Post Written By Rob Minton
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Do you remember learning about the power of compound interest in high school? I do. I can still remember my teacher showing charts of what happened to money over time when interest was compounded from period-to-period. Here are two definitions for "compound":

  • intensify: make more intense, stronger, or more marked
  • put or add together; "combine resources"

Compound interest is a powerful saving strategy because your savings intensify over time. This happens because you earn interest on the money you originally saved and then you earn interest on the interest previously earned. With each passing compounding period, your savings earn more and more interest.

I believe the same thing can happen over time with your marketing. There are three basic ways this can be engineered in your business:

1. As you sell homes and earn commissions, you increase the amount of money invested into marketing. This compounding increases each year as does your sales.

To engineer this in your business, you must set a specific percentage of your commissions to save and allocate to marketing. In addition, you must have the discipline to increase this set percentage each year. From my observation, this compounding doesn't actually occur for most agents. This is because most agents have a tendency to spend every penny they make. They don't develop the discipline to save or re-invest a fixed percentage of their commissions. 

2. Consistently testing new lead generation advertisements and lead conversion systems in your business.

In number 1, the goal is to increase the amount of money you invest into marketing. The trick is to use the additional marketing $$$ to test new marketing campaigns. Marketing is really about testing. You must be testing new advertisements all of the time. One new winning advertisement could help you sell hundreds of homes. This happened in my business because I tested weekly.

3. By creating marketing pieces that have the ability to go viral.

A viral marketing piece is something that gets distributed from one prospect to their friends and family. Over time, you're marketing expands from person to person without any additional effort or investment on your part. Examples of viral marketing could be a report your wrote and distributed, a book your wrote, an audio recording, or a video. The key is to make your viral marketing piece awesome. The content should be really good so that people will want others to get the same information.

I accomplished this viral strategy by offering a book I wrote as an eBook and then giving each person the right to give the book away to others. Slowly but surely we began to be contacted by people interested in our services that hadn't responded to any of our lead generation advertisements. When we met with them, they would explain that a friend of theirs had passed on my book to them. This is compound marketing at it's best.

Step back and think about how powerful compound marketing could be for your business over time. It intensifies from period to period bringing you more leads, more homes sales and higher profits.

Unfortunately, most real estate agents don't think about compound marketing. They are very haphazard with their marketing. Its the "dreaded" task that they put off and rarely get to because their too busy.

Here are the steps you should take to compound your marketing:

  1. Think long-term about your marketing instead of short-term.
  2. Make marketing THE priority for your business.
  3. Save a portion of each commission check you receive and reinvest it into future marketing.
  4. Increase the amount invested into marketing over time, as your income grows.
  5. Constantly test new lead generation advertisements
  6. Constantly test new lead conversion strategies
  7. Create viral marketing pieces and encourage prospects and clients to give them away

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