Increasing Sales Production Through The Quality Of Your Prospects

When you break a real estate agent's business down, there are only four ways to increase production; four proven avenues toward increased gross revenue. They are:

• Number of contacts
• Method of contacts
• Quality of the prospect
• Quality of the presentation

In this article, we'll focus on the quality of the prospect. When you begin working on any one of these, you have taken the step to becoming a Champion Agent. Once you have raised your level of the performance in each of these areas, you can call yourself a Champion!

QUALITY OF THE PROSPECT

The quality of the prospect is an area that really separates non-champion performers from Champion Performers. Our ability to separate the wheat from the chaff will lead to a dramatic increase of our value per hour, gross income, low frustration level, better clients and more and better referrals. The natural tendency for most sales people is to work with leads, rather than prospect for new leads. Most sales people, in real estate especially, do primarily lead follow-up, rather than prospecting or lead creation. The problem with that approach is what happens if your leads aren't any good. Most agents have a group of bad leads they are trying to convince to be good leads, so they don't have to prospect.

Let me give you a hint; you can be the greatest salesperson in the world, and you will rarely convince a bad lead to convert to a good lead. You are far better off investing your time to find better leads. We hold onto these marginal or bad leads, so we can avoid prospecting. We know that if we don't have enough leads, we will be forced to prospect. It also takes less effort, time, emotion, and frustration to convert and serve high quality leads.

MOTIVATION FACTOR

The question is how do we determine whether the prospect we just created is a high quality lead? I frequently ask agents that question. I get a variety of answers including asking prospects qualifying questions. evaluating the source of the lead, and many others. The Champion's technique is to ask them for a face-to-face appointment. By asking them for an appointment, you cut through the smoke to see if they are real.

The last place on earth a low-motivation prospect wants to be is in front of a salesperson. If you didn't have a reasonable level of motivation to purchase a car, what is the last place you would want to be? Correct, at a car dealership, getting "hot boxed" by a salesperson and their sales manager. The same is true with a real estate prospect. The best way to determine quality and motivation of the lead is to ask for an appointment.

What I just described will be the choke point for your buyers agents. Their ability to drive prospects to face-to-face presentations will be the biggest determining factor of their success. The buyer's agents who do that will sell three to four homes a month or more. The ones who are ineffective will sell one or two homes a month. There will be an increase of 100% in sales when using the same quality of leads.

There are many prospects whose sales resistance goes up in direct proportion to the length of your litany of pre-qualifying questions goes up. Questions, even well scripted and directed ones, can lead to sales resistance problems. I am not saying don't ask questions; we need to use them to keep the discussion flowing, so you can ask for an appointment again in a minute or two. The most efficient way to determine the viability of the prospect is their willingness to meet with you.

THE 80/20 RULE

There is an age-old rule that governs success and people. This rule was created in 1895 by a man in Italy named Wilfred Pareto. He observed, at that time, that most people had little influence, power or money in the marketplace. He called this group of people the "trivial many". He decided that these people made up about 80% of the population. He then theorized that the remaining 20% had all of the influence, power and capital of society.

He called them the "vital few". He created the 80/20 Rule that has governed success for more than 100 years. The 80/20 Rule applies to your prospects, as well. 80% of the prospects you work with will create 20% of your income. The amount of time, effort, and energy is disproportionately not in your favor. The odds of becoming a Champion Agent when working with this group are long indeed. The devastating part of working with this group is that you spend 80% of your time, capital, effort, energy and emotion to create a 20% return on investment.

The numbers are not in line with a successful business. A Champion works with the elite 20% of the population that creates an 80% return on investment because they gain an added return or unequal return on their investment. This elite 20% doesn't mean that you have to work only with those who would be defined as the upper crust of society. Although, working with high priced buyers and sellers certainly can have a positive effect on your income.

In evaluating the quality of the prospect, we determine their level of motivation, financial capacity, ease to work with, realistic expectations of service and what they can purchase. I have met high priced buyers and sellers who were also high maintenance; I fairly placed them in the 80% category, not the 20% category. The question you must wrestle with quickly is does this prospect fit into the 80% or the 20%?

RESOURCES TO INVEST

You have limited resources to invest in terms of your time, effort, energy, emotions and dollars spent. Our objective is to select clients who utilize low levels of resources with high levels of return. That is what a 20% prospect allows us to do. The common school of thought in real estate sales is that sales is a volume game; if we raise the volume of production, we raise the income.

I believe that school of thought is poorly conceived and simplistic thinking for a sales-oriented business. One of my competitors, who is a "magic marketing" guy, has a saying; "You can't go broke making money"· He is absolutely wrong. Many successful companies and real estate agents have gone broke making money. Gross sales volume-increase has merit but not at the expense of cost of sale and net profit.

FOCUS ON SALES MARGINS

What we must focus on is the sales margins, not just the sales volume. Our objective is to enhance or expand the margin between the resources we expend and the return we get. When working with a team, your expenses are higher. You might create more sales, but those sales have a higher cost because you'll have to pay the buyer's agents to create them.

One way to influence the margins is by selecting better prospects to serve. We must reduce the resources of our time, effort, energy, emotion, and dollars we invest against the return of money, job satisfaction and future revenue in the form of referrals and repeat business. Better prospects create better margins. Don't be fooled by the sales volume game. The margins in business and life are what really count. The quality of the prospect dramatically influences your margins in your business.