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
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
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
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.