February 7 2009

Shortsighted Responses to a Tough Market by Jeff Shore

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Warning: I’m about to offend people (especially managers) by challenging some of the decisions that are being made in response to market conditions. I’m prepared to deal with that wrath. But please, consider the message before shooting the messenger!

The challenging market means we need to re-think everything we do and every dollar we spend. That makes total sense to me; it’s just smart business to be as effective as you can, especially when it comes to cost cutting.

Unfortunately, far too many decisions are made in the fashion of the proverbial knee-jerk method. Critical programs are cut in the name of saving money, even though the programs are commonly revenue generating.

Time to re-consider some things. As an industry observer, here are four market response strategies that, I believe, are shortsighted.

Closing Offices

Ask any retailer on the planet about closing the doors to save on labor costs and they’ll look at you like you have a hole in your head. Retailers exist on one thing: traffic through the doors. Close the store and shut off your supply of traffic – it’s that simple.

A good temporary representative is an inexpensive alternative that can capture a prospect’s information and get that customer in touch with someone who can take them to the next level. At the very least, a prospect who takes the time and makes the effort to find a sales office will not be punished by finding the place unattended. Believe me, they’re not coming back to give you another shot at your convenience.

Good temporary representation will cost you a few bucks an hour, so you have to ask yourself whether it was worth the savings if someone pulled up, looked around and drove off. So try this little experiment: take some work or a good book and park in front of the models on a day the office is closed. Watch the look of your prospects as they pull up, get frustrated, and drive off. That might be all you need.

One last thing: some say that temporary representation is so poor that it’s not worth staying open. I disagree. I’ve met many of JoAnne William’s temps in new home sales offices who were every bit as effective (in many cases more so) than full-time agents I often run across.

Cutting Training

Okay – I know this sounds self-serving, but think of the reasoning behind this statement: “We aren’t getting the sales performance we need, so let’s cut the training budget.” Huh? Does that confuse anyone besides me?

It’s one thing if you are finding sales training to be ineffective. But good training should pay for itself with an immediate increase in sales. Training returns many times over in a direct increase in revenue, and a savings in incentives when salespeople are well-prepared to perform at the highest levels.

Piling More on the Sales Manager

Somehow the position of General Sales Manager has become the catch-all for the industry. I see sales managers who are totally consumed with meetings, paperwork, contracts, crisis management, customer complaints, and a thousand other details. And here is my question: Who is out there helping salespeople write more deals? Who is coaching? Who is challenging the salespeople to perform at the highest level? Who is making sure that incentives are used wisely, and that new prospects are given the opportunity to purchase?

We need to seriously re-think what our sales managers do. Their job should be focused on one overriding objective: Lead Conversion – making sure that every possible lead is converted into a sale. That job cannot be done from behind a desk.

Cutting Back on the Web Presence

If you see web advertising as a cost, you'll do what typical managers do - minimize the cost. If you see it as a money-making asset, you'll support it. When it comes to web presence, there is almost no justification for cutting costs in this highly efficient medium. The only question is whether the money spent is going in the right places.

For example, many search engine web sites charge you a monthly fee for placement regardless of performance (which is often difficult to measure). But using a search engine that operates on a pay-per-click model (newhomesdirectory.com, for example), you pay only if the prospect clicks through to your website – that is, you can track your costs in relationship to your activity.

In any event, cutting back on your web presence might be the most confusing of all the cost-cutting initiatives in place today.

But Jeff, our finance guy…

If you’re in sales and you’re reading this, and if you’re agreeing with some or all of these points, it’s time to put your sales skills to work in convincing the powers that be that saving money at the cost of making money is no savings at all. The business world is littered with the remains of companies that have attempted save pennies at the risk of losing future dollars. Sales and marketing is not an expense – it is an investment!

END

Jeff Shore provides new home sales training and is regarded as a top trainer of new home sales agents and new home sales managers.  Thank you for allowing me to re-post your newsletter on this blog.  This is great stuff. Jeff Shore has had a tremendous impact on my life as well as the lives of many others.  If you can catch one of his seminars, do it. The cost is little and the improvement of your skill set is great.  Check Jeff's schedule here.  Thanks again Jeff, Jim Adams.

 

Comments

Posted by: Jim Adams | February 7 2009 7:26 AM

Love it. Fantastic article Jeff and spot on. If money makes you more money, keep spending. Stop spending money with no ROI. Jim

Posted by: Mike Lyon | February 7 2009 8:44 AM

Dead on...why cut what is proven to work. Great article.

Posted by: Ed Doss | February 7 2009 6:32 PM

Holy Cow Jeff!!
You read my mind. I have been interviewing industry professionals this week and one of my own personal questions to them has been about this subject. I would also say that every one of them has agreed with your stance. It's no wonder that theirs are some of the more successful companies. It has boggled my mind why so many people in our industry can their Marketing department or eliminate marketing dollars when the economy hits the bottom. Great article!

Posted by: Nanette Overly | February 9 2009 3:16 PM

Jeff, as usual, you are right again!  We've just wrapped our national sales conference, and in a just a couple of days contracts are being written.  Just another testament to what sharpening the axe will do!

Posted by: Maribeth Mace | February 9 2009 4:13 PM

Great article Jeff. You are right on with regard to the role of the Sales Manager- It really does make a difference when your sales manager spends 90% of their time in the field with the consultants.  In this market they need the support and mentorship more than ever to convert every lead that walks in the door!

Posted by: Mike Sipes | February 9 2009 4:33 PM

Jeff, I couldn't agree more.  I can't even count the number of times I've seen companies (in ALL industries) shoot themselves in the foot by trimming the very things that would make them money, but leaving behind the money wasters.  CEO's, listen up here, Jeff knows what he's talking about!

Posted by: Jennifer Blough | February 10 2009 7:49 AM

Jeff, I agree on all fronts.  This is the time to invest -- in tools, resources and people.  Consumers are still buying homes -- maybe not as quickly, or at the same volume as a couple of years ago -- but they are still buying.  Putting the right tools in place, and training and motivating sales professionals to perform at their peak, is what is necessary to sell during these times.  Thanks for a great article!

Posted by: Carol Smith-Gephart | February 15 2009 4:23 PM

Absolutely Spot On!!  Closing offices - cutting training and piling more on the Sales Manager is a disaster in the brewing! "Sales and marketing is not an expense – it is an investment!"....couldn't have said it better myself...wish I had said it first!  Great article.
  

Posted by: Dick Pirozzolo | April 3 2009 9:45 AM

I agree. I've been promoting log and post and beam houses and writing about  homebuilding for two decades.

The web has become such a powerful and efficient marketing medium and it is becoming even more powerful every day. What's more the web is the only place where you can make changes as fast as the environment changes. That is the last place I'd cut... strike that ... that's the first place I would expand!

Dick Pirozzolo
Pirozzolo Company Public Relations
Wellesley, MA

Posted by: Tish Addington | May 4 2009 10:56 AM

Great article! I can't tell you how many times I've received instruction to cut something and made the comment, "stepping over nickles to pick up pennies". It seems to me that when a company executive makes suggestions about areas to look at for possible cost cutting, some DP's go overboard instead of gathering the team and figuring out a way to be more effective and profitable. I mean, they hired the best people, why don't they bring them in on how to make the team work better? Why is the first place to cut always sales and marketing when those two areas are the only revenue generating activities!  

Pile on the sales manager. I agree that sales and marketing managers need to be in the field side by side in the trenches to fully understand and then be effective! They also need to gain the respect of their sales teams by showing them they know what they are doing! Being strong in the face of uncertainty is another reason we need to be in front of the sales & field teams! If all we do is push paper, create meaningless reports, do administrative work we are doing our teams a disservice. The best way to get a ROI with a marketing plan is to have a sales team that can execute. To get that team, sales managers must teach them. Show them how it is done. How many sales managers can actually sell their own product? I can't tell you how much mileage I got when our sales were slow and I committed to working on the sales floor each weekend until I could figure out what the problem was. When I sold the only home that weekend, my sales people took it up a BIG notch and really started implementing my sales techniques. From that moment on, they respected me more than ever and BELIEVED I knew what I was talking about.

Posted by: Amy Hayslett | June 20 2009 9:46 AM

Wow, how true is this about the sales office being closed. I am just trying to get back into the busines after three years of staying at home but I just spoke to a friend who's office is open 7 days a week and he tells me, he cannot believe how many Realtors come in with clients and tell him the other builders in his community are losing business because they are closed that day.

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