We’ve experienced greater changes in the real estate industry in twenty-four months than in the last twenty-four years. Many of us resist the changes. The question is – are the changes going to speed up or slow down? I think the answer is obvious . . . we are in for a wild ride.
Consumers are demanding more service from us than ever before. They want it faster, better, and cheaper in all service-based industries. REALTORS® and mortgage originators are no exception to this rule. We must work together to provide better service, communication, and advice to our prospects and clients to compete effectively.
Let me share with you a formula…if you master this formula, you will have more business than you can handle. This formula is Value = Benefits – Cost. The consumer makes buying decisions based on this formula. You use that formula yourself daily. Let’s look at each component separately.
Value: This is the consumer’s perceived value of something. It is what they view something to be worth. Why is the Mercedes perceived to be of greater value than a Hyundai? They are both transportation – a vehicle to get you from point A to point B. The difference is in the benefits and cost. The benefits of owning a Mercedes are much greater; therefore, its cost can be greater than that of the Hyundai. For some consumers, the value of REALTORS® is all the same. That is the reason they don’t see the benefits – only the cost. Consumers do not look for benefits naturally. They must be sold and shown the benefits, or they will focus solely on the cost. Cost is the area of the equation on which you don’t want to have to compete.
Cost: By moving the cost of the service you provide, you can manipulate the value of your service. You can convince more consumers to use your service. More people will see greater value due to the lower cost. When McDonald’s lowers the Big Mac to $0.99 from $1.89, they get a lot more people to buy the Big Mac. You can do the same with your commission, but I would not recommend it.
Benefits: Success is contained in the benefits. To run an effective and profitable business, we need to increase the benefits. This will increase the perceived value of the prospect and client and keep us out of competing on a cost basis. Let me give you two steps to increase benefits.
1. Itemize what you do. Consumers do not really know what you do. They only see the end result…the commission going to you. You may be providing lots of benefits, but no one would know it. Make sure your clients and prospects clearly understand the services and benefits they will receive from working with you.
2. Create a team to add more benefits. The first member of your team is your mortgage originator. He/she has a lot of benefits to offer. These benefits are also your benefits if you have a strategic alliance. You have to work together to combat the commission and rate cutters of the world. Raise the benefit level to counter act these practices. By forming strategic alliances with other professionals, you can create more benefits for your clients, thereby creating more value. By increasing value, you can generate more long-term referrals, thereby generating a repeatable process to your business.
Many consumers think all REALTORS® are the same. They also think that they can save money on a home loan off the Internet. Focus on adding benefits together. Benefits are really what the customer is buying.