The Logistics of Brokerage Growth

“Amateurs talk about tactics, but professionals study logistics.” This quote, often attributed to former Chairman of the U.S. Joint Chiefs of Staff, Omar Bradley, applies to today’s real estate market. 

Many brokers now see opportunity ahead in the softening market. They are developing strategies and tactics to take advantage of growth opportunities and focusing on brokerage logistics. A broker’s strategy is their long-term plan, while tactics make up the actions required to reach and support short term goals. Tactics are the nitty-gritty details that make it all possible. An effective strategy is dependent on logistics which are often tiny planning steps. It’s why logistics are called the “great enabler.” 

My father served as a paratrooper with the 82^nd Airborne at the end of the Korean War. He used to say he was trained, “to blow up things and to build things.” His role was to disrupt enemy supply lines while creating and protecting ours. Often I heard, “armies can win battles but logistics win wars.”

Here are five strategies that today’s top brokerages are focusing on for dramatic growth as well as tactics and logistics to reach their goals:

Scale focus

Brokers talk about growth and most agents generally prefer to be part of a vibrant, growing organization. However, there is a big difference between simply growth vs. scaling. Growth does increase revenue, but it also increases overhead because a brokerage adds resources such as additional offices, staffing, marketing, etc. at the same rate of revenue increases. By contrast, scale increases revenue but adds resources at an incremental rate as needed which requires significantly less overhead and more profit. 

What are the logistics involved in scaling your growth? It takes specific expertise; investment into your brand; increased technology and systems; human resources; ongoing support, training, recruiting and more. Companies positioning to scale often seek a growth partner to provide resources, especially funding. Many owners today prefer not to invest their own capital but instead look for outside funding needed to accelerate their growth to scale.

“Many owners today prefer not to invest their own capital.”

PPP focus

Per Person Productivity is critical in today’s real estate world. PPP is the best recruiting/retention tool and successful agents want to be around other top producers. When your agents do more transactions than the other agents in your market, they generally aren’t leaving you simply for a higher split.

The logistics for increasing PPP starts with knowing the key metrics of your agents such as: 

• How many transactions do your agents have? 
• Listings? 
• Listing presentations? 
• Prospecting time? 
• Seller contacts?

It’s all about managing the basics and doing those things that lead to agents’ success. Some brokers will set company standards and have their agents commit to performance levels and in turn, brokers will hold those agents accountable to fulfilling their commitments. Accountability by you, your team and the agents should be the rule, not the exception as everyone needs some degree of accountability. Drive your agents’ success to increase their PPP and you will change their lives and drive growth.

Recruiting focus

Good recruiting is the lifeblood of a growing brokerage and a key growth tactic. It also increases agent retention because top agents want to be on the winning team. 

To be truly effective, recruiting must be ongoing. The logistics require a trained and dedicated team who are working together to make recruiting a process. The broker is a vital link because it’s difficult to build an effective recruiting process if the broker is not involved.

Your recruiting focus should be on the right candidates who will provide you a reasonable company dollar and/or the opportunity for ancillary services. Top brokerages target agents who fit the firm’s culture and have proven expertise, as well as those candidates that the firm can assist in increasing their personal performance and earnings. 

Recruiting should be personal. Instead of mass texts and emails, pick up the phone, reach out on social media and send handwritten notes. Your recruiting should be all about the agent, not your firm. Instead of focusing on showing your beautiful recruiting presentation, fine-tune asking candidates the right questions to find out why that agent is considering a change and what you can do to help them. 

While some of your good agents on occasion will leave you, good recruiting becomes your production insurance. It is a key component of a powerful growth strategy.

Listings focus 

Listings drive the business and are a key tactic for success. When you have the listings, every broker in the MLS works for you. 

While this is one of the most important components of a solid growth tactic, it befuddles many brokers and agents. The reality is that working with buyers today is easier; typically, the buyers find the home then they find the agent. However, for listings, agents generally must find the sellers and negotiate to get those listings. In essence, the house sells the buyer; but that agent must first sell the homeowner to get the listing. The process requires more work and greater skills. 

The logistics that go into building the listing base include teaching and driving your agents to become listing focused; the rewards are greater for all. Agent prospecting activity is vital; they may not like prospecting, but they must do it to be successful and reach their goals. 

When you have the listings, you and your agents have predictability over your business and the logistics that drive growth and scale.

Acquisition focus

Scale creates opportunity and often mergers, acquisitions and partnerships become a part of the logistics of scaling to become a regional driver. Top companies weave an M&A logistics strategy into their to plans to enable significant growth more quickly. 

As the broker, you play an important role in M&A growth. Look around; who is losing market share and agents? Veteran brokers often suffer from market fatigue and get tired of the stress. They make great M&A candidates. Now is the time to focus on a planned expansion strategy for growth opportunities. 

A top-down growth and scaling plan must be accompanied by a comprehensive review. For most brokers, it means a bottom-up analysis of your capability to execute it. Often it makes sense to look to outside resources to make certain the strategy, tactics and logistics of your plan come together for the maximum success in your market.

If you would like to learn more and explore what a valuation looks like for your company, click here to contact Rick Ellis today.