Hi Everyone,
As many of you know, I spend a tremendous amount of time on the first L (as Gary Keller refers to it). The first L is lead generation, more specifically online lead generation. Having spent a fair bit of time consulting to KW in the Internet Lead Generation program as well as spending a bit of time with Hobbs/Herder and now hiring a coach for company structuring it seems to me that lead generation is either one of those things you do extremely well at or something that you struggle with, with a few people sort of straddling the fence.
I remember in my economics classes we spent a lot of time talking about the subject of comparative advantage. One guy could get more coconuts out of the tree then his friend and the friend was a better fisherman. Through trade both were better off working with their strengths and trading those goods for other goods that they were less efficient in collecting or producing.
After consulting to KW and visiting with literally 100's of agents around the country all of whom expressed a sincere desire to generate the quantity of leads that we generate in the markets we compete I'm coming to the conclusion that lead generation is really our comparative advantage. If you become good at it though it is unlikely that you will continue to be an agent for a long period of time since you now have an obligation to make sure all of the leads you generate get followed up on. As a result my personal opinion is that one's growth will ultimately take them to at a minimum a team leader (running a mega team) or ultimately creating your own real estate firm (like we have). In any event lead generation then becomes a corporate function which is what I think the intermediate game is online.
This flies in the face of most real estate company's business models which suggests that lead generation is something the agent does. In fact this is how 95% of real estate companies are structured. They are structured with lower and lower splits (higher nets to the agents) hoping that somehow this will magically increase the bottom line income of the company and for that matter the agents when in fact 80% of agents will leave the business within their first 2 years in the business because they have no business. Of those who stay in the business only 3% will be earning what they expected to earn after five years...
What this says to me is that the assumptions are all wrong. Real estate is one of the only industries where 90% of the lead generation efforts are left to the agent. This is a foreign concept to professional sales people from almost every other industry. Most lead generation is done by the company with the professional sales person working through the opportunities and ultimately earning commissions based on transacted business.
What's I've also found is that agents typically don't want to invest a huge amount of time, money or effort in lead generation which ultimately sets them up for failure, but this failure is in a large part because the companies they work for told them all they needed was a license and the ability to walk around neighborhoods and knock on doors. That might of been true in the 1970's, but it sure isn't the case in 2007.
So I say all this to ultimately suggest the following. Lead generation should be done at the company level. Agents should look at their net income and career paths and not their splits with their office since splits mean nothing if there is no business.
If real estate company's structured themselves to allow agents to be successful out the gate we wouldn't have 80% of agents leaving the industry after 2 years and we would have many more agents earning respectable incomes with rewarding careers.
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