I woke up this morning, satisfied that my MMPT was written for today. I’ve lived today’s topic for the last decade and could teach it in my sleep, but I had lingering doubt as I was brewing my coffee. The content this week is so basic and integral to the long-term success of an agent, would those listening gloss over it and move on without executing what I am teaching today. In that moment, the universe pinged me with a story I had heard about John Wooden, the legendary UCLA basketball coach whose teams won 10 national championships in 12 years. He said that “It’s the little details that are vital. Little things make big things happen.” Every year, he would start the first practice by teaching his players how to tie their shoes. Yes, he would teach them to tie their shoes. Why? He wanted them to understand the importance of the fundamentals of winning. It’s the small things done consistently over the long haul that turn into big things. These MMPTs on Database and Relationship Management are the fundamentals. If you are good or become good at managing your database, it’s not an “if you will be successful,” it’s a “when.” So, it was important to me to make this point before I move on to the meat of today’s call.
One thing that I’ve learned over my career of building businesses is that you need to be astutely aware of your time and more specifically your PPH (profit per hour). You need to ask yourself constantly “Am I using my time wisely?” This is so true when you look at your client list/database. It is vitally important to understand and evaluate the importance of each client/contact on your list. Early on, I studied the Pareto Principle named after the late 1800s Italian economist Wilfredo Pareto. The Pareto principle (also known as the 80/20 rule, the law of the vital few, or the principle of factor sparsity) states that, for many events, roughly 80% of the effects come from 20% of the causes. After doing research and observing my business, I noted that this principle rang true in my real estate brokerage business. The top 20% of my clients/contacts were responsible for about 80% of my business. It was that 80% that was either transacting or introducing me to potential buyers and sellers. As my business matured, I kept increasing my focus on the “vital few.”
Again, though research, I realized that 100 clients was the maximum that I could manage properly. This didn’t mean I marketed to only 100 clients, I just marketed differently to separate and unique segments within my database. I called my “vital few” my TOP 100 and segmented that group into separate and defined categories (Platinum clients, Gold clients and Silver clients and then contacts 101+ were my Fringe contacts). You’ve probably seen other categorization concepts using letters like A+, A, B etc). I named my categories after the American Express card types. I don’t remember the reason but at that time, I just felt the words carried more weight than the lettering system. Also, I wanted to create my own theme. Let me just take a minute and define each one of these terms and categories I created for my database.
TOP 100: The 100 most influential clients and prospects that “know you”, “like you” and “trust you” as their real estate broker and resource for all things real estate. 100 clients has been proven to be the highest number of clients that you can manage in an authentic way. All other contacts should be categorized as “Fringe” contacts.
Platinum Clients: The people that refer you multiple times a year or consistently do business with you like a developer or investor. They are the top 20% of your Top 100. I made a point to “touch” these clients every 21 days.
Gold Clients: The people that refer you occasionally or have done business with you randomly over the life of your career but never refer you. They are the next 30% down in your TOP 100. I made a point to “touch” these clients on a 30-day cycle.
Silver Clients: Prospects and past clients that have the potential to refer or do consistent business with you over the life of your career. This is the bottom 50% of your TOP 100. If they were a prospect, I wanted to send them content at least every 5-7 days and if they were a past client, I would put them on a 45-day “touch” schedule.
Fringe Clients: Everyone Else. They should remain on your low-cost marketing campaigns like email marketing and direct mail marketing. You should develop an email marketing campaign, segmented, with content delivered every 2 weeks.
There is one other category that can be super important to your business if you make it a priority and that is Referral Partners.
“Referral Partners:” People in other industries or real estate agents in different markets that refer you new clients. Referral partners should not be counted in your TOP 100. A separate list should be created and managed. Your Referral Partners should be touched every 90 days.
Here’s your homework: Step 2 in building your client list/database is to go back and categorize your contacts based on the above definitions. This is not a one-time activity. When I was building my brokerage business, I would review these categories once a week on Sundays either at a slow open house or when I got home on Sunday. As needed, I would move my contacts around like chess pieces. When I took the leadership role in 2013, it was my promise to wind down my business over a couple of years, so I decided to focus just on my Platinum and Gold clients. I moved my Sliver clients to fringe. The plan backfired on me. What I learned is that when you put a higher focus on fewer people, your business will expand. That’s what happened. I had one of my best brokerage years in 2015, a year and a half after I joined leadership. Because of this, I started promoting during my training a TOP 100 instead of a Top 150 like I had taught previously. Remember, a successful database does not have to be huge. I’ve seen brokers do $25M+ on 50-60 contacts in their Top 100. If you are new, start this process now and don’t stop. As you add clients and your sphere matures, you need a place to collect, organize and manage your contacts.
On next week’s call, we’ll talk about how to market to each individual group for maximum impact.
