I keep running across posts talking about paid traffic or advertising as bad things, and I just can't help but throw my hat in the ring. Let me start by saying that if you're a single agent, and don't ever plan on building a team or having an assistant - there is no need to read further. As long as you're doing an excellent job, referrals will take care of themselves. If that is the case, I fully agree with you in the fact that advertising to get additional business is wasted money. However, if you ever want to increase your hourly earning potential beyond that of your own capabilities, I think building a team (or having an assistant) and advertising is a necessary evil.
"I can't handle more business." About 9 years ago, I had been in the business for 5 years. I remember getting to a point in my career where I turned away 20% referrals because I was booked solid on my own referrals from friends, past clients & my website. I view the position I took back then as the exact same position I hear Realtors® taking when they say they don't pay for web traffic anymore & rely solely on organic blog traffic.
My train of thought at the time was that I would have to turn away other business in order to take that 20% "less profitable" business. "Why in the world would I do that?" I thought. I remember telling a friend in commercial real estate -- Tisha Connoly (who had sent me 3 or 4 residential referrals a year for 2 or 3 years) that I had gotten too busy at the time and could no longer handle her referrals. It wasn't so much that I couldn't handle them -- it was just that I didn't want to handle them for a 20% reduction in my paycheck. That scenario back then reminds me of the exact same scenario we have today when we have to decide between "free" traffic, paid traffic, or both.
A moment of regret. The very next morning after I had that awkward conversation with Tisha, I remembered a conversation with my Grandfather (who played a large role in getting me started in real estate in Colorado). I was still in college and I spent my spring break getting a tour of the Colorado Front Range with him. We spent two straight days in the car checking out the various places I could choose to start my real estate career. I vividly remember asking: "Grandpa -- how do you pick which clients to work with & which ones to turn away?" He looked over at me with a grin and said "You sell a home to everyone you can find a home for." (As in: "Business ain't that easy to come by, kid. Make hay while the sun is shining!")
If my Grandfather had been sitting beside me during the conversation with Tisha the day before, I'm sure he would have smacked me on the back of the head and hung up the phone before I could have finished telling her my ego was getting in the way of getting more business. (OK, he wouldn't have smacked me, but you get the idea.)
Time for a paradigm shift. That morning, I decided that since I had the convenient problem of having too much business -- instead of turning that business away, I needed to start my own company and get some agents on my team. By the time I called Tisha back, she said she had referred that client to someone else, but she would keep calling me with anyone else she came across. I had burned the bridge though, and never got another call from her. I still regret the choice I made the day before, and our friendship has never been the same.
From that point forward, I decided that although I can give myself the luxury of being picky with what clients I work with, I would never again be so arrogant as to turn away business that would put money in my agents' pockets, and earn myself a passive income in the process. Once I adopted that new philosophy, spending money on PPC advertising, classified ads, or paying referrals became unlimited profit potential for me - not a liability.
The magic of leverage: When it came to generating business for the agents on my team, I took on a whole new philosophy towards spending money. If I wanted to increase my hourly worth, I figured the best way would be to put my efforts into something that doesn't take any more of my time. The best way to do that was to advertise because it takes no longer to write a $20,000 check than it does to write a $200 check. The more I spent, the more business I got for my agents, and even though my income went down on a per closing basis, "a closing" (and all of the work it took getting to closing) was no longer something that took any of my time. OK, it took an average of 1/2 hour per closing between reviewing files and occasionally fielding calls from my agents when problems arose, but nowhere near the time it would take if I were doing it on my own.
For example -- Even if I spent an average of 40% of a commission on advertising, if 10 of my agents were on a 50% split that left 10% of 10 closings for me. That's a 125% return on investment for letting my agents do all the work, and I simply write a check! If I only spend 20% of incoming commissions on advertising, I got a 250% return. Imagine my elation during months where every dollar I spend generates ten to fifteen dollars in gross commissions! My agents get closings they wouldn't have otherwise had, and I get a percentage of those closings too. It's a win-win partnership!
My role in the team: Even though I myself am no longer actively selling real estate, I still play an active role in the team. I just choose to only do activities that don't directly depend on the time I put in. I am responsible for generating the majority of business for about 65 agents on my team here in Colorado via the web. Although we have an excellent follow up model for our internet leads, our websites have been very "web 1.0", and still are. However, because I have such a great parntership with my agents, I am able to focus on bringing our business model into the "web 2.0" world, which will help our agents become even more productive. It's an exciting time for me, and I have a lot to learn about social marketing, but I know that my friends here on Active Rain, as well as my Twitter friends are the best place for me to do that.
Whew -- Sorry that was a lot longer post than I intended!
Back to my original point: I guess I would sum up the above gazillion words up with: "Don't rule out advertising just because you have some free traffic right now. Advertising doesn't have to be expensive." I'm not saying advertising should replace your blogging efforts. I'm just suggesting that it would be an excellent complement to your already existing blogging campaign. Even if you don't want to build a mega-team, an effective advertising campaign can help make your businesses peaks higher, and more importantly - your valleys won't seem as low. In fact, a good advertising campaign will help insure that you make it through the tough times while others who hadn't been advertising are forced to find other careers.
In closing, I want to take my hat off to my Grandfather - Clem Hausman - who taught me that, with the proper leverage, my earning potential per hour worked actually goes up with every dollar I spend on advertising -- not down. Grandpa is still a very respected (and active) real estate developer and owner of Hallmark Realty in Pueblo Colorado. In fact, if you live in Pueblo, there's a 25% chance he built your home. Living up to his philosophy, he still helps find buyers for most of the homes he built/developed too! When asked when he'll retire, he always responds with "As soon as I find a hobby I like more than real estate -- and I don't like golf!" He and my Grandma Marge have 8 Daughters & 3 Sons -- many who have followed in his career footsteps, as well as several of their 32 grandchildren -- who have done the same.
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