I was recently interviewed by Dean Jackson about how I built my business. The interview was transcribed and I've included part one for you in this blog post.
We’ve got a very special Marking Monday for you this week. Recently I interviewed my friend Rob Minton.
Some of you might be familiar with Rob, he was able to build a very
successful real estate practice in the Cleveland, Ohio market and he was
subsequently able to sell that business recently for more than a
Rob has some great insights on choosing a very specific niche market
and then applying direct response marketing to that business to build
it in an incredible way so that clients were actually applying to work
with Rob and his team.
So we’ve got some great insights for you today and I hope that you enjoy this interview and tell all your friends.
Hey Rob, thanks for joining us.
You’re welcome Dean.
Hey, where in the world is Rob Minton today?
Rob Minton is calling from his home office in lovely Cleveland Ohio,
and I always say lovely before I say Cleveland, little, supposed to be
a little joke because it’s not really lovely here.
Go Browns baby, right?
There you go. Well Rob I really appreciate you taking the
time to spend with us today, and I know you’ve got an interesting story
about how you built your real estate business, so can you share a
little bit about your career in real estate sales?
Yeah I’d be happy to, and just kind of a quick warning, I’m
struggling with a little bit of bronchitis, so if I, I’ve got cough
drops and all kinds of stuff, so I will do my best not to cough up a
lung as we go forward. I got my real estate license in the mid 1990’s
and I was working for a small company, you know this small brokerage,
and I was working with buyers and trying to get listings, and I did
what everybody else did, I was out there copying other real estate
agents that I thought were successful, and at some point I started to
read some books on business, and I decided to open my own brokerage,
and this was about near 2000. My main strategy at that point was I’d
run a lead generation advertisement offering a free report, and a
prospect that would be interested in that free report would call and
leave a message, or maybe they’d go to my website and request it, and
then I, the idea was we would return the phone call and in that phone
call try to set an appointment with the person who requests the report
and, so that was kind of the main approach, and…
Did you start right out of the gate, using direct response
like that? Like were you familiar with it, and you started immediately
applying it to your real estate business?
No actually, no. My original broker was old school, so we weren’t
doing any direct response advertising whatsoever, but when I made the
decision to start my own company and I started to hire agents, I
realized that I needed to do something to be able to have new clients
coming into the business on a consistent basis, and when I started
research marketing, direct response seemed like to be the best approach
to use going forward. But the problem is once you generate the lead,
what do you do with it, right? How do you get that lead to become a
client? I recruit a couple
of agents and the idea was “Okay I’ll generate the leads, I’ll hand
these leads off to my agents and then my agents will make these phone
calls” – you’re laughing.
Well I laugh because we always joke that it’s like, you
expect and you think that you can generate all these leads and hand
somebody the ball on sort of the fifty yard line and they can take it
from there, but the reality is you’ve got to, you’ve almost have to
hand it to them on the goal line and push them over the edge.
That it, nobody told me that right. I’d hand them the ball and
they’d fumble it like Cleveland Browns would do, and so what ended up
happening was, because I own the business, I’ve got to pay for all the
expenses. In addition, I ended up being the one making the phone calls because I
couldn’t get them to do it. So I’m on the phone in the evenings, I’m on
the phone on the weekends, I’d set the appointments, then I’d hand the
appointment off to my agents. When they had the appointment they
would do fairly well. But at some point, I realized this strategy is not sustainable going forward. I can’t be
the one driving every sale for my business. Sure if I'm working by myself – yeah that would work – but to try to feed your agents that way is not a really good business strategy. I didn’t have the
cash flow in the business to hire like an outbound call person or a
telemarketer. Ihad to figure out a different way to handle lead conversion. Calling prospects to set appointments just didn’t work for me. Maybe it does for other agents, but the way you laughed is probably saying that it
I just think that was funny because it’s
so, you know I work with a lot of agents who have teams, and the dream
is that you can generate the leads and hand them off, and agents will turn them into sales but it just doesn’t work out that way.
They don’t appreciate it I guess if they’re not paying for it, I
don’t know. But, so what ended up happening was I’m like “Okay this
doesn’t work, what do I have to do?” I went back to books and I
started studying sales letters and long copy sales letters which my
original broker told me if it’s, if you’re writing something long
people won’t read it, you’re wasting your time, and it turned out he was wrong. If you have a good sales letter with a neat
story, people will read it even if it's long.
The same thing applies to ads though, like a lot of times
the advertising sales people, and your brokers, and people who aren’t
trained in direct response think you got to have a lot of white space
and you got to have short punchy things because people don’t read, but
you know I always get a kick out of, our mutual friend Dan Kennedy
always says “Nobody reads white space”. We know that for sure.
It would without a doubt, and actually Dan Kennedy, some of his
books helped me a lot. One of his books was The Ultimate Sales
Letter. This is where I started to learn how to write sales letters. I simply sat down and wrote a long copy sales letter for my business. The
goal was to lead a prospect to the conclusion that I was an expert and the best agent for their real estate needs. I put
a call to action in the sales letter by adding “If you’re interested in becoming
one of my clients, fill out this application and fax it in to my
office.” The goal was to pre-sell the prospect, get them to raise their hand and come back to us again. I began advertising a free report, but
the free report I sent was the sales letter that I wrote. Slowly
but surely, we started to get people sending in these client
applications. They would come in via fax, some would come in via mail
and some people actually would drive to the office and hand deliver them. This was a huge turning point in my business, because I
was able to then hand off these applications to my
agents and my agents were able to convert 50-70% of those client
applications into exclusive buyer contracts. One sales letter eliminated outbound phone calls and
believe it or not, it actually doubled my home sales from 2005 going forward each and every year. The end of my story in
selling real estate is that I sold my small real estate
brokerage for seven figures in 2007.
Wow. That’s some pretty impressive growth numbers, but what
do you think drove the increase in the number of homes that you sold?
Well a couple of things. First off, to touch back on what we just
talked about is once I realized I could run a direct response
advertisement, generate a lead and then mail them a sales letter and
have an application come in, I had a predictable lead conversion type
strategy in my business. If I wanted to sell more homes, all I
really needed to do was generate more leads. Because the sales funnel
worked so well, more leads meant more client
applications, which turned into more home sales. Once this was in place in my business, I could leverage it further just by running more lead generation advertisements.
The second was targeting a specific niche in the market. This is different than what
I think a lot of agents do. A lot of agents want to be everything to
everybody. This is virtually impossible. By selecting
a niche, you’re saving a lot of time. You’re able to offer some
compelling benefits to your specific niche, and when you do you’ll
see an increase in response rates.
How would you describe a niche? I’d love to hear how you would
describe what a niche market is for people who maybe not have a
crystal clear understanding?
… It’s a gap, a possible gap in the marketplace where other real
estate agent’s aren’t necessarily paying attention to that you can
dominate. In my business, I decided to niche with real estate investors. Back in
2004 – nobody was really paying attention to investors. I’m not saying
working with investors today is the best niche because of all the
problems with financing here in the States, but at that
point in time no one really wanted to work with investors. In fact, most agents felt investors were a pain in the neck to work with. I decided to make investors my entire business. Basically a niche is a pocket in the market which you can excel at.
Yeah, like a definable market
rather than just saying anybody who wants to buy or sell a home –
that’s pretty broad, but when you can narrow it down to investors would
be a niche, or first time buyers would be a niche, whatever. A segment
of the market like that.
Definitely segment of the market. The hard part is letting all other opportunities outside of your niche go. A couple of other things real quick on what I think
helped drive the number of home sales is I finally learned the real value of a lead. When I first got into real estate, I didn't see this value. Next was lead conversion systems like the sales letter. The sales letter helped to automatically convert prospects into clients. I viewed this as a very powerful sales asset for the business. Those would probably be the high points which drove our increase in home sales.
Now isn’t it amazing though, because we talked about a lead
conversion system and for me, that’s what’s so, that’s why I believe we
have so much in common, I like everything that you’re doing because
everything that we do is really based in systematic results and the
value of system is knowing with predictability what’s going to happen.
Like you know if you generate a bundle of a hundred leads and you send
out this sales letter, the start of your lead conversion process, and I
love how you call them sales assets, because that’s exactly what it is.
If you’ve got an add or a postcard or any type of lead generator, or a
website that predictably creates a result when you drive people to it,
that is an asset. You don’t have to, you put in the work, you’ve done
the, you’ve done all the hard work about it, and it can continually be
Oh without a doubt sales assets are probably the most valuable thing you can have in your business. I had one advertorial advertisement that I referred to as my million
dollar ad. When I ran this ad, I would generate three hundred leads. I’d mail three hundred sales letters and would have twenty five new clients – clockwork.
Like clockwork, exactly.
Month after month, month after month, month after month.
Well based on what you’re saying in the market place today,
what do you think is the best niche to be in right now? We’re talking
here in the fall of 2009.
You know, I know probably listeners aren’t going to want to hear
this, but I think foreclosures have to be something everyone has to pay attention to. Even though the
media’s saying “We’ve hit the bottom” and you’re hearing all kinds of
competition, and foreclosures in certain areas, I still firmly believe
sales are going to be a major opportunity for many years to come. There are many reasons why I believe this niche is one to exploit. Obviously our
unemployment rate is continuing to escalate, which means more people are
losing their jobs. More homes are going to be foreclosure. I
think we have a pretty big issue headed our way with all the option
arms that are going to be resetting. From what I’m reading, 94% of the people that have pay option arms are only paying
interest. This means they’re going negative in their monthly payment – on top of the decrease in value. So I think we will continue to see a large number of foreclosures coming
into the market over the next two or three years. Even though you
might not be excited about foreclosures, I think that’s where the
majority of the home sales are going to come.
Either, it’s certainly, you see all of the, like you said
it’s all over the news, you know it’s got, it’s coming. There still
continues to be more and more of them, and that’s way, I guess there’s
some momentum in it, in that the buyers who are buying, it seems like
that, to them seems like they’re getting a deal. I mean it seems like
that’s what they, that’s what the buyers are really interested in, is
Oh yeah, no. You said the media has trained everyone to want a foreclosed home. This means it's a lot easier today to attract foreclosure buyers. Prospects are already trained to want a foreclosed home by the media. This has dramatically reduced the cost per lead for agents marketing to foreclosure buyers.
Well there’s momentum.
… Yeah because you’re riding in the wave of what the media’s telling
everyone. The media attention drives your marketing cost down dramatically. To
give you an example – when I was running my business, my average cost per lead was probably about fifteen
dollars. Today agents
who market to foreclosure buyers are generating leads
sometimes for 30, 40, 50 cents. And in many cases, they're generating free leads onCraigslist.org. Or if they’re running an advertorial style advertisement, they’re generating high
quality leads for a dollar, two dollars, three dollars. I used to pay fifteen dollars, on average, for a lead. This simply means the media exposure on foreclosures is a huge benefit to real estate agents.
See it’s kind of interesting too that you, when you have an
asset like your system, the conversion system that you were talking
about, you don’t, you’re not afraid to spend money to generate those
leads, even though, you talked about generating two, three, four
hundred leads a month, and on an average cost of fifteen dollars,
you’re spending four, five, six thousand dollars in generating those
leads, and a lot of people just don’t have the confidence to do that
because they don’t have a system that would convert.
And rightly so. If you don’t have a lead conversion system, you may be wasting your money.
That’s exactly right, but here you are, you knew that you’re
going to spend that money, but then at the end of the day you’re going
to have twenty five new clients, and you’ve got the value of that is
way higher than the money that you spent to generate those leads.
You know it’s funny you bring this up because I honestly believe buying leads for your business is the single best investment you could possibly make. Especially if you have a lead conversion system that turns prospects into clients. It beats every other investment opportunity available by a wide margin.
Stay tuned for part two of this interview coming soon!