Tertiary markets

Playing the Small Market Game

These 5 moves can increase your odds for success.

Working in small markets poses many challenges, but perhaps the greatest obstacle to overcome is thinking big about marketing and building your commercial real estate business. The number of brokers competing for the same clients is compounded by the fact that small markets have less business to go around. There may be only a couple dozen brokers in the market, but when you consider the smaller number of potential transactions available, the ratio becomes significant.

Two key objectives can help commercial real estate professionals effectively compete in small markets. The first is to implement strategies designed to position you as a dominant player in your market. The second is to expand your reach beyond the limits of the market itself. As a broker working in a small market for the past 30 years, I offer five useful suggestions to help brokers in other small markets achieve success. And to some extent, since all brokers work in “small” markets defined by specialization or geographic submarket, this advice may be helpful to those in bigger markets too.

1. Leverage Your Strengths

Commercial real estate professionals must learn how to maximize their strengths when it comes to building business and marketing themselves. For instance, I always have been a good communicator and I enjoy working with people. Building on this foundation, I pitched our local ABC affiliate a TV show idea about interviewing community business leaders. I approached local bankers, builders, and business people that benefit from my commercial real estate activity and asked for their support of the project as advertisers.

The network saw value in the project, and I now have a weekly TV show that gives me more exposure than I could afford on my own. In addition, the show also gives back to the community by providing a forum for business people to be recognized as well as to share their insights and perspectives.

This is the kind of exposure that implies credibility to potential clients. I could spend a small fortune on advertisements and not receive the kind of response that the TV show provides. It has been instrumental in helping to position me as a commercial real estate force in my market and gives me simultaneous visibility and credibility.

2. Craft a Trilateral Strategy

When I was a boy, my father explained the trilateral military defense strategy, which involves patrolling and protecting the country from air, sea, and land. The point of this strategy is simple: If an enemy attacks, the U.S. can retaliate from three different sources of strength.

Similarly, commercial real estate professionals can apply a trilateral approach to their objectives. In addition to a business plan, incorporate marketing and public relations efforts into your overall strategy.

Write a Business Plan. Even within my business plan, I apply the trilateral strategy. For instance, by tracking my activity over the years I have learned how much business I capture each time I make a client presentation. In my case, it amounts to $10,000 in commissions for each hour I spend making listing presentations to clients. Therefore, if I set a goal to achieve $500,000 in gross commission income, I know that I must spend at least 50 hours presenting to clients to achieve this goal.

Similarly, I know that I need between $15 million and $20 million in closed transactions to achieve a GCI of $500,000. To close this amount of volume, I need at least double that amount in my listing inventory, based on the theory that I will sell only half of my inventory in any given year.

In addition, I factor in the number of calls to new clients required to achieve the desired GCI. By doing this, you create three distinct paths to achieve your goal. With any of these strategies alone you may be capable of reaching your goal, but combined in the trilateral strategy, the probability of success is much greater.

A business plan does not need to be a complicated document. Mine is a one-page outline that I post on my refrigerator where I can see it each day. (See sidebar.)

Construct a Marketing Plan. The first consideration when creating a marketing plan is to determine who to target and how. The other item to consider is how you plan to spend your time. I recommend spending at least 50 to 75 percent of your time on marketing.
First, it helps to understand the difference between prospecting and marketing. If you are prospecting, like the 1849 gold rush miners, you have to sift through a number of clients before you strike gold. You hunt for a client, complete a deal, and then you may have to begin again from scratch for the next deal.

By marketing instead of prospecting, you build momentum with a target audience and velocity that continues to grow and pay dividends year after year. For example, if you consider the whole range of potential clients in a given market, only a very small number of them are in the market to buy or sell, perhaps only 5 percent. The problem, particularly in small markets, is that most commercial real estate professionals are chasing that same 5 percent.

A better approach is to target the other 95 percent of potential clients and create a top-of-mind awareness of your services when they are ready to buy or sell. Very few of your competitors are likely to be targeting that group, and eventually a segment of that group becomes the new 5 percent of the market interested in buying or selling. If you do your marketing right, you can even create a situation where you are in a competitive vacuum — the client is calling you and not even considering the competition.
Items in your marketing plan might include a monthly postcard to target clients, a consistent informative monthly e-mail, a printed monthly newsletter, your name and phone number posted on all signs, a personal team brochure, and a personal Web page.

E-mail is an effective form of marketing if your messages contain valuable and relevant content, which is more than just asking prospects to view recent listings. You can include facts, stories, or market information — particularly about your local market — in a brief e-mail. E-mail marketing is most effective when messages are sent out consistently at regular intervals.

In many ways, if you don’t have your own Web site, you don’t exist. I am not talking about your broker’s Web page or your franchise’s site, but rather a Web page specific to you. With basic computer skills and an off-the-shelf software program, you can create your own Web page relatively inexpensively. For an example, visit my site at www.ruggieriteam.com.

Create a Public Relations Plan. You don’t need to be a Fortune 500 company to benefit from good public relations. I define public relations as ways to give back to the community and ways to get noticed by the public’s eye.

For instance, speaking to local groups is a great way to gain exposure in your market. Service associations, church groups, and local civic organizations and committees look for speakers to enrich their lunch programs. Create a short presentation on a topic relevant to your business, such as the ABCs of 1031 exchanges, and offer to present it at local meetings. It costs virtually nothing but your time.

Volunteering is another way to gain exposure. Our team helped to build a Habitat for Humanity house because we thought it would be a fun and valuable way to give back to the community. However, we also received valuable public relations benefits: Our photo appeared in the local newspaper and on the front page of our franchise’s national newsletter.

Writing and distributing press releases is another way to gain exposure. Most small-town newspapers rely on press releases to help them with local news coverage. A simple, direct press release can provide the media with the details they need to print the story.

3. Learn the Art of Warm Calls

Generally speaking, I don’t believe in cold calls. I am not opposed to making telephone calls as a way to connect with first-time clients, but calling a prospect cold from a list or the phone book is not the best way to connect with potential clients. Instead, try making a warm call.

What is a warm call? As an example, I was interested in doing business with a local company that was very prominent in the industrial real estate market. I learned that a friend of mine sat on a board with the company president’s brother. I took my friend to lunch and asked him if he could make an introduction to the brother, which he did. I explained to my new contact (the brother) what I did and asked permission to mention his name when I called his brother, the company’s president.

Essentially, that is the process of warm calling. Gaining a referral from a peer makes a big difference in how that prospect will answer your warm call versus a cold call.

4. Network Locally

Networking can be accomplished in a countless ways, but it is important to select a method you can maintain. For instance, I became a founding member of the Urbana Business Association in my local market, serving on the board for six years. It was a great way to meet community business people, and I was able to contribute my skills as well. An unexpected bonus was that the nonprofit group later used my company to do three major real estate transactions.

Other networking opportunities include being active in the local chamber of commerce, commercial real estate groups, and trade groups. Try serving on a local committee. The more you circulate within your market, the greater your visibility and awareness among potential clients.

Another great tool is a letter of referral. Upon closing, I ask clients for a written letter of referral. You may be surprised at how many of your clients are happy to do this small favor for you. I keep a notebook of all the letters that I have received over the years, and I can’t emphasize enough how valuable this resource has become to my business. Whenever I meet with new clients, I go to my notebook, pull out the appropriate letters, and add them to my presentation package.

5. Expand Your Reach

Networking with groups and organizations beyond the borders of your city or state is an excellent way to prosper in a small market. Being active in your local or regional CCIM chapter and attending regional and national events with other professional groups connects you with colleagues who may reach out to do business in your market, or better yet, send you a referral when they know you are working in a given area.

Don’t be limited by geography. I have made quite a business of working outside my market in cooperation with other brokers either within my franchise network or through other affiliations such as the CCIM Institute or Society of Exchange Counselors. For instance, a client wanted to list a $3 million office building in Indiana. Since I am not licensed in Indiana, I called an Indiana broker I knew well and offered to cooperate. He gladly accepted and even had a buyer for the property. Needless to say, the seller was very happy. And happy clients are often repeat clients: Soon after that transaction, the seller listed a $22 million property with my company.

The most important thing for small- market commercial real estate professionals to remember is not to think small. Instead, work hard to position yourself within your market, use a multifaceted approach to build your business, and in every way, think big. Include public relations and solid marketing techniques within the framework of your strategic plan, and extend your reach within and beyond your market. With a strategic approach and a little hard work, you can create a solid commercial real estate business in any market, no matter how big or small.

Alex Ruggieri, CCIM

Alex Ruggieri, CCIM, is a partner with Sperry Van Ness-Ramshaw Real Estate in Champaign, Ill. Contact him at (217) 359-6400 or alex.ruggieri@svn.com. 2008 Business Plan Goals 1. Financial: $600,000 in gross commission income 2. Listings: $100 million by end of Q1 and maintain in Q2, Q3, and Q4 3. Closings: $30 million for the year 4. Marketing: • Postcards — minimum of six cards by year-end • Newsletters — minimum of six newsletters by year-end • E-mail newsletters — minimum of one per month • Leverage personal Web site — build brand by creating a personal marketing brochure to leave with clients, train the team on maintaining brand profile, and create my “sticky” story that people will remember better than facts and figures 5. Public Relations: • TV show — 14 episodes; leverage the show with additional public relations efforts • Magazine articles -– publish a minimum of two articles in industry publications by year-end • Client events — client party/picnic, 1031 seminar, and investment seminar for women business leaders • Visibility — look for opportunities to speak to local groups • Press releases/news stories — get published 6. Professional Growth: Become active in CCIM chapter, actively participate in “vital factors” (a concept drawn from the book Vital Factors by Leo Froscheiser and Paul Chutkow) mini group, visit each vital factors member in 2008 7. Personal: Purchase an investment property 8. Team: Create detailed job description for marketing assistant to be used as a daily, weekly, monthly guide to marketing plan, continue to train office assistant to take over office manager duties to free up time 9. Attendance: Attend Sperry Van Ness’ regional conference, one national CCIM Institute event, the International Council of Shopping Centers event in Las Vegas, and at least three Society of Exchange Counselors national meetings

Recommended

Small Cities, Big Demand

May.June.19

While coworking spaces in secondary and tertiary markets haven’t exploded, several factors point to these markets offering an additional growth frontier.

Read More

Tertiary Markets

Jan.Feb.16

Investors explore various opportunities in search of higher ROI. Mirroring national trends, commercial real estate professionals in diverse local U.S. markets are experiencing strong interest, especially from out-of-state investors. Their biggest problem isn't demand, it's supply.  “The biggest challenge i

Read More

A Game of Risk

Mar.Apr.13

Every real estate professional is well aware that commercial real estate is making a comeback. Even during the depth of the recession, the market of 2009 presented a great deal of opportunity for investors and lenders. Many of

Read More

Big Deals in Small Markets

Mar.Apr.12

As prices climb ever higher in primary markets, commercial real estate investors are making their way to non core markets in search of better returns. While second tier cities such as Austin, Texas, and Pittsburgh predictably dominate, even small towns

Read More