The events of the past several weeks ensure that one of my basic laws of marketing will be severely tested. This law states that you must adjust your marketing actions constantly.
Market Changes Drive Marketing Changes
Altering Strategies For Changing Markets
By DAVE HERSHMAN
August 11, 2003
Whether you are selling mortgages, real estate, insurance, settlement services or anything closely related to the real estate industry, a sharp increase in interest rates is a precursor to a changing market. And when your market changes significantly, your marketing activities must be changed accordingly. We are not saying that the recent change in rates is permanent -- but any violent movement reminds us that the world around us can change at any moment. The question is-will you be prepared to succeed in this new environment?
Of course, those who are more likely to succeed are those who have planted the seeds for change before it has happened. Those who are successful tend to be visionaries who are much more likely to take action in preparation for what might happen instead of in reaction to what did happen. What type of action might a visionary take?
- Well, a visionary is likely to become more diversified. In the instance of real estate, what segments of the market are likely to be unaffected or even positively affected by an increase in interest rates?
- If rates rise high enough to cause the real estate market to slow down, it is possible that foreclosures could rise. There are many who focus upon this lucrative market.
- First-time buyers. The purchase of one's first home is many times an issue of lack of cash rather than affordability of the payment. Many surveys have indicated that the number one obstacle to home-ownership in the United States is cash, not income or credit.
- Those with challenged credit. Those with significant credit issues will be paying higher than market rates regardless of the current interest rate environment. For this market segment-the goal is to consolidate debts to ease the pain or get in a home. The long-term goal is to improve the credit history and move closer to current market rates in the long run.
- Look for specific opportunities. If the market is getting tougher- others will be leaving the market. This leaves the spheres of others wide open. The only question is, who is going to exploit these opportunities? You guessed it-visionaries.
Of course, there is no way that you can anticipate all changes in the marketplace. There are times when all of us will need to change direction. It is easy to succeed when the phone is ringing and there is not enough capacity to service the public. But what happens when there is overcapacity? Overcapacity hurts us in many ways --
- Our marketing activities are likely to produce a more limited response.
- Increased competition will cause our revenue per unit to decrease, especially without the diversification we delineated previously.
So what should we do to mitigate the pain of a difficult sales environment? For one, we need to determine which of our relationships are the most effective from a referral standpoint. Instead of casting a larger net, we need to narrow our focus to those that will produce the best results because our marketing resources are likely to be more limited.
Second, we need to determine how best to deliver value to these effective referral sources. This value is not likely to be a lower price-but a way to help them to successfully deal with this more difficult environment. Remember, your business is not the only one being affected negatively. For that matter, the concepts contained in this article apply to your referral sources-so don't hesitate to provide a copy to them.
Last, we need to determine how to duplicate these effective relationships. If you need 100 new customers next year to make your business plan successful, this can be a daunting task to find these when you are searching right along side of thousands of competitors. However, if you discover that three of your sources are providing 50% of the referrals you need each year then you may merely have to develop two more of these close relationships. It is much easier to develop two strong relationships than it is to find 30 or 40 new customers. It takes less time, energy and most importantly-fewer marketing dollars.
What it does take is more strategic planning and this is where the vision comes to play. If you don't know how to exploit these important relationships by increasing the value component-you will be left to fish in that crowded ocean everyone else. On the other hand, if you want to come out of the changing market stronger than when you entered-starting seeing the bigger picture.