Target Your Market

This is a step-by-step elaboration on the previous post.  Help-U-Sell Brokers:  I believe this is the single most important thing for you to do right now. That’s why I’m giving it so much voice.  

Help-U-Sell Real Estate is a target marketing business.  Seriously.  We’re not like other real estate companies who leave marketing up to the whim of the agents.  We actually work at it with intensity and focus.

Target marketing begins with . . . well, with the target.  Where are you going to market?  At Help-U-Sell Real Estate we make that decision dispassionately and guided by data.  We look for marketplaces where the turnover rate is high and where there is enough business to sustain the office.  In most cases, this boils down to a zip code or two.  And that’s the problem:  zip codes are a lousy way to target!

Think about it!  In every zip code there are neighborhoods where you don’t want to spend your marketing dollars.  You have that area where all the new construction is occurring; it won’t even be ripe for marketing for another 3 years.  You have that area that is mostly industrial; not exactly the kinds of households you’re looking for because they’re not households at all.  How about that side of the zip that is mostly apartments?  Do you want to send your marketing pieces there?

No.

Really:  no.  You are Help-U-Sell Real Estate, remember?  Your marketing is aimed at one group:  home sellers.  Even though we acknowledge that Help-U-Sell is all about the buyer, we don’t market for them.  We market our superior offer to sellers so that we can take a ton of listings that generate a healthy flow of buyers into the office.  We get buyers by having inventory.  Don’t forget that.

The problem with zip code targeting is that zips are loaded with irrelevancies.  They also tend to be pretty large.  Most zips come in between 14,000 and 20,000 households.  To effectively market to that large a geography would take a ton of money.  What usually happens with Help-U-Sell offices is they target a zip or two and go after it with a small budget.  They end up taking a listing here and another there and another way over there . . . and never achieve the kind of concentrated visible success necessary to blast off.

Instead of targeting zip codes, let carrier routes guide you.  A carrier route is the actual neighborhood the letter carrier walks to deliver the mail.  Most zips are made up of a couple dozen carrier routes.  You can choose carrier routes with higher turnover rates, the right mix of properties, in the right price range.  The problem is:  how do you get accurate sales data by carrier route?  And how can you see where a carrier route is?  Let’s solve those problems right here:

First, run a 12 month sold report from your MLS on each zip code in your overall market.  That’s probably 2 -4 zips.  Export the reports to an Excel or CSV file (if you are confused by this, drop a message to support@helpusell.com).  Send the exported data to Mike Paholke at Excel Print/Mail:  mikep@excelprintmail.com, and ask him to sort it by carrier route.  He will return a report to you that breaks it all down, shows the mix of single family to multifamily homes, median household income and median home value.  Most important, he will have a turnover rate for every carrier route in the zip code.

Step one:  eliminate all carrier routes with low turnover rates.  I consider 4% to be OK.  Anything approaching 5% or more is great.  I usually eliminate all carrier routes with turnover less than 3%.  By the way:  turnover rates change over time.  That route with 1.6% this year may be at 4% next year – which is why you want to do this exercise at least annually.

Step two:  eliminate carrier routes dominated by rentals.  Your first indication of this would be the number of households in the route that are in the ‘Multi Family’ column.  However, understand that the postal service classifies multi family differently than we do.  They consider any household with  its own street number to be single family.  So an apartment at 123 Elm St. would be classified ‘Single Family.’  A condo with the address, 123 Elm St. Unit 4, would be classified as Multi Family. The only way to know for sure is to see where that particular carrier route is located, which brings us to the next step of the process.

Step three:  go to https://eddm.usps.com.  Put the zip code in you are considering and a map of the zip will come up.  Click the button for ‘Show Table’ and select the carrier route in question.  Click the ‘Hide Table’ button and the route will be highlighted on the zip code map.  Do you recognize this location?  Is it condos or apartments?  Perhaps you might need to take a drive to be sure.

Go back and forth between your list of surviving carrier routes and the USPS website, looking at each carrier route.  Be guided by the following criteria:

1.  The number of households you select should be driven by the amount of money you are able to spend on marketing.  We have a couple of rules of thumb for that at Help-U-Sell Real Estate.

  • Marketing should account for 33%-50% of your overall budget, including marketing.
  • Marketing should equal 10% to 15% of your anticipated annual Gross Commission Income.

2.  Effective marketing is all about getting your logo in  front of your target group every single day of their lives.  That’s why we regard every listings as a marketing bonanza:  each one provides ample opportunities for signs, mailers and so on.

3.   While there is no hard and fast rule about what it costs to accomplish that kind of saturation, I find that smaller targets (2,000 – 3,000 households) take about a dollar a household per month to effectively establish the brand.   As the number of households goes up, the cost per household declines somewhat.  Once the brand is established and the office is enjoying at least a 20% share of the market in the target area, signs start doing much of the branding and the marketing budget can be reduced a bit – but why would you want to?  Once you’ve achieved a reasonable market share in the target area, continue  marketing and expand the target!

4.  When selecting carrier routes, it’s best if they are contiguous.  Four or five carrier routes clustered together benefit from synergy :  a listing in one carrier route creates signage opportunities that can be seen in the other carrier routes.  On the other hand, carrier routes at opposite ends of the zip code are like little islands.

5.  It has already been mentioned, but do this exercise at least annually.  Turnover rates – which are the key to marketing efficiency – change over time.  A lower turnover rate today may become healthy in a year.

If you are serious about success, growth and HAVING FUN while building a successful business, you really must do this.  It is Help-U-Sell Bedrock.  It’s who we are and what we do.

 

The Bullseye in Your Backyard

I’ve grumbled about this before but apparently, not loud enough. I am afraid, in the interest of being ‘techno-current,’ we’ve strayed from the core marketing strategy that made us great.

Help-U-Sell was founded on one powerful marketing principal:  geographic targeting.  As a broker, your job is to study your overall marketplace – I mean, really study (massage the numbers until they throb, to quote Dr. Dick McKenna) – to determine which specific neighborhoods are most likely to produce listings, the fuel that feeds our lead-generating fire.

There’s a lot in that statement.  Unlike our ordinary competitors who believe the answer to any marketing challenge is to add another agent, we look at hard data about the market and solve our marketing issues by going where the action is.  And we market for LISTINGS.  That’s it.  Just listings.  What about the other side of the business, what about buyers?  We love buyers.  As Don Taylor once said, “People forget, but Help-U-Sell has always been about the buyer!”  But we’ve learned that the best way to find a buyer is to get a listing and another and another.

I talk with brokers every day.  Often I hear the complaint, ‘My website isn’t working, I don’t get any buyer leads!’  My answer is always a question:  ‘how many listings do you have.’  I usually hear something less than 5.  Well Duh!! You don’t have any buyer leads because you don’t have any listings!  Real estate, whether the enlightened Help-U-Sell model or the tired old agent model, has always been an inventory business.  He who controls the inventory, controls the business.

Back to the idea I presented at the start of this post, the notion that we’ve lost our focus in favor of being technologically relevant.  With the entire Universe – especially NAR, Trulia, Zillow, et. al. – screaming that almost every single buyer starts their home search online, we have been lured into believing that we have to market online.  We spend money on AdWords and Facebook pay-per-click, and Google Display Ads; we obsess over our websites and constantly re-work them to become more attractive to search engines.

The results are almost always disappointing.  Even when leads are produced, the quality is iffy at best.  And what kind of leads are we getting from all of this online mania?  Buyer leads.  Again, we love buyer leads, but we also know how to produce them and it has nothing to do with point and click.

Meanwhile, as good Help-U-Sell brokers pour countless dollars and lots of energy into their online programs, I see them ranging all across God’s Green Earth to take a listing here and another way over there and heck – you’re an hour away from my office and in another area code, but shucks, I’ll take your listing!

Stop It!

Use your market data to pick the two or three specific neighborhoods in your Target Market that have the highest turnover rates, and then focus all of your energy in developing listing inventory there!   When a FSBO sign goes up, you know it and are in contact with them that first day.  When one of your competitors gets a listing, you immediately do 50 ‘Arounds’ so the neighbor who is also thinking of selling knows there’s an alternative to 6%.  When you get a listing in your Target Market, you regard it as a gift from the Marketing Gods and you exploit it to the max with signs, and brag cards and open houses and half a dozen other strategies.

Now, once you’ve done that, once it has begun to produce, once you’re getting at least 15% of the listings in your Target Market . . . then, you can consider online marketing.

And the  online marketing you do should be aimed at further establishing your brand.  It’s things like putting your latest Sold & Saved or Testimonial on Facebook and then paying to promote it within your target market.  It’s things like creating a well-focused landing page for a Google pay-per-click campaign aimed at FSBOs in your target market.

Yes, there is a place for the Zillow/Trulia/Realtor.com ‘buy a Zip Code’ programs.  I know of a few offices that have thrived with those additional marketing pieces.  But you know what all of them had in common?  Tons of listings.  Really.  Go onto Zillow and search for homes in Chino Hills, CA.  Patrick Wood will turn up in Spades.  Why?  Because he has a huge share of the listings in that town.  Zillow works for him – just as it works for Ken Kopcho – because he has a nice chunk of the listing business in his target market.

So, Help-U-Sell Brokers:  use the Internet.  Use it to gather as much data as possible about the individual neighborhoods in your overall marketplace.  Pick a few that have the highest turnover rates.  And then pursue the listing business in those neighborhoods with an unwavering focus.  Do it on foot, in the streets and the mailboxes.  Do it on billboards and bus benches, community sponsorships and involvement, Do it with signs. Get a listing and another and another.  And then, start thinking about how you an further establish your brand in those neighborhoods with online marketing.

Please.

 

RE-Targeting

How big is your target market?

How often to do you touch your target market with marketing?

What share of the listings are you taking in your target market?

These are all good Help-U-Sell questions.  Our success has always come from geographic target marketing.  We always begin with a serious marketplace analysis.  We look for those pockets in the market with higher turnover, with 4% – 5% being acceptable and more than that being exciting.  Then we hit those target households hard, with simple, easily understood marketing pieces.

All of that changed when the market went into the tank.  When turnover rates plummeted because houses simply weren’t selling, when it became more important to have a ready, willing  and able buyer to work with than a seller, the targeted, rifle approach to neighborhood domination went out the window in favor of a shotgun blast spread over a much wider geography.  We were no longer attracting business from 5,000 – 12,000 households.  Now we were serving 40,000 or 50,000 (or trying to).

But here’s the thing:  it is not possible to target market to 50,000 households.  It’s just too expensive.  If you did a monthly EDDM outreach to that big a group you’d be spending about $15,000 and running the wheels off your car.

Instead, what you end up doing with a broader geography is trading on the name, the Brand.  A certain number of people in that broad geography already have some familiarity with your program, understand that you can save them money, and will reach out to you if they know you are close by.  These are the home sellers who contact you even if you don’t market.

It’s almost impossible to build market share on that.

This is a challenge to you:  put down the shotgun and refocus.  Do your market analyses.  Find the 5,000 or 7,000 homes in your broad area where turnover is highest.  Pick one and do it right.  Do a monthly EDDM there, crank up a Facebook and/or Google campaign.  Put out your blitz signs.  Faithfully do arounds and just listed/just sold postcards (remember: arounds are around someone else’s listing).

6,000 homes x 5% turnover = 300 sales.  Get 10% of that and watch your business explode!  Once your signs are prominent and you  have listings to market around, you can begin to pare the expensive initial marketing and expand into an adjacent target.

This is how we do it.

 

Flashback Friday: Marketshare

Today I”m thinking about Marketshare and found this post from Spring of 2010 that addresses it from a Help-U-Sell perspective.  This metric was so important to us 10 years ago.  We doggedly pursued it, pushing and pushing to increase it.  We watched it like no other metric in the book because it was the most meaningful measure of success.  

I’m afraid, in the downturn, all that flew out the window.  We took our transactions where we could and the idea of dominating a defined geography went away.  I strongly believe we have to get back to a geographically focused marketing program and, therefore, an obsession with marketshare as a measure of success.

Now, if you are roaming all over God’s earth taking listings wherever you can within a 100 mile radius of your office, I wish you luck with that.  It was a good strategy five years ago, but today, it’s a recipe for both burnout . . .  and lousy customer service.  However, if you want to get serious about establishing Help-U-Sell as the dominant force in your TARGET market, you must get back to the basics of:

  • defining your target market
  • collecting data about your target market
  • tracking your share of the target market

One last thought:  Help-U-Sell is a company built on a superior offer to home sellers.  In the post that follows we talk about tracking your marketshare based on closed sides. This method (which is best) takes buyer sides into consideration as well as seller sides.  But since our marketing is oriented to the seller’s side, here’s a quick and easy alternative.  Count the number of active listings in your target market and compare that with the number you have (in the same target market, of course – those outside don’t count).  Your listing marketshare ought to be very similar to your closed sides share.

I’m working through the old Operations Manual and just read through the section on marketshare.  We used to tell everyone they should get 25% marketshare.  That was the goal.  For everyone.  Did we have members who did that?  Yes, quite a few, actually.

We calculated marketshare by taking a carefully defined geography — the area(s) in which the member intended to do business, into which he or she directed marketing — and discovering what portion of the total number of closed sides done in that area were the member’s.  Further dissection of the marketplace into smaller units, like carrier routes or individual neighborhoods, might reveal that the member had 24% marketshare in this neighborhood and 14% marketshare in that neighborhood and so  on, each adding up to a total share of the target market.  We wanted to see target markets in the 10,000 – 15,000 household range with overall turnover rates in the 4% – 5% range.

The problem with this prescriptive approach is that it does not take in to consideration the vast differences that exist between markets.  Factors like:  the sheer number of competitors working the same area, the density of households, the impact of REOs on one market versus another, urban vs. suburban vs small town vs. rural areas . . . these were not considered.

Suppose your target market is a densely populated urban neighborhood.  You have 15,000 households and could probably walk your entire area in a few hours. Mostly it’s condos in the $200,000 range.  You set your fee at $3,950 and you figure with a 50/50 mix of buyer sides and seller sides, your average fee per closed side will be about $4,500.  You build a first year budget with expenses at about $12,000 a month.  Non-REO Turnover is at 4.2% — that’s 630 sales a year or 1,260 available closed sides.  Break even would be at about 32 closed sides:  a 2.5% marketshare.  This becomes our first milestone:  the point at which you start to look for ways to expand the number of transactions you can do by adding staff or improving systems.  You’d expect to hit that milestone within the first year and to be at 3% -5% marketshare  (36 – 63 closed sides), in your second year — and making a good profit.  Getting into your third year,  you’d want to be hitting  5% – 10% (63 – 126) closed sides.  This is usually where the ‘snowball’ effect takes over and as long as you’re willing to invest in more staff and better systems, an increase in marketshare and profit becomes very attainable, even up to say, 20% or 25%.

Now think about a smaller town, say 13,000 households.  Turnover is much lower:  3% in town and 2.8% in the surrounding county.  Although expenses might be lower and competition less fierce, average sale price and average fee are lower, too:  $3,200 per closed side.  A 10% share here (that’s 42 closed sides) — which was the tipping point in the above example — is just getting by.  It’s a nice job, but to be making money and building a business (not just a nice job), you’d need to be at 20% or more, and your snowball might not start until you were at 30%.

The first office needed 5% – 10% marketshare to be ‘thriving.’  The second needed more than 20%.

You have to think about more than just numbers of closings, too.  You have to consider the cost of doing business in each marketplace, the number of closed sides required to break even and how many it will take to get to a reasonable profit.

To further muddy the waters, you have to consider how you’re calculating marketshare.  We use closed sides.  Period.  That’s our yardstick and it makes sense from a dollars and cents perspective.  However, I met a Re/Max consultant once who told me they calculated marketshare on numbers of agents.  Production didn’t matter at all.  Just bodies.  When you think about it, it makes sense for their model. Re/Max operators make money by renting space and services to agents, so numbers of agents is a good measure for them (I’m not sure it’s the best measure for the consumer).

But even beyond that, marketshare is both static and dynamic.  Your static marketshare is a shapshot of a period of time.  It’s what we used in the examples here:  a one year shapshot  —  of all the closed sides done in your marketplace in the past year, how many did you have?  But your marketshare this month or this quarter is probably very different from your market share 8 months ago or two quarters ago.

Use the static, annual marketshare as your report card, the measure of the success of your business, the metric you use to set your goals.  But continually monitor the dynamic marketshare to make sure you are always progressing toward the next milestone and as an early diagnostic tool for problems in your operation or your marketplace.

How to Use Facebook to Generate Leads

Forget about spending hours posting fascinating real estate information, looking for people to ‘Friend’ and creating an online persona. I know: that’s what all the ‘Gurus’ are telling you to do. And I’m sure it can work.   But I’m too impatient for that.  I want instant gratification.  I want to start a marketing effort today and see the results this week.  You can do that with Facebook and the following steps will show you how.

  1. Go to your office website content management system (CMS), or to your tech person if you have one, and build a great landing page for customers.  What kind of customers?  Well, the page could be directed at Buyers or Sellers, but since every real estate website is directed to Buyers (search, search, search) and since listings are the name of the game, I’m going to suggest you build one for Sellers.  What should be on it?  A brief description of what you do and why you’re better than anyone else in the business, testimonials from real people you’ve helped with happy photos, and a contact form that ties directly to your cell phone.
  2. Go to your Facebook page.  Look for the gear icon in the upper right corner and click it.  You’ll get a drop-down menu and you should select ‘Create Ad.’  You’re going to create a little sidebar ad to run on Facebook that will drive people to the landing page you just created.
  3. Locate a good duty free graphic that will draw the eye and craft an intriguing statement in the space allotted.  Tip:  put your phone number in the ad.  It is remarkable how many people will phone you rather than click the link in your ad – and, since this is pay-per-click, if they don’t click, you don’t pay!
  4. This is the fun part.  Target your ad to hit the Facebook pages of the people you want to reach.  Maybe you’ll choose a geography:  say, a 5 mile radius of your office.  Maybe you’ll choose an age range:  25 – 55.  Maybe you’ll choose any number of other criteria.  Each time you select a criteria, you’ll see the size of your potential audience shrink.  That’s a good thing.  The best marketing is target marketing and as you fine tune and shrink your target audience, the effectiveness of your ad will increase.
  5. Set a click-rate.  How much are you willing to pay when a consumer clicks your ad?  Facebook will suggest a range and it will often be fairly large, say:  $1.50 – $10 a click.  Whatever you choose can be edited at any time, so I suggest starting in the lower half of the range, ideally just south of the mid-point.  What you’re really setting is the MAX you’ll pay for a click because the click rate varies depending on how many other ads are competing for the same audience at the same time.  Maybe you’ll bid $3.00 a click.  When you check your stats,  you’ll discover you’re only paying, on average, $2.05 a click.
  6. Set a campaign duration and total budget.  I would suggest your first campaign should run 1 – 2 weeks and have a budget of, oh . . . $200.  That will be enough for you to see some results and make adjustments.
  7. As the campaign runs, check your stats daily, even two or three times a day.  Are  you getting enough clicks to exhaust your budget in the time allotted?  If not, maybe you should up your click rate.
  8. Meanwhile, meticulously track your results.  Of the clicks that get to  your landing page, how many fill in the inquiry form?  How many call you?  And what about the people who never click, but call the number in the ad?  How many of them are there?

You see, this is how you develop leads using Facebook:  you treat it like any other advertising medium . . . because that’s what it is.   I love Facebook pay-per-click advertising because it can be so highly targeted.  $2.00 might seem like a lot to pay for a click, until you recognize that it is a click originating within your target market, from a person who fits the description you chose, who was sufficiently motivated by your teaser ad to investigate.  It’s a bargain!

Here’s the key: What can you offer in your teaser ad to get viewers to your Landing Page?  If you are Help-U-Sell, that ought to be easy.  (Picture of house ‘thinking’) Headline:  Thinking of Selling?  Body: See how much you can save!  (555) 543-2109.  

And, by the way: though I dissed Facebook’s ability to build your business in the first paragraph, truth is: it’s a great tool for staying in touch with past clients. Please exploit that aspect to the fullest. But try a little pay-per-click to generate NEW business.