Is Your Farm Area Right For You?
Doing periodic research can help ensure you’re getting the biggest bang for your marketing buck.
In the past, we’ve talked about the importance of focus in your career, and how it’s easy to slip into autopilot and drift aimlessly from one to the next. Of course, the longer you let yourself stray, the further you get away from your desired path, and the longer it takes to get yourself back on the right track. The reason I bring this up is because the same phenomenon can be true about your marketing campaign. That’s why it’s important tp periodically take step back to analyze your farm to ensure you’re positioning yourself correctly in your market.
Before we get too far, however, let me stress the importance of consistency and longevity in your campaign. Far too often, agents change directions in their marketing prematurely, and in no way am I suggesting that you should drastically change your focus. What I’d like to convey in this article is this: The better you know your farm, the better you can tailor your image and marketing to their needs. At the end of this article, I’ll even share a great method for testing your market to gauge your acceptance within it.
Make a Connection
When choosing their farm, many times agents’ first instinct is to choose a geographic segment where they live, and they begin mailing to it. That may be an important factor in a campaign, but just as easily it could be meaningless. Remember, logical appeals such as, “I live here.”, are worthless when compared to a powerful emotional appeal. So, before you make any decision, consider demographic factors such as profession, lifestyle, hobbies and interests. The farming process is one in which you are trying to build a relationship with a complete stranger, so you have to connect with them on an emotional level.
Traditionally, that process was done through door knocking, where face to face interaction allowed you to personally make that connection. But more and more of today’s top agents now achieve that connection through personal marketing, not only because it’s easier and more effective, but because times have changed and the last thing a homeowner wants anymore is for a salesperson to knock on his/her door. So how do you establish that connection—one that you--- without meeting them face to face ?
You have to think like they do.
People do not think of themselves as home buyers or home sellers. They think of themselves as real people--- fathers, mothers, doctors, lawyers, golfers, boaters. This is where you can access their emotions and elicit a response. Imagine the avid golfer who receives a mailing from” the Golfer’s Specialist.” He’d immediately feel a common bond with that agent, and when the time came to sell his house, how could he choose an ordinary agent who wants to be his “Real estate agent for life” over The Golfer’s Specialist”?
Important Factors to Consider
Choosing a farm isn’t simple as identifying your passions and marketing to like-minded homeowners.
Before you embark on any direct mail campaign, there are three very important factors to consider.
- No Major Competitor
The first thing you want to do in choosing a farm is to make sure there is no dominate competitor in the market. If one agent (not company) controls more than 30% of a given market, avoid it and look elsewhere. Note to you headstrong types; I said, Avoid it and look elsewhere!” It’s very difficult to unseat a dominate player, and your money and energy can be much better spent elsewhere.
Your best bet is always to find a market where the business is evenly spread amongst many agents. If 30 homes were sold last year by 25 different agents, that market is ripe for someone (like you) to come in and dominate by using a marketing campaign that speaks directly to this group and makes a connection with them, whether that connection is made on a geographical basis or demographic-basis.
- Turnover Rate and Quantity
If homes in a given market simply do not turn over, you aren’t going to make a living farming this community. This situation is usually encounter4ed in older, established communities that are home to an older age group, but it leads to our next important point. Before you choose a farm, you must discover its turnover rate. How do you do that, you ask? Take the number of homes sold in the last 12 months and divide it by the total number of homes in the farm.
The lower the turnover rate, the more expensive it is going to be to generate business. You should look for an annual turnover rate of no less than five percent.
The next thing you need to do before committing to a farm area is to ensure there will be enough business to achieve your goals. If 25 homes out of 250 sold in the last year, that’s a phenomenally great 10 percent turnover rate. However, if 10 percent represents only three home sales, you’re going to starve!
You will never get 100 percent market share, but with a well-designed, targeted
campaign, 50 percent market share is not unreasonable. So, in addition to finding a
farm with at least five percent annual turnover rate, the total number of homes sold
needs to be at least double the number of homes you plan to sell in the coming
year. For example, if your goals dictate that you sell 25 homes, make sure 50
homes sell each year in your farm area.
This conversation with agents almost always leads to the $64,000 question: How
many people should I be mailing to? The simplest answer is that you need to do
your homework before you can choose your farm:
· Establish your goals—exactly how much money do you want to make?
· Determine the dollar amount of your average commission.
· Divide you goal by the amount of your average commission. This is how many homes you will need to sell.
· Double that number.
· Divide your new number by the turnover rate, expressed as a percentage.
For example: Let’s say you want to make $100,000 and your average commission is $4,000. That means you need to sell 25 homes to reach your goal. When you double 25, you get 50, meaning your farm needs to sell 50 homes annually. Divide 50 by the turnover rate—five percent expressed as 0.05—and you get 1,000 homes. If the turnover rate is seven percent (0.07), the answer would be 714 homes.
- Personality Fit
Unlike the first two items we’ve discussed here, number three isn’t based on sales figures, but it is based on a very important percentage: 100 percent. If you’re not 100 percent comfortable with people you will be working with, you haven’t chosen the right farm area for you. Ask yourself the following questions to help determine if you are right for a given market:
· Can I relate to them ?
· Do I understand them?
· Can I act just like any one of them
Ultimately, the question becomes, “Do I feel comfortable with these people?” you’re basically choosing a group of people whom you’ll be spending much of the rest of your life with, so choose carefully. To be successful, you have to enjoy what you’re doing, not to dread it. Imagine the feeling “The Golfer’s Specialist” has waking up each morning knowing he’ll spend the day talking with people with whom he shares common interests. If you answer “no” to any of these questions, you shouldn’t farm this area.
Authored by Don Hobbs
Broker Agent News