Science to Sales

Fresh out of college, I became a teacher.  I worked with emotionally disturbed adolescents in a psychiatric hospital.  Needless to say, it was an easy transition when I started a traditional real estate company and took to recruiting agents!  My teaching skills became important again after I sold that office and went to work for Century 21 Corporate.  I started as a business consultant but soon was in the classroom, first teaching management courses and then, sales programs.  A few years later I found myself at headquarters as VP of Training, responsible for creating every bit of training the  company produced and developing a team of trainers spread across the country.

I say all of this to make a point:  I know training.  I know how to discover the need for it, how to design it for maximum effectiveness, how to coach trainers  and how to improve performance with it.  That’s why I was floored in 2003 when I encountered Science to Sales.  It is the best buyer agent training program I’ve ever seen.

Science-to-SalesScience to Sales was created in the early ’90s by Help-U-Sell founder, Don Taylor.    It is an activity driven, spaced learning program designed to be coached, not taught.   It gets new agents busy immediately and productive quickly, while preserving the broker/trainer’s most precious commodity:  time.

Consider this:  the first chapter of Science to Sales has the agent writing 18 sample offers to purchase.  18!  By the end of their first week in the business, a Science to Sales trained agent has more experience writing offers than most ordinary agents have in a couple of years! 

There is a misconception about Science to Sales.  Some think it is a video training program.  It’s not.  There is a video component, but it was added several years after the original workbook-driven program was created.  The six, hour-long videos were created as content for the Help-U-Sell television network and became a valued addition to Science to Sales.  Today, the agent meets with their coach at the beginning of the module, then watches the video, completes the activities outlined in the manual, and then meets with the coach again to debrief and prepare for the next module. 

In 2004, the program was revamped.  Actually, we considered recreating it from the bottom up — and I was given the task of exploring that idea.  I struggled.  How do you improve on something that’s already this good?  I decided that a few minor content tweaks were necessary (the business had changed a little), and that could be easily accomplished in the manuals.  But then there were the videos.  Oh, they sounded fine.  But the clothes and the hairstyles went out of don taylorstyle a decade ago.  I stewed.  Would these clunky old videos be an embarrassment?  Would the dated look trivialize the program and cause brokers and agents to disregard it?  After talking with a dozen great Help-U-Sell brokers I decided to leave them alone.  It was clear these guys adored the program just the way it was and considered the opportunity to hear Don Taylor himself on tape to be priceless.

Here’s the Good News:

Yesterday, Robert Stevens and I finished uploading the entire program to the Help-U-Sell Download Library.  The videos have been digitized and are available for streaming over the internet.  The six student chapters have been PDF’d and can be downloaded and printed.  Even the coaches guide is there.  And it’s all free. 

As usual, I see this as an opportunity.  Here is your chance to go out this week and recruit an absolute green bean, someone who’s just gotten his or her license and hasn’t got a clue what to do.  Then, put them into Science to Sales and see how quickly they become confident, competent and productive!  I’d love to hear the results.

(You know how to get to the Download Library, don’t you?  Go to helpusell.com, scroll to the bottom of the page and select ‘Help-U-Sell OMS’.  If you don’t remember your Log-in and Password, send an email to support@helpusell.com.  Go to ‘Marketing and Content’ and you’ll see the Download Library in the drop-down.  Expand the item, ‘Help-U-Sell Real Estate,’ and find ‘Science to Sales’ in the list of folders.  By the way, you don’t have to stream the videos over the internet.  If you’d prefer, they can be downloaded and stored on your computer.  Just right click on the individual video link and select ‘Save Target As’.  You can use the same procedure to download and save the student and instructor guides. )

How Ordinary Brokers Mistake Cash Flow For Profit

It’s darn hard for a broker to make a profit in the ordinary (traditional) real estate business.  I know this because I spent years working for one of the large national franchisors specifically to help their franchisees find ways to become profitable.  I worked with hundreds of brokers and learned to dissect their financial statements and make recommendations that might help increase the bottom line.  It was a futile effort.  Once brokers started averaging less than 30% in Company Dollar, there was little hope there would be much left after expenses.

Many of the offices I saw made no money at all.  Most bumped along at between 1% and 3% profit.  And a few — just a few– approached 5%.  They’d usually protest when I gave them the bad news.  ‘What do you mean, I’m not profitable?  I got money in the bank!  I pay my bills!’  What they had was cash flow — not profit — and there’s a big difference.  Cash flow is just the money a business kicks out from a variety of sources.  Profit is a measure of a business’s success.  Successful businesses are profitable.  Failing businesses are not.  And the problem with traditional brokers was their business model:  it was broken.

Time and again, I’d ask for financials and receive these fairy tale statements that had seemingly  been created in never-never land.  Filled with magical thinking, they usually showed piles of cash at the bottom line . . . until I started straightening them out.  As a refresher, here is how a real estate office looks at profit:

  • Gross Commission Income
  • Less Cost of Sale (which includes Agent Commission Expense and Franchise Fees)
  • Equals Company Dollar (Net Operating Income)
  • Less Expenses (Rent, Marketing, Utilities, etc)
  • Equals Profit/Loss

And here are a handful of the most common things traditional brokers do to their P&Ls to hide the fact that they make no money:

Basing profit on Company Dollar, not Gross Commission Income.  Doing so can make a 1% profit look 5-10 percentage points higher.  Just a reminder:  Profit(%) = the bottom line divided by Gross Revenue, not by Net Operating Income. 

Not paying themselves for performing the management function.  Most brokers run around all day long, cleaning up their agents’ messes, solving their problems, deal doctoring, training and recruiting, recruiting, recruiting.  Few ever budget compensation for that massive task.  I insisted they build in a salary for themselves equal to what they’d have to pay someone else to do this job– even if they never write the check.

Not paying themselves as an investor.  Most brokers sink thousands into their businesses getting them open and to the break even point.  That’s money they could have invested anywhere else . . . and gotten a return.  I insisted they build at least 8% Return on Investment into their income statements.  When they’d protest I’d challenge them to go out and find someone else who would loan them an equal amount for that kind of return. 

Not paying themselves for personal production.  Over and over they’d say, ‘Oh, I just leave my own commissions in the company.’  Wrong.  You pay yourself on the same basis you pay your top agent.  If, after doing so, there is not enough money left to pay the electric bill, you invest more money into the business. 

Attributing ancillary sources of income to the real estate business.  Title, escrow, mortgage, insurance, termite and on and on.  I actually had a group of California brokers tell me they never intended to make any money in their real estate operations.  They just used the real estate office to generate business for their ancillary services!  Anybody who would intentionally take on the risk and liability of a real estate company with no intention of making a profit is . . . well:  there’s a new definition of insanity for you. 

Not too many years ago I was doing a project for another one of the large nationals.  I was in a meeting with some of the execs when someone came into the room, fresh from a meeting with a group of their top brokers. 

“How’d it go?’ she was asked. 

‘Not too good,’ she replied, ‘They’re all struggling with profitability.’ 

‘Well, did you show them how to charge a transaction fee?’ 

I had to bite my tongue.  If your business model is so messed up that you have to charge your customers a fee for handling their transaction in addition to the commission you charge them to handle their transaction . . .  

These are just a few of the many reasons I fell in love with Help-U-Sell.  Here I found brokers who were making a reasonable profit and delighting customers at the same time.  They were controlling the biggest drain on income most real estate offices face, Cost of Sale (which includes agent commission expense).  Company Dollar was greater and so more cash fell to the bottom line.  In Help-U-Sell, brokers had a way to charge less  .  .  . and make more.

Rely on Facts . . . Not Rumors

The other day, Ron McCoy told me about a broker who had been beating herself up because she didn’t have any REO business.  She kept reading in the newspaper and hearing on the radio what a huge part of the market foreclosures had become.  Why wasn’t she getting any? 

All of this gnashing of teeth led this broker to do what Help-U-Sell brokers do in situations like this:  she did a Market Analysis.  Guess what?  Turns out REOS accounted for less than 10% of the business in her target market!  Suddenly all of that energy that was going into stewing and worrying about REOs that didn’t exist could be channelled into capturing as much of her market as she could.

Here at the Set Fee Blog, we did the whole Chicken Little/Foxy Loxy thing a couple of days ago and we all know not to pay attention to the negative press that’s out there.  But why not take it one step farther?  Why not replace the negativity circulating around you with solid market place facts?  Even if REOs are 40% of the activity in your MLS, what’s going on with the 10,000 – 15,000 households where you intend to do business? 

As Help-U-Sell brokers, we rely on market data for so many decisions:  where to set our fee, where to target our marketing, when to gear up and when to wind down.  Confusing times, uncertain times, times when all the birds in the barnyard are squaking — these are the times to update your Market Analysis and examine your data again.  You’ll find the full set of forms and instructions you need to do a Market Analysis in the Help-U-Sell Download Library. 

(You know:  go to www.helpusell.com, scroll down near the bottom of the page and select ‘Help-U-Sell OMS.’  Proceed to OMS Login and, if you’ve forgotten your user name and password,contact support@helpusell.com.  You’ll find the Market Analysis package in the ‘Marketing and Content’ section, under ‘Operational Tools’ and ‘Office Operational Forms.’  If that’s too many clicks, just drop me a note and I’ll send you the package and even help you fill it out!)

Chicken Little

We all know the story of Chicken Little:  how a seed fell from a tree and landed on his tail and he therefore assumed the clsky was falling! the sky was falling! 

He ran and told Henny Penny, ‘The Sky is falling, the Sky is falling!’

And Henny Penny cried, ‘We must run!  We must run and tell the king!’ 

They ran into Turkey Lurkey and when he asked how they knew the Sky was falling, Chicken Little said, ‘I saw it with my eyes, I heard it with my ears, some of it fell on my tail!’ 

To which Turkey Lurkey gobbled, ‘We must run!  We must run and tell the king!’ 

Of course you know the story, they ran into Ducky Lucky and Goosey Loosey and soon the entire barnyard was in a panic. 

And that’s where our memory of the story usually ends.  We get the lesson:  don’t panic, and that’s great, but the story gooseyactually goes on from there. 

Eventually this hoard of feathered fowl encounters Foxy Loxy.  They tell him their story and when he asks how they know the Sky is falling, they all chime in, ‘Chicken Little saw it with his eyes!  He heard it with his ears!  Some of it FELL ON HIS TAIL!!” 

To which Foxy Loxy said, ‘We will run!  We will run into my den and I will tell the king!’ 

And they all ran into Foxy Loxy’s den . . . and never came out again.  The End.

I’m rehashing this wonderfully instructional tale for obvious reasons:  it has great implications for our recent and foxycurrent real estate markets.  Of course, you can’t listen to the ney sayers that surround you.  You have to tune them out.  But understand that in times like these, when there is a cacophony of negativity and fear, there is also opportunity.  These are the times when smart companies grow and gain.  These are the times that bring out the Fox in those of us who still have one lurking beneath the surface.  My hope is that the Help-U-Sell team gets foxy and we come through this winter with enough fried chicken to last decades!

Who We Are . . .

The Help-U-Sell® Brand stands for something.  It represents the ability of the average consumer to receive expert assistance in a real estate transaction while saving significantly over what they’d spend with an ordinary REALTOR®.  It proudly represents a new approach to the real estate business, a better model, a new deal.  This reputation for exceptional customer service, coupled with savings has enabled us to build Brand awareness nationwide. 

The Help-U-Sell Vision Statement expresses how we see ourselves in the competitive environment in which we operate:

We are the premier provider of professional licensed real estate services, empowering consumers with access to information and choice, while offering a set-fee for service.

 

Great care was taken in crafting the Vision Statement to truly express who we are.  The language is very precise:

Premier Provider – We are an elite corps, the cream of the crop. We are neither discounters nor a limited service option. 

Professional, Licensed Real Estate Services – We are fully licensed in our respective states and aspire to the highest levels of professionalism in the industry.

Empowering Consumers – We give our Buyers and Sellers the information and tools they need to effectively navigate the complex world of real estate sales.

Access to Information – We don’t ‘hoard’ information or hold it hostage.  We freely give our buyers and sellers as much information as they need to make an informed decision.

Choice – We present our clients options, help them evaluate them and then tailor a solution to fit their particular need.  We do not embrace one-size-fits- all solutions.

Set Fee for Service – We price our services logically and fairly.  Our pricing makes sense to the consumer and we tailor our pricing to fit the services they use.

The five Help-U-Sell® Core Beliefs are the backbone of our identity.  They guide the way we relate to our customers and clients, our fellow brokers and each other. 

We Believe In

  • Integrity:  We conduct our business with honesty and transparency, and share information without condition. 
  • Consumer Choices and Empowerment:  We present options and help our clients evaluate them, enabling them to make informed decisions.
  • Consumer Savings:  We strive to ensure that every consumer choice results in savings.
  • Broker Control and Profit: In our office, the broker is the business. The broker generates the leads, develops client relationships, and ensures successful transactions.
  • Systems Orientation: We create and implement systems for accomplishing recurring tasks.

Never forget you are different.  Though you assist the same customers as ordinary REALTORS, yours is an entirely different business model.

Accessibility Toolbar