Production Management 101 - How to turn your C inventory into your A clients

Real Estate Agent with THE PODGURSKY GROUP @ Re/Max Direct

One of my mottos that I use when I speak to Realtors about doing business together is:

I can CREATE Buyers!

That means that I can help my Realtor partners get another transaction and commission when they refer me mortgage business. I don't just mean current customers, either...I can CREATE A buyer from a PAST customer.

This is what leads me to the Title of this Blog....

Everyone sees I have three extra capital letters in my name.  For some it matters; for others it doesn't.  Whether it does matter to you or not that I have a Master's degree in Business Administration I believe this will help you in your career... which will hopefully help me in mine.

In Production Management there are a lot of theories about inventory.  What's the appropriate level to keep at any given time?  The Japanese have changed this field dramatically - especially in the auto-industry. They use many different methods - the most well known being Just In Time production.

In Just In Time (JIT), the theory is:

  1. you only receive raw materials when you are about to use them...
  2. you only produce when you have an order to do so...
  3. you ship immediately as the products are completed
  4. only producing when orders are in creates less waste
  5. extra materials and products sitting on the production floor create bottle necks and cost money in storage that could be used as profits instead

The only issue with this is that in American business, the model has always had to accomodate more finicky consumers.  This meant having any given part at any given time that a consumer wants it. 

Think about it this way.  The White House kitchen is loaded with EVERYTHING - just in case the President (which ever one!) wakes up with a hankering for something unusual.  Obviously the Chefs spend a lot of time understanding what he will and won't eat so they are prepared.  For instance, the Bush's like Salmon and Avocados so there is always some on hand.  Why? because at 2am when Airforce One lands from a long flight and the guy is hungry - the chef wakes up and makes something THEN.   JIT would say, though, that there would be a lot of wasted raw ingredients.  I chose food because it makes the most sense. 

Now... let's look at another business model... one that my professor taught me: Deloreans.  Everyone knows what that car looks like.  Well... how many people know where to find parts?  My professor did.  He was an enthusiast.  He knew that there were certain parts that he just had trouble finding.  The problem was that sometimes the people that actually had the inventory forgot that they were there on the bottom shelf!! Because of this, he often would call and pick up his parts from that bottom shelf for a discount since the parts company needed the space for cars that were more popular.  So my professor bought all that inventory.  That leftover stuff that the parts dealers just couldn't move and didn't want to waste the time and space on.  He started gobbling up these hard to find parts at 10-30cents on the dollar!... now what had he become?  A big player in the Delorean Parts Industry!  Sure, it was a niche but what's wrong with that??  He turned one dealer's forgotten parts into his profits!

The theory is that there is a grading system for products:

  • A Inventory - this is the most popular stuff at the time.  In shoes right now it would be Crocs.  They just sell. To young and old they don't sit on the shelves.  Retailers will put these in prime locations so that customers don't search for them.  They stock all colors and all sizes and all styles and work to get people to buy 2-3 pairs at a time.  I love my Crocs!!
  • B Inventory - this is the run of the mill stuff... for instance in Starbucks... the seasonal coffee drinks always get first billing.  The regular cups of coffee.  The plain cappucinos, lattes, frappucinos without mint, cinnamon dolce, pumpkin pie spice, gingerbread etc ... that's the  STANDARD menu... that's the B Inventory.  It moves but sometimes ends up suffering due to the new and fabulous.
  • C Inventory - well... the C Inventory would be these Delorean parts.  There just aren't that many Deloreans still running... so demand isn't great enough for a profitable dealer to keep them shelved.  So a little guy can come and make a business out of this demand - however small it is to the big dealer - it could be HUGE to a small dealer!

Let's get back to Real Estate.... I will repeat... I CREATE BUYERS .... It isn't magic although I do it very well.

Here's the deal.  Realtors... think about your valuable inventory.  You immediately jumped to your listings, right?  That's not your most valuable inventory.  Listings come and go.  Where do you get them from?? YOUR BOOK OF BUSINESS IS YOUR MOST VALUABLE INVENTORY!! aka your sphere of influence, your rolodex, your outlook contact file, your PIM, your speed dial... whatever... all your clients past and present.

I CREATE BUYERS by converting Inventory for you... this is the comprehensive quote but now it will make sense.

Your inventory falls into three categories ABC:

  • A Inventory - your CURRENT ACTIVE CLIENTS - you're busting your humps day in and day out to show property, list property, market property, etc... but these are just the properties on your active listing sheet and the buyers that you know are near a decision.
  • B Inventory - You would think I would say your lackluster buyers and stale listings, right??? WRONG - we're not talking about Listings! That is just the product - it is not relevant right now.  Your B Inventory is the group of clients that you stay in touch with and have been with you a while.  These are the people you hear from.  These are the people you have done several deals with and have no worry that they will be back sooner or later and wouldn't consider using anyone else because you send them holiday and birthday cards and call them four times a year like a good little agent.  You don't have to pay attention to them.  They will make you some money every year if you have enough of them.  And you don't really sweat these people.  They are great.
  • C Inventory - no one wants to admit it... but early on in your careers you didn't keep in touch as well.  Now you're embarassed to send a card out of the blue.  More often than not, you have a client you have kept up with but there's a layer of dust settling.  They're in a place for a longer time and have been there a while and really haven't inclined to move.  So you put them on the shelf and sort of lose touch with them.  Sure, you say hi at the store when you see them but you don't go out of your way.  They're stagnant! Why would you?!?

BECAUSE THEY AREN'T DEAD!!  SO THEY MIGHT NOT BE DONE TRANSACTING!!  AND IF THEY ARE DEAD BUT STILL WARM YOU MIGHT GET TO HELP THEIR FAMILIES IF YOU'RE NOT TOO SEEDY ABOUT IT (don't ask for listings at a funeral...if you have to ask why please just delete your profile now)

I can create buyers with your B and C inventories.  Sometimes these C clients need a wake up.  The B ones are warmer calls, sure, but the C ones are the cake deals.  The ones you forgot you could get.

For instance....Mr. Johnson bought his first house from you 7 years ago.  He's happy as a clam.  You haven't kept up with him.  He's left the company he worked for and started his own business.  He needs money for the business to purchase a small industrial space because they're taking off.  Now, you could find that out... or I could and make you look like a huge hero. 

How??  CALL THEM!! Tell them that you're following up and offering them a FREE Service.  A Free Mortgage Analysis by your best Mortgage Partner.  You think that they've built up some equity and should talk to me to make sure that:

  • Their credit is in good shape
  • Their equity balance/leverage is stable
  • They are still ok with their payments
  • Their rates haven't adjusted (for gosh sakes ... when you sell a house to a client with an ARM, call them back before it adjusts!)... or they have just adjusted and haven't realized it
  • They are looking for some money to send their kids to college, expand their business, blah blah blah...
  • Long story short, they need to BUY SOMETHING ELSE!  They will also say to their friends - guess what? My realtor called and his mortgage guy did this ... you should call. 

When they decide to buy an investment property - guess who gets the lead? YOU!  when they decide that the condo life is getting old, YOU get the sale AND the listing!... and when they decide to scale down, you get the business.  Why???  Because 1) You called them and 2) Because I'll tell them so!! I'll say this is a perfect time for REALTOR to help you achieve that!

THAT'S YOUR C INVENTORY... There's business there.  I can't call them... I don't know them.  You do!  You don't have to do it all tomorrow - but set a schedule to get in touch with all these people.  Make sure they're still kicking.  Don't let them leave the area without giving you the listing!  See if they've had 2 more kids and that new 3/2 you sold them 4 years ago is just too tight.  You've got TheMortgageGoToGuy (that's me) that can help them afford the upgrade!

Boring? You knew that?  But did you know that I JUST CREATED BUYERS by reminding you of this??  And when you call these people, be ready with my name and number.  Hell, I'll give you a stack of cards to pass out.  Show them how a professional TEAM works for them... and show them what service is.   They'll think of you fondly when they're enjoying their new property... and if they don't move - they'll think you're their hero because just when they were trying to figure out what to do with their debt, you brought me to them.  Just as they were considering a major home improvement, you showed them where to get the money... and Just as they needed someone to trust to help them with their business - you put them in the good hands that earned their trust for life.

I JUST CREATED BUYERS FOR YOU - now run out and get me five leads each before the end of the weekend!!


More Real Estate Industry News You Can Use from
David A. Podgursky, MBA
The Mortgage Go To Guy!
Your Source for Residential and Commercial Mortgage Loans in Florida

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Cyndee Haydon
Charles Rutenberg Realty - Clearwater, FL
727-710-8035 Clearwater, Beach Short Sales Luxury Condos &Homes

David - thanks for "homework" that actually pays off $$$$. Now can you make there more hours in a day? ;-) 

Apr 26, 2007 08:26 AM #1
David A. Podgursky PA
THE PODGURSKY GROUP @ Re/Max Direct - Boynton Beach, FL
THE PODGURSKY GROUP - Make the Right Move!

Ben - a BA in Business or in Production Management?

I liked a lot about that class because it applies to so many fields!

Cyndee - I'm happy to help!

Apr 26, 2007 12:24 PM #3
Greg Herson
Mal & Seitz Real Estate - Portland, OR
Hi David, Thanks for the great information.  This is very useful.
Apr 26, 2007 01:15 PM #4
David A. Podgursky PA
THE PODGURSKY GROUP @ Re/Max Direct - Boynton Beach, FL
THE PODGURSKY GROUP - Make the Right Move!

Greg -my pleasure


Apr 26, 2007 01:17 PM #5
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THE PODGURSKY GROUP - Make the Right Move!
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