields, construction and density to transportation and travel times.
TAM - Total Addressable Market
How big is your marketplace? It's not about the number of homes nor the number that transacted last year, especially if it was the best year of all time for volume. What matters is the number of transactions per year over a ten-year average. This irons out any market bumps. Make sure your marketplace is big enough for your aspirations. 150% market share is hard to attain. 30% in big city markets is dominating, and north of 70% in small coastal towns is the same. Why the difference? It's harder to command market dominance in larger markets.
Start With Data
Imagine you put the residential address of every past client, every Landlord, and every Archived Landlord on Google Maps. Where do they all live? The secret are in the data. The forwarding address for past clients and the residential address of Landlords is a winning strategy. How does that data map compare with where you currently have a market share? Hopefully, they overlap; if they don't, then there's a huge market opportunity.
Move To Relationships
You don't need a lot of relationships to become number one. You need transformational relationships. That one person who knows everyone. Who already knows all the people you want to know? We've seen agents strike up relationships with their land mowing handyman through to the local garage door repairman and gain market share through just those relationships. When you know where the customer hangs out, you know who to connect with, and that can generate plenty of leads for you.
Before, Core and After
When someone buys from you, where do they come from? When they sell through you, where do they move to? That transactional data is the biggest insight of all. Australia Post offers forwarding data to identify suburbs people move from and to. It's ideal, as it's complimentary. Let's say your average sale price is $1M, and when they buy that, they sell a $500,000 apartment, then the $1M seller buys up and buys the expensive home in the neighbouring suburb for $1.5M. Even though they may not have made that transaction with you, it still doesn't mean they can't do it in the future.
Get Strategic
The goal of any market growth is rapidly growing revenue.
There are three principal drivers for business revenue growth:
- Average sale price,
- Fee.
- volume.
Lift Average Sale/Rental Price
If you're going to stand there for four Saturdays or manage it for a year, you may as well work on the expensive ones. Higher average sales or rental prices bring a better type of clientele. It lifts your hourly rate and lets you generate more leads; as the buyer buys up, they have something to sell, so it's a self-generating prospecting machine.
Lift Average Fee
Get out of the competitive markets and get into the lucrative ones. If you can raise your average fee in the neighbouring market, you will get paid more per hour. Move to get paid on the result, not on time. If you can keep your average days on the market down, you increase your hourly rate.
Lift the Volume of Transactions
No point in being on an island. The smaller your market, the harder you fall when the market stops. Working in bigger markets provides more opportunities. To lift volume, you need to be in a hub market, not just a spoke. Hubs always turn regardless of the economic conditions of the day. In spoke markets they are highly lucrative, but they are the first to fail when economic conditions turn.
Complimentary to Core
It's ideal that the markets you choose are complementary to the core. Moving up and down the property ladder, where do they start out as a single? Where do they move to when they couple up? Become a family? Upsize as a bigger family? And downsize into when they retire? The more you know your market, the more you can be in the aspirational locations, so you pick up more leads in your core.
Service Market Fit
They talk about product market fit. Does this product fit the market? Let's now talk about service market fit. To command a market position, we need to do something the customer seriously values. Something they'll talk about, something that they'd pay more for. Service differentiation is really important. One brand in Australia drove market share as they didn't auction, charge for vendor-paid marketing or conduct open homes. This lumped everyone else into the competitor set. Right or wrong, you need to be a service market fit. What do you stand for? Hopefully, something the customer seriously wants.
Positioning
When you wake up in the morning, are you aiming to be a big discounter? Or the most expensive? In fact, if you're not planning on being the cheapest, then how are you planning on winning? You can choose to be The Reject Shop, David Jones or Louis Vuitton. LV makes all the money and is highly profitable; the Reject Shop has a high volume of low-margin customers, whilst David Jones represents the best in each price range.
Positioning really matters. It's the story of David vs. Goliath. David moves quickly and can move on a dial. It's highly strategic. Goliath is slow-moving but knows its customers really well. One is a challenger brand, and the other is safe and secure.
Metrics That Motivate
To become number one, how will you define that? Most Google reviews? Is that an edge when you're winning against Goliath?
You need metrics that motivate. First, you start out with the number of new listings this week. If you list more this week and do it again next week, you will start the wheel of momentum. That leads to having the most number of opens in your marketplace. Now you meet more people than anyone else. The flywheel kicks. That leads to reducing days on the market so that you can drive volume. You move to auction to do that, plus the social proof of auctions leads to more listings. Then, the one metric that matters most is the number of SOLD stickers. Whilst it's easy for sales to measure success, property management is the lifeblood of the subscription revenue for any real estate business.
Incentives When You're David
When you start out as David, you need a story. A story that consumers buy into. Remember, there are people who are very clearly competitors' customers, there are non-consumers, and there are people who are not yet consumers. To steal customers, you have to get their attention. This is where you define strategy. You might let data decide the strategy. If there are lots of expired listings, that might be your first pass. If you need a customer base, you might buy a competitor and/or their rent roll, then increase the customer spend of their customers. David can poke fun at Goliath. We all know the David brands. They look shiny; they do something different, and they challenge convention. They don't always make money, and at some point, they have to mature, as what got them attention soon becomes a pain as they scale.
Hunger When You're Goliath
Just because you've made it doesn't mean you can get lazy. Do you remember how hungry you were when you first started out? We have businesses in Australia where the minimum cash buy-in for a partner is $1M. Talent heads for David. They've got no cash but plenty of conviction to have a go. Goliath needs to know what makes them great. They must leverage customer bases. They have to maximise relationships. They need to grow the next generation of agents. Goliath is in a commanding position. Change is hard, and learning history can strangle you. It is much better to set a dominating strategy, keep your people hungry, and be disciplined in your growth path. Too big, too quick, too easy to fail.
3 Reasons 'Why You?'
Don't expect the customer to work out why they should use you. Come up with three unique components to your story. This is why people use us. Simple things like, we have market share in the $1M price range, which means our sellers are buying up into your price range of $1.5M. We already look after this suburb, and when the buyers get priced out, they move to your suburb (buyer transfers). We're new. It's time. We're calling out XYZ for these reasons. I.e., find out why customers would change. Landlords only move because they are unhappy, they hate their property manager, or they've had a poor experience. Imagine the ad, 'Hate your property manager? Get one you'll love, who's really good at what they do. Changing is easier than you think; click here. When you connect with the hearts and minds of your customers, that's when things change.
Marketing Edge - Video, Sale Method, Price Transparency
Develop your marketing edge. Maybe it's a video and the way your people present. Maybe it's a method. Maybe it's price transparency. It all comes down to design. Don't offer free market appraisals; let them 'get a quote' for you to sell or manage their property. It's right at the decision moment; it makes sense, and it could be your game-winning strategy.
What's really important is that you're aspirational.
It's about building a business that you love, one that's fun, one that enjoys its success, and that reinvests its profits into reinvention so you can stay in the market-dominating position for decades.
