In the first article of this series, we introduced the idea of developing a strategic business plan. In this second part, we’ll discuss research.
Most of us can “sell” people, but few acquire professional level expertise in the three key marketing research functions: customer research (clients), product research (home types) and market research (units, listing, selling values, days on market, discounts and dates).
These research and analysis projects will be crucial to your strategic thinking processes. Fortunately the real estate industry can provide the raw data, but to turn it into useful information, you must know how to access, sort and analyze the data. By downloading board data to Excel software, you can acquire the local knowledge and expertise needed to gain confidence and respect with your target market.
The first step is to research your major market because this is the information your clients can easily access. This is essential for listing presentations and during negotiations. But your credibility zooms when you have a binder of actual property sales in your target market for the past five years. (Binders with property information are much faster than computer screens to communicate local data.)
By inputting old listings data (including local competitor information) on your annual spreadsheets, you see inside your market. It may take 100 hours to set up your target market spreadsheets, but you will use them throughout your career. If targeting a new subdivision, be sure to collect all the builders’ feature sheet materials. Once you can quote selling prices per square foot in your target market, you establish your credentials as the local market professional.
By the way, the competitor who seems to dominate your area may in fact only own 15 to 20 per cent of the local sales. That leaves 80 to 85 per cent for you!
Defining your target market can start with 13 ways to farm the real estate market: subdivisions, professional networks, condominiums, price range properties, vacant land, investment income, commercial segments, waterfront, new homes, neighbourhoods, rural, recreational and referrals. Choose the market(s) and clients you relate to: education, income groups, cultural groups or special interests.
Don’t expect your target market to produce 100 per cent of your business. You can expect it to produce 25 to 30 per cent. In a great year it may produce 60 per cent, but this is where you will spend 80 per cent of your advertising and promotion budgets over the next five years. At least 30 per cent of your business comes from being in the right place at the right time, but don’t waste earnings (or line of credit) trying to make things happen in a large random marketplace.
What is also important is to recognize that you will be doing three groups of the eight primary marketing functions. One signs up listing clients, another sells their property and another buys their next property. Each marketing function group is a separate component of your strategic business plan.
With a 20 per cent market share objective, you can calculate the value of your target market’s business and thus how many properties or people you need to interface with in your market on a regular and consistent basis.
Product research is a key sub-function often neglected because your target market is impossibly large to manage. Condos have relatively homogeneous products, as do most new subdivisions, while older areas with infill homes are quite heterogeneous. If most houses sold recently had renovations exceeding $50,000, $100,000 or more, you need to know this. Home renovations exceed four per cent of Canada’s GDP and will be close to $75 billion this year. If you don’t visit every open house in your market, you have little information of value to your clients.
By researching and analyzing your target customers (sellers and buyers) and your product mix and your market data, you become perfectly equipped to immediately be recognized as a high integrity real estate consultant, rather than a manipulating commission-driven salesperson. You then understand your client’s values, aspirations and ambitions and they will reward you accordingly for all your marketing research efforts.
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Jim Reid is a strategic planning consultant and has been a corporate executive, university and college lecturer, business owner, real estate broker and wilderness canoeist. “Your average Canadian failed entrepreneur, wage slave, divorced former Realtor,” he says. Visit his website, or send him an email.
