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What do Hyatt, FedEx, Microsoft, and Burger King all have in common? They all started during recessions. And today they each are winning companies in their industries. Every one of them understood that recessions cause both economic uncertainty and reveal new opportunities. Their success is a result of capitalizing on the companies who went into “automatic” mode during good times, forgetting that change, and recessions, always come. One look at these companies today proves that recessions and innovation go hand-in-hand. They either invented or re-invented how their industry performs during a time when rivals tried instead to weather the storm. They took risks that helped them grow through the downturn, and win a dominant position in their industries.

This grow-to-win strategy offers real estate professionals a model, too, as they reach the end of their “cut more expenses” reaction to the recession. Yet many companies don’t think growth is possible, since expansion conditions seem impossible when and revenues are down. Is it possible, in a housing recession, for smart companies to grow? Here are five ways to do exactly that.

  1. Grow per-person productivity. Traditional growth at real estate brokerages has always meant more people. More people mean more expenses, like business cards, email accounts, web marketing and training. That’s nearly impossible when revenues are down. That’s why growing per-person productivity is critical. To create a “leaner” company, you can’t just cut expenses but must increase per-person output. Training and technology help, but the biggest tool to grow production is . Managers must focus on developing per-person output using clear goals, close and consistent coaching and reducing the distraction of marginal-producing factors (whether it’s people, marketing, technology). Eliminating marginal production and reassigning the work to more capable (but not yet maximized) people reduces expenses and grows output, which creates a competitive advantage for the company. But management must also provide coaching and support to reach that higher output. Reducing redundancy also creates higher margins for everyone, including income per person, even during a recession.
  2. Grow each transaction’s margin. Most studies show that, after paying all parties and expenses, the remainder of each real estate transaction is under $175 profit to the brokerage. Even agents who think they’re making good money with higher commission splits will find that, at the end of the year, very little margin remains. This is because operational costs have risen in the decade leading up to the recession, as new technologies, marketing and training requirements have grown while downward pressure on commissions increased steadily. Volume cannot make up the difference, especially in a recession. The only way to grow is to “go deep” on each transaction. This means selling more ancillary services, like mortgage, warranty, title and concierge services, on a greater percentage of deals. Even if the number of units holds steady year-over-year, a 10% increase in per-unit ancillary sales can create serious revenue growth. Companies must standardize the “do you want fries with that,” approach to transactions to grow revenues.
  3. Grow the percentage of closed leads. Recessions mean less dollars spent on marketing. Cuts in advertising cause both short- and long-term damage to any organization. During recessions, however, few people are thinking long term. This is also the reason why so many internet leads remain un-converted, in the long term, into deals. It has never been a question of generating more consumer leads, but in downturns, agents and companies that convert a greater percentage of the leads they generate will grow without expanding expenses. Converting greater percentages of leads requires more effort, something that less-busy agents in a recession should have plenty to spare. In some cases it may require training, but thinking of item 1 above, it makes more sense to redirect leads to agents with proven ability to convert them first.
  4. Grow relationships, not databases. The vast majority of real estate deals come from one’s sphere of influence. So growing real estate professionals don’t need to grow the size of their database, to do more mailings. They should focus instead on growing the strength of their existing relationships. Whether by social networking or a phone call, growing one’s influence with consumers who already trust them is both cost effective and productive. In a sales business, growth comes from repeat customers and referrals, not the biggest “friends list” online. A particularly lucky opportunity exists today, since more than 50% of buyers are first-timers from Generations X and Y. Creating strong relationships with them now will pay repeat dividends as these groups purchase 8 to 12 homes over their lifetime. To dominate the future market, it won’t be how many people you know, but how well you know them.
  5. Grow your customer service. Hyatt moved into a marketplace dominated by hit-or-miss service from small-town motels chains in 1957 and grew through highly structured training efforts. FedEx offered fed-up post office customers a highly predictable level of service even at a much higher price, winning both units and margins. Microsoft responded to home and small business consumers with in a personalized way that Bigger and Bluer companies wouldn’t, by offering a customer-friendly mouse driven operating system. Burger King let customers know they could “have it your way” every day. When each of these companies entered during a recession, they targeted then-dominant players whose customer service was inward-focused, that’s-how-we-do-it, take-it-or-leave it. Growing your customer service can target those same attitudes of real estate competitors today, too. At too many companies, a residual mentality of “they need me” from days gone by pushes consumers away, rather than draws them in. Inattention to inquiries by email or text message literally “turns off” younger buyers. Aggressive sales techniques (or the reverse at open houses) create tension with Gen X’ers who demand control in their purchases. Growth will come to companies who focus more on the consumer, less on the practitioner. Real estate websites still force people to register. Listing data is frustratingly incomplete. Photos are missing. Silent movies. A different customer service attitude could reposition your company as a better experience within a crowded market, to attract growth.

You don’t have to be a Microsoft or a Hyatt to grow in a recession. You simply need to adopt their growth attitudes about business. Any one of these changes can create new opportunities to be the future leader who, like many other global leaders, got their start when times were tough.

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