Book Review: Red-Hot Cold Call Selling

This is an overview of the book
Red-Hot Cold Call Selling by Paul Goldner

Goldner's bio: Goldner holds an MBA from the University of Rochester and is also the author of Red Hot Customers. Paul built his first of two companies up to an excess $100 million in annual sales.

Key points: The Selling Life-Cycle Paradigm and his Ten Commandments of Prospecting.

Mr. Goldner says that salespeople have two basic functions. Responsibility number one is the servicing of your existing clients. And the second responsibility is toward business development. Paul says, “When you are not providing superior customer service, you must devote your full attention and energy to business development and prospecting. It is crucial to your selling success.” He goes on to say, “Business development is a proactive process. You cannot sit and wait for things to happen. You must go out and make them happen.”

Though the book was written in the mid-90's Goldner (updated in 2006) makes several astute observations that are as timely today as ever. He says that, as salespeople, we need not participate in the recession if we don't want to. Paul makes numerous references to a concept that is very important in the profession of selling. The fact of the matter is that if you do something often enough a ratio will appear. In baseball they call it batting average and in sales we call it our closing ratio.

Goldner says, “If you keep accurate records, you will soon learn that your relationship between sales volume and dials of the telephone can be as predictable as the sun rising in the East and setting in the West.” If you've never tracked or measured your ratios I encourage you to do so. Yes it can be tedious work and, yes the ratio will be a lot smaller than you would have hoped. But the consistently predictable nature of that ratio is truly a freakish phenomenon to behold.

It is for this reason that Goldner confidently claims that, as salespeople, we can set our income at whatever level we'd like. If we know the level of income we want and we know our ratios, we will know exactly how many calls we'll have to make to make the money we want. Paul does go on to state the obvious, “During a recession, you have to make more calls to yield the same results.” This simply means that as the economy slumps our ratios will go down as well. But that doesn't mean our income must go down as well. During a recession increased prospecting activity will maintain your level of income and will position you to soar once the economy rebounds.

“If we do not make cold calls, we will have done little, if anything, to further our business development efforts.” Goldner points out that selling is essentially the transfer of enthusiasm. He notes advise that you will hear from many a wise sales trainer, after success on a call or presentation, immediately move to the next prospect. Your elevated state of mind will have a dramatically positive effect on the next response from the next prospect.

Now to the Selling Life-Cycle Paradigm. Goldner uses this mindset to become what he calls “rejection-proof.” Generally I would say it's a good frame of mind to have. In Pauls' words, “One can never be rejected as long as the selling process continues. By being persistent, by continuing the education process, and by repositioning your prospect in an appropriate position in your sales pipeline after a temporary setback in the sales cycle, you have the ability to control the ultimate outcome of the sales process and the ability to control any emotions associated with an apparent rejection. In fact, given this perspective of selling, you see that it is impossible to lose a sale.” This goes hand-in-hand with the rejection of the premise that we only get one chance to make an impression. Something I wrote about in this post: Your First Impression

Sales can be a very emotional career. You can chose to deal with these emotions in a number of ways, Goldner's Selling Life-Cycle Paradigm being one of them. As it turns out, a fair number of people use alcohol and narcotics to deal with life's frustrations and anxieties. However, we all know the possible dangers associated with those two solutions. A big part of the value of the Selling Life-Cycle Paradigm is that it reminds us that sales is a process not an event. When you really internalize this idea, when you get it in your gut, a lot of anxiety and frustration should disappear. When someone tells you no, reneges on a promise, or cancels an order, you'll be better equipped to realize it's no big deal.

Success in selling results, in large part, from having a full sales pipeline. Your pipeline of course being the people in the various stages of the sales process. When you get a 'no' you don't want to discard that prospect, you simply want to reposition them in your pipeline. If done properly you stand a good chance of getting that person's business when the time is right. If you're reading these words there's a good chance you've told me no, doesn't mean I'm done with you. As an aside, I should mention that there is a good reason to toss someone out and that's if the person is a jerk. Life's too short to deal with jerks. When you come across one just throw them in the waste basket. But rest assured my dear friend, you are not a jerk, otherwise you wouldn't be here, you'd be in the dump.

Goldner talks about the importance of defining your target market. This is a very useful concept. The old saying says that if you try to be all things to all people you end up being nothing to anybody. This definitely applies to sales and marketing. Unless you work in a very small market you will want to segment your marketplace. This will help you know who to go after. One simple segment for a realtor could be, “All homes within a five mile radius of my office.” Voilá, you now know exactly who to go after. In real estate, or any profession, you can extend your target even further. Indeed, chances are, you can be as specifics as you'd like. Perhaps you only want to call on existing single family homes of a certain value range in a certain zip code. No problem, now there's no doubt who your prospects are. You could even ask around for referrals by asking the people you know if they know anyone in that particular zip code. You get the idea.

Here are Goldners' Ten Commandments of Prospecting:

#1 Make an appointment with yourself for one hour each day to prospect – Prospecting requires discipline and Paul assures us that the will will never be exactly right to prospect.

#2 Make as many calls as possible – Sales is a numbers game.

#3 Make your calls brief – Two to three minutes is maximum.

#4 Be prepared with a list of names before you call – Just like defining your target market this will help keep you focused and avoid wondering who you should call on.

#5 Work without interruption – Should be obvious. Prospecting with a definite goal and focus helps you better reach that goal.

#6 Consider prospecting during off-peak hours if conventional prospecting times don't work

#7 Vary your call times – This pertains mostly to business-to-business selling.

#8 Be organized – The one who keeps the best notes wins.

#9 See the end before you begin – Your confidence and enthusiasm with be contagious.

#10 Don't stop – Persistence is one of the key virtues in selling success.

Goldner notes that it is important to use a script and to practice, practice, practice. Some salespeople resist using a script, for whatever reason. The fact of the matter is if you prospect repeatedly, you will eventually use the same words anyways. The only question is whether you're going to have an intentional script or an accidental one. Paul says that the importance of how you sound cannot be overemphasized. A well practiced script sounds the best.

Mail should be sent to support your cold calling efforts, not in place of them.

Goldner is a big fan of Toastmasters International, a public speaking club. If you've never heard of Toastmasters it's an organization that helps you develop your public speaking skills. A long time ago I learned that there is a connection between our fear of public speaking and of fear of cold calling. Master your fear of public speaking and watch your cold calling efforts improve as well.

Paul talks about Unique Selling Points or USP's. The idea goes all the way back to 1960 when Adman Rosser Reeves introduced the concept in his book Reality in Advertising. (Reeves actually called them Unique Selling Propositions, but whatever.) Very simply, your USP's are the reasons your customers buy. And you want them couched in terms of what the buyer receives, not what you provide. Meaning, you may have extensive knowledge about your marketplace but the reason people buy from you could be because of the enormous selection you provide. You provide the knowledge but they receive lots of choices. This distinct is very subtle but very important.

Since Goldner's example isn't so great, I'll give you the example I'm most familiar with which is my business, LegalShield. First I will list the benefit my clients receive and then I'll put the feature that creates said benefit. Here they are:

• Time and Financial Freedom – When you have leverage and residual income you don't have to spent your life chasing after a paycheck.
• Location Freedom – LegalShield is a national company so our associates are free to live wherever they wish.
• Security – Since our associates own their business, they can't be fired or downsized.
• Tax savings – Business ownership has lots of perks.
• Protection and Empowerment – We give people unlimited access to top-notch law firms without having to worry about the high hourly rates.

Now it's your turn. If you haven't already, create your USP's. This is a great marketing exercise because people buy for their reasons not yours.

We'll finish up with Mr. Goldner by covering his discussion of measurement and tracking. Paul says that it's important to track your numbers and report them to your manager. (or anyone else that can hold you accountable for results) Goldner says, “The classic argument against sales reporting is that it takes away valuable selling time. Although this may be true, sales reporting can also be a valuable coaching tool and a tool used for strategic planning. I prefer to view sales reporting as an investment in my own success. Sales reporting ensures that you are working smart.”

Paul recommends measuring the following six things: Dials, Completed Calls, Appointments, Proposals, Sales, Commissions. This happens to be based on the telephone but it works just the same if you're prospecting in-person. There are three main benefits to sales reporting:

• It keeps us accountable for results – what gets measured gets done.
• It demonstrates that we make money with each call – if it takes fifty dials to make a sale, each and every dial has value. (makes money)
• Helps with course correction – your numbers will tell you how you're doing and if anything should be changed. The great Ad-men understand that advertising is all about selling and salesmanship. I've heard the Guerilla-guy (Jay Conrad Levinson) say that the only person who should change your advertising is your accountant. Meaning, if it's making you money, stick with it. This applies to both advertising and selling. Tracking your progress helps you to steer the ship.
  
  
  
  

This is Fundamental to Your Life

Paradoxes are very important and central to life. They are an area where I believe I can contribute to people's lives. Like a lot of people, I am always looking to learn new things. The question that is floating around in my mind is always, “What can I learn from this?” I am asking this question even if I'm watching The Real Housewives. And though I have looked far and wide, I haven't found much discussion on paradoxes. I think this is a real and unfortunate void. Perhaps the void exists because paradoxes can be rather complicated. But I don't think they necessarily have to be difficult. My goal is to break it down for you. So let me explain what a paradox is.

One definition, taken from Merriam-Webster, is that a paradox is, “A statement that is seemingly contradictory or opposed to common sense and yet is perhaps true.” I will make a distinct between two types of paradoxes, those that don't seem solvable and those that do. For obvious reasons, I will only spend time on paradoxes that we may hope to solve. As I mentioned, they are an extremely important part of life. I won't waste my time with problems beyond our realistic reach. Let me give you an example of an unsolvable paradox.

There something called the Liar's Paradox which goes like this, “This sentence is false.” So, if the sentence is true, then the sentence is false, which is a contradiction. Conversely, if the sentence is false, then the sentence is true, which is also a contradiction. Wow! Listen, it is this sorts of conundrums that I think might creating black holes in the universe. There is no sense to be made out of the Liar's Paradox. So it's pretty much a waste of time. It's reserved for philosophers, in musty smelling old buildings, on university campuses. I want you to join me in the world of the paradox. But, in order to do so, when need something we can actually work with. So, let's switch over to more promising territory.

If you're willing to go with me, I assure you'll find that paradoxes can be very entertaining and even humorous. That may seem to be quite the claim but let me back it up. You may have heard the old line, by Groucho Marx, that said, “I wouldn't want to be a member of any club that would have me as a member.” It's deliciously self-depreciating and fun. It's a paradox. And it has a solution. Obviously, Mr. Marx was destined to live a solitary existence. :)

A paradox, I am certain you are familiar with, goes like this, “Never say never.” You've certainly heard that one, right? And so, what does it mean? It speaks to the value of having an open mind, doesn't it? That is to say, the importance of being to willing to try stuff. It's a great life lesson! But, strictly speaking, it's a contradiction in terms. Right now I could list off dozens of paradoxes. So this a topic I will revisit often.

Now time for a little of the nerdy stuff. A few years ago Jeffrey Schwartz and Sharon Begley wrote a wonderful book titled The Mind and The Brain. The subtitle is Neuroplasticity and the Power of Mental Force. That's quite a bit out of the everyday norm but fear not, it's not as scary as it may sound. What scientists have found is that the human brain remain plastic (their term for malleable) throughout life. It used to be believed that the brain was only formed while we are young. What is now known is that the brain is capable of rewiring itself up until our very last breath. This is a truly inspiring idea and the basis for much optimism. What it's basically saying is that it's never too late. That is amazing!

What Schwartz believed was holding back brain science was physics. He contends that neurology was bound by a Newtonian view of the world. A world lacking interdependence. Schwartz believes what is necessary is some knowledge of the quantum mechanical world. I won't get into a discussion about quantum mechanics. It is, indeed, very heavy lifting. I will, however, tell you one thing. What we now know, thanks to quantum physics, is that the observer of an event changes the observed event. It's pretty wild but it's true. This all stems from a classic experiment called the Double Slit Experiment. Without getting into it, I will tell you, the double slit experiment discovered that matter behaves like both waves, and particles, depending on whose watching. (Humans do a similar thing.) This might not seem very impressive to you so let me explain.

Imagine a wave at the beach. Can you see it? Now imagine a dolphin riding that wave. In my example, the dolphin is the particle. What quantum mechanics has shown is that the dolphin is sometimes a dolphin and sometimes it's the wave! It all depends on how it is being observed. This is called the Wave-Particle Duality of nature. And I hope I didn't just create a black hole in your brain.

All of this occurs at extremely small sizes. It's not something you will encounter in day-to-day life. But it is the very basis of the building blocks of the universe. Light, electrons, and atoms all behave like waves and they also behave like particles. This is a complete contradiction, but it's true. It's a paradox! I believe that life is fundamentally paradoxical. And, for that reason, I think it's something worth exploring.

I will leave you with one last joyous paradox. It's one that I just love. Maybe you've heard somebody say it before. Whenever someone is trying to pin you down, to an idea or a commitment, and you do not wish to be so pinned, you can tell them, with all sincerity, that you're going to have to give them a, “definite maybe.” :)

How To Make Six Figures in Real Estate

The following is an overview of the book

How to Develop a Six Figure Income in Real Estate by Mike Ferry

Mr Ferry's bio: Mike began his career with Nightingale-Conant where he became National Training Director. He then made the decision to move into the residential Real Estate field as a sales person. After a career of selling homes, Mike decided the time was right to launch his own company. Four decades later, The Mike Ferry Organization became a $50,000,000 company with tens of thousands of clients.

Key point: Do you want to make $10/hour or $100/hour? (I realize this book is kind of old school but it still has useful concepts)

As the name of the book suggests Ferry wants to help you make big money in real estate. He calls it becoming a Superstar. He says you can hang around the office drinking coffee and make $10/hour or you can follow his system and make $100/hour. Keep in mind this book was written in 1993, so those numbers need some adjustment. Also, you might find a lot of Ferry's advice to be very basic. That's exactly why you should review this document often!! Fundamentals are a big key to success.

Ferry isn't fond of measuring success strictly through gross sales volume. Rather he believes you should focus on the annual number of transactions. The main benefit of measuring the number of transactions being income stability. To consistently hit your number, in terms of annual closes, Mike points out there is clearly one activity that's most important, prospecting. Unfortunately he says, “Real estate is a direct-sales job, and many agents don't realize that – or they aren't willing to do the prospecting work it takes.”

Mr. Ferry puts it very bluntly, on page four, when he says, “Superstars prospect a minimum of three hours every day.” Mike repeatedly quotes the statistic that you need to talk to at least 100 people to get one deal, hence the daily prospecting. He is also very big on seller motivation. Ferry believes it is very important to do whatever you can to establish the motivation a seller has to sell. He advises that you only work with very highly motivated sellers. Otherwise, he says, you'll be spinning your wheels and wasting time. And, as you may have guessed, he suggests focusing on prospecting for seller listings. You get a much better return on your time and money if you focus on acquiring seller agreements. For example, “Studies show that 50 percent of the sellers are going to buy a house in the same area.” Thus, selling listings are fertile ground for buying clients.

Mike says that you need to stay in the field and out of the office. The coffee drinkers that sit around the office are worth about ten bucks an hour. To make good money you need to stay out of the office and be looking at property every day. This will keep your focus in the right place and will keep you aware of the inventory on the market. This includes going on company caravans.

To perform at a high level you need good time management. Ferry says, “The person who controls your time controls have much money you make.” Don't sit around the office engaging in politics, listening to the whiners that don't make any money. Do everything you can to stay focused on generating leads and closing deals. Once you have signed contract, turn it over to a closing officer and move on to the next deal. Mike adds that he thinks it best to stick with the same support staff, such as the closing officer, time and again.

If you're required to do floor time he reminders you to stay productive during that time and turn the calls into your leads when appropriate. In order to stay fresh and avoid burnout Mike insists that you take two days off per week and take a one hour lunch each work day. Ferry is a big advocate for personal development and fitness. To maintain the energy needed to perform he recommends adopting an exercise program and working out at least three times a week. He is also very big on reading and even gives a list of suggested books.

Back to the world of prospecting, Mike says it the backbone of your business. He states the old (true) cliché that sales is a numbers game so you're going to need to talk to a lot of people. Ferry says, “You go out to find business instead of waiting for it to find you. High-impact prospecting means that you'll be talking to a lot of people daily.” He recommends cold calling by knocking on doors.

He advises that while prospecting you take a “no” quickly and easily and move on. It is literally as simple as knocking on a door, confirming that the person you're talking to is the owner and asking them if they plan on selling or moving any time soon. Working on such a volume, it is recommended that you have and use a script. If you feel uncomfortable or have a difficulty memorizing your script, Mike suggests using what he calls Trigger Cards. These are little index cards that have your script written on them. During a cold call Ferry says you can literally read straight from the trigger cards, if you must. He says it's much better than saying something stupid or ineffective.

A helpful perspective on prospecting is to, “Go for the no's.” Since the majority of the people you talk to will not have a need for, or interest in what you're selling, it's a good idea to act as though you're collecting no's. Collect enough no's and the yes's will come. “How often should you prospect? Every day. If you're willing to talk to 100 people a day, then you're worth $100 per hour.” And to do so, “Cold doors are a superior method of prospecting.”

Open houses, Ferry says, are generally a waste of time unless you're focused on prospecting while holding the open house. A lot of the people that come to the open house are good prospects. He also touches on the concept of farming. He says, “If you aren't getting 20 to 25 percent of the business in that area, you're wasting your time. In terms of productivity, you'd be better off making cold calls.”

People that have been in real estate for a while are probably familiar with the fact that Mike Ferry loves to prospect FSBOs and expired listings. He says, “These people are the only prospects in the world who tell you up front that they want to sell their property.” In other words, they have already qualified themselves as real prospects. What's more, Ferry quotes the National Association of Realtors as stating that 94 percent of all FSBOs eventually list with a realtor and, “You don't have any competition when prospecting FSBOs.”

A big part of Ferry's modus operandi is seller motivation. To discover seller motivation you must qualify all prospects and that simply means asking questions. “Qualifying is nothing more than determining the motivation of a buyer and his or her ability to fulfill that motivation.” Don't list the property if it isn't going to sell in a timely manner. Mike says, “You list property to sell, not to feather your inventory.” Also, “There are too many good ones to waste your time on the bad ones. If you're out there prospecting every day, you're going to come across more buyers than you could ever handle.” And when you have lots of prospects you can choose to work with the motivated ones and say goodbye to the time-wasters.

I will now list Ferry's qualifying questions. He advises that you type them out on a letterhead and make copies. This way you can sit down with a prospect and fill the thing in. This will help keep you from forgetting questions. Furthermore, prospects are more likely to answer every question to help you complete the form. Some of the questions might be redundant or obvious so he says to simply use common sense.

Here are the questions:

– Is this your first visit to our city?

– Where are you from?

– How long have you folks been looking for a house?

– How many children do you have, and what are their ages?

– Where do you live now?

– How long have you lived there?

– Do you own or rent?

– How is the resale market in your area?

– Where are you employed?

– How long have you been employed there?

– What is your position with the company?

– Have you seen any homes that you like?

– How soon will you be able to move if we find the right home?

– Oh, by the way, are you working with any other brokers in the area?

– How much time do you have to look at property today?

– How long have you seriously been looking for a home?

– How many bedrooms will you need?

– How much will you realize from the sale of your home?

– Will it be necessary to sell your home to buy the next one?

– If we find the perfect home today, are you in a position to buy it?

– How much of your savings will you be able to invest in your new home?

– What price range have you been considering?

– What is the most you can afford to pay monthly?

– What do you like about your current home?

– Describe your perfect home.

This last one serves many purposes, the main one being a closing tool. Once you've found a home that fits their criteria you can go down the list and cross off each item. When you're done you simply ask them to sign the contract.

Ferry has a very firm rule about qualifying. He says, “If a prospect refuses to answer any of the qualifying questions, don't show him or her property! It's that simple.”

Here are some of Ferry's suggestions when it comes to showing property:

– Always show your personal listings first.

– Don't take anything with you except the contract.

– MMFI – Make Me (the buyer) Feel Important

– Let them decide if they want to buy or not. Meaning, always ask if they want to buy and never

presume. This means ask at every single property.

– Call first before showing property.

– Ask questions in the car. (to keep them thinking about buying)

– If your buyers are motivated to buy, keep showing them property until they do.

– Show buyers houses in groups of three. Then attempt to close. Too many choices creates indecision.

– Select the scenic route to the home. (to show the amenities)

– Don't oversell the house before showing it to the buyer.

– As quickly as possible, separate the lookers from the buyers.

– Always park across the street from the house.

– As you approach the front door, say to the buyers, “Let's look at this home as if it were vacant.”

–Once inside the front door, tell the buyers, “Let's make ourselves at home. I'm just here to answer questions.”

– Keep the buyers together inside the house. (keeps you in control)

– Try to save something good for last, but show it to them first. (so it's first and last)

– Get the customers emotionally involved with the house.

– Be enthusiastic.

– Let buyers take notes.

– Always take one car, eve if it's theirs.

– Never make a statement, only ask questions. (information is powerful)

Ferry also recommends that you ask the buyers to buy at every single piece of property. Let them decide. You never know what they'll say. And always remember, every buyer has champagne wishes on a beer budget.

When it comes to listing property Mike suggests that you always have a contract with you. Be prepared! Ferry is not a fan of obsessing over rapport, saying that you don't need to be their friend to sell their home. “You're not a friend they have invited over to play bridge. You're there to list their property for sale.” As always, Ferry recommends the use of trigger cards if necessary. Have your script written down so you stay focused and effective.

In chapter seven Mike talks about the Plan of Action, this is the steps you and your firm are going to take to sell the home. He says, “The real value of the Plan of Action is as a closing tool.” What happens if the sellers are willing to list with you, but they want you to cut your commission? Take out the Plan of Action and ask them what services they want cut!

The following is Ferry's suggested Plan of Action. Keep it mind that you can adjust it, especially considering we're in the age of the internet.

Our company objectives are the following:

1. To get as many qualified buyers as possible into your home until it's SOLD.
2. To communicate the results of our activities to you weekly.
3. To assist you in getting the highest possible dollar value for your property with the least number of problems.
4. To constantly look for the best possible methods of exposing your property to potential buyers in the market.

The following is our company's plan for marketing your home:

1. Submit your home to the Multiple Listing Service.
2. Submit copies of your listing to our company's sales staff for their waiting buyers.
3. Tour your home with my office.
4. Promote your home at the real estate board meetings for the maximum exposure to the other agents in the area.
5. Develop a list of features and benefits of your home, for the cooperating agents, to use with their potential buyers.
6. Suggest and advise you as to any changes you might want to make in your property to make it even more marketable to buyers.
7. Constantly update you as to any changes in the market.
8. Knock on 50 doors in the surrounding area.
9. Create additional exposure through a professional sign and lock box.
10. Hold an open house when possible.
11. Advertise when necessary.
12. Prequalify, when possible, all prospective buyers.
13. Make you completely aware of all the various methods of financing that your buyer may want to use.
14. Have the cooperating brokers in the area tour your home.
15. Provide for the cooperating brokers, on a monthly basis, a list of features and benefits of your home.
16. Follow up with all the salespeople who have shown your home for their response.
17. Assist you in arranging interim financing, if necessary.
18. Deliver a copy of the multiple listing and all published advertisements for your approval.
19. Represent you upon the presentation of all contracts by cooperating brokers and help you negotiate the best possible price and terms.
20. Handle follow-up and keep you informed, after the contract has been accepted, on all mortgage, title and other closing procedures.
21. Deliver your check at the closing.

Submitted by:                                              Your Acknowledgment:

_________________________             __________________________________

Now, on to objection handling. The fact of the matter is you will only encounter a handful of different objections. In other words, everyone will basically voice the same set of objections. To handle them, you first need to understand the difference between an objection and a condition. A condition is a fact you can do nothing about. If a buyer has bad credit and can't qualify for a loan, that's a condition. Shopping outside of the buyers financial abilities, etc. creates conditions.

Once you have confirmed that what you're dealing with is an objection and not a condition, please understand that objections are a great thing. Ferry tells us to embrace objections because they indicate interest. If the client doesn't raise an objection, they aren't really interested. Ferry says that the first step to handle an objection is to say, “I understand.” (or “Fine.”)

Here's the list of Ferry's seller objections:

– I want to give you only a 30-day listing.

– I've never heard of your company.

– I'll save the commission by selling it myself.

– I will list high; I can always come down later.

– I don't want to sell until I buy.

– I must check with my banker [lawyer, etc.]

– I want to think it over.

– I have a friend in the business.

– You're company is too small [big].

– Another company said that they could get me more money.

– I don't want to sell my property VA or FHA.

– I don't want a sign on the property.

That's a total of twelve objections. The idea is to have a scripted response for each objection and have that script memorized. This isn't really very hard. I believe you'd do it if you knew the real value of being able to overcome the minor resistance of an objection. Here's a couple of examples from the book.

To the objection that another agent said they could get the seller more money, you can say, “I understand. Many companies list properties at one price and expect to sell them at a completely different one. That's probably very disappointing to the seller, wouldn't you agree? Let's review our CMA together and again look at the prices, but before we do, could you review with me where you're moving to?”

And, to the objection about having a friend in the business you could say, “I understand. It's difficult not to deal with friends, but let's take a look at the services that the two companies offer. What you're really concerned with is good service, correct?” (Refer back to the Plan of Action)

As a side note I'll tell you a personal story about how even waiters use scripts. When I was younger I used to wait tables at a restaurant in Newport Beach, California. One of the requirements was that we had to use the same (house-written) script with all the tables. In order to get serving shifts we had to pass a test with a manager proving that we had mastered the script. What's more, we could be fired at any time if we failed to use the exact wording. Quite simply, restaurants like these understand that intentionally scripted words are more effective than leaving things to chance. It's the reason so many restaurants take your dessert order when they take the entree order, it flat out sells more. If you wait until the guests have eaten their appetizers and entrees they'll be less likely to order dessert.

Closing is an interesting phenomenon. It is studied at length and it intimidates a lot of salespeople. Ferry has a gnarly closing question that is very difficult to remember, it goes like this, “Will you sign the contract?” Of course, I'm joking. That fact is, if you do a good job (take the proper steps) closing is pretty straightforward. People that have to devote a lot of time and effort to closing haven't done their job in the beginning. If you have done a good job of qualifying the prospects closing is absolutely as simple as asking if they'll sign the contract.

But just to gratify the curious types I'll mention one of Ferry's closes, he calls it the Order Blank Close. In this close you simply refer to the blank contract and have the buyers/sellers help you fill it out. It is helpful to get the contract out early so the prospect sees it and becomes desensitized. When it's time to close, simply ask a question from the form and write their response down. For example, you start writing the prospects names down and then look up and ask what the date is. If they tell you, they've bought, they're ready. If they raise an objection you will need to clarify the objection, answer it and then go back to closing. That is, to filling out the contract. Keep it simple.

How To Get Referrals

My friend, Brian, was born into real estate. His father created a very large, and successful, Prudential operation which included mortgage, title, etc. So naturally, when Brian graduated from Villanova University, he joined his family's business. Before long he was making a great income. Being such a young man, he really thought he had the world in the palm of his hand. But something kept gnawing at him. Brian watched as both his father and brother had stress-induced heart attacks. He wondered if his fate was to be he same as theirs.

Like a lot of people in real estate, Brian thought he had freedom. And, in a way, he did. Among many other benefits, he didn't have to punch a clock or sit in a cubicle. But what really bothered him was that he was always working. And if he stopped working his income would stop too. It didn't take long for the reality to sink in; he was a slave to his clients. He calls the life of a real estate professional a treadmill, repeatedly doing the same things with no end in sight. Brian says the pattern he has observed, over-and-over, is that the treadmill eventually wears out even the most ambitious of people.

Not wanting to destroy his health, from the stress of the treadmill, Brian's mind was open to alternatives. Several years back Brian started working with my company because we have a phenomenal product. Better yet, we pay our people on a recurring revenue model. That is to say, the income is completely passive when you do it right. So, Brian went to work. By his second year he was making some very significant income. Indeed, he was making enough money to walk away from the family business. To date Brian has made many millions of dollars. But the best part is, unlike real estate, the money keeps rolling in, whether he works or not.

Stress is no longer a part of his life and his health has been preserved. Brian also happens to be a single father and he just loves that he's now able to attend all of his son's functions. So, if you know of any sharp and fun real estate professionals, who might be ready to get off the treadmill, and get on with a life, please have them contact me. I can show them how to earn more and work less. My number is (949)630-2797.

Would like to work strictly off referral? I think most salespeople would. The good news is it can happen. But it takes a while. In fact, some people are so committed to working only referrals that their income suffers tremendously. Here's a startling fact, research has suggested that asking for referrals just doesn't work. It's one of the ironies of life, we get the most referrals when we don't ask for them. So what can you do?

Well, let me tell you a story about a man named Bill Good. Good was managing his sales crew when, one July, he decided to take an audit of their performance. He found that 30-40% of all the company's business was coming from referrals. Naturally, he figured the obvious goal must be to get more referrals! So he came up with, “Ten Referral Questions,” to teach his salespeople to get more referrals, and hopefully save money on his direct mail expenses. The result? Sales began to fall in August and continued to plummet into September. It was then that he became probably the first sales manager in history to tell his guys, “Quit asking for referrals.”

What had happened? Well, in the couple months that Good had his team asking for referrals they had generated 503 referrals in total. He searched and discovered that those 503 referrals turned into a grand total of three sales. That's a closing ratio of 0.5%. Meanwhile, they were closing about one out of eight direct mail leads or about 12.5%. In essence, a referred named was no more likely to close than a cold name. Asking for referrals was killing his business!

One of the keys to understanding this situation is to understand the nature of those referrals. The 30-40% of his business that was from referral came from unsolicited referrals. He discovered that when people use, “Who do you know?” type questions the names they get are no better than a cold name. In other words, a solicited referral is about as valuable as any random name.

Good says that your clients want to help but just don’t know anybody at the moment who needs your service. And the clients don't want to turn a salesperson loose on friends or associates who do not need your service.

So, what's the solution? Maybe we could promote referrals not solicit them. Good references research released by Julie Littlechild, the president of Advisor Impact. Ms. Littlechild's team asked clients about the last time they had given a referral and only 2% said it was because the salesperson asked for it.

When asked why they refer 58% referred for reciprocity, 38% to help a friend, and 4% for another reason. This means that the client likes referring people to you as a thank you but don't do it when you ask (you put them on the spot). Now, have we gotten any closer to a solution?

Good used to say, in his books, that we should promote referrals. But he has changed that, a little, in recent times to; induce referrals. What does that mean? Bill says to, “Continually educate clients to recognize referral opportunities and gently and persistently remind them their referrals are valued and accepted.”

What both Good and Littlechild are saying is the best way to get referrals is to tell benefit-laden stories about your service that will ring a bell when the time is right. In order to do this, of course, you will need to know what you're looking for. If you haven't already, please take the time to clarify who your target market is. It will make this process (and sales in general) a hell of a lot easier.

So let me give you an example. Let's say you recently helped a growing family find a bigger home. Tell the story of that experience, to your clients, and ask that if they ever know of any families that are growing to please let you know. Of course, you can't just tell them once, repetition is important. It is suggested that you try to tell a referral-seeking story every time you interact with the client. The story, and the benefits it contains, can vary widely. But the idea is that the story will stick, a lot better, with your clients than to simply say, “If you know anyone who needs a realtor, let me know.” Or the dreaded, "I appreciate your referrals." Yikes!

Real Estate Prospecting

This is an overview of the book

Real Estate Prospecting: The Ultimate Resource Guide by Loren Keim

Keim's bio: Mr. Keim is a graduate of Lehigh University and owns a Century 21 franchise in eastern Pennsylvania.

Key point: You will not make a great living at any company waiting for the phone to ring.

Mr. Keim's story is a pretty interesting one. During the mid-1980's, while he was in his early 20's, Keim made a bunch of money because the market was super hot. Being young and naïve he thought he was really something special. He also thought the market would stay like that forever. So he convinced his father to spend his life savings buying into Century 21. Not too long thereafter the market turned and his father found himself facing foreclosure.

Keim mentioned the old cliché that necessity is the mother of all invention. With the prospect looming that his father could lose his house, and it would be Loren's fault, Keim realized he badly needed to invent some new clients. He knew the one way to do that was by prospecting. Loren was indeed able to right the ship and things are going just fine for him these days. This book is his attempt to pass along what he learned and what he teaches to his team.

Keim says that to prospect is to select a target audience and let them know you have something to offer. According to Loren, “In the Real Estate Industry, as in most sales professions, prospecting is a dirty word.” He says that far too many agents enter the profession and think they can sit and wait for the phone to ring with people responding to advertises, direct mail, etc. Keim warns, “You will not make a great living at any company waiting for the phone to ring.”

“Prospecting, however, is not simply picking up the phone and calling possible buyers and sellers. To be effective, prospecting must be a consistent planned process. Your goal is to create a steady flow of business into your pipeline that will result in above average income.” Ultimately you're going to want to implement both short-term and long-term prospecting plan. But, I'll get to that in a minute.

First you want to select your target market. As you know, the real estate business in highly competitive and the best method you have to succeed is through specialization. If you simply want to list and sell any house you come across, you'll find yourself right in the thick of tons of competitors. Even to say that you focus on existing single family homes is not specific enough. Especially if you're fairly new or wish to seriously grow your business. Keim recommends selecting two markets and it's best if they're counter-cyclic. By selecting counter-cyclical markets you will be hedging against fluctuations in the marketplace. The two specialties that Mr. Keim first selected were historic homes and bank foreclosures. The reason being that historic homes do well in up markets and obviously foreclosures increase as the market goes down.

You'll want to do research on your targets so that you'll be knowledgeable and can position yourself as an expert in the field. Keim says that in this profession, “Your inventory is your portfolio of properties for sale or for lease. You are marketing someone else's product and being paid for that service.” This is clearly where it helps to be an expert in whatever markets you choose to target. Also you're going to want marketing skills. One of which is to understanding of the power of an expert.

“My suggestion is generally to start with either calling or knocking in neighborhoods where your firm recently sold a home, or to call through expired listings,” says Keim. Cold calling, over-the-phone or in-person, is what Keim calls a short term prospecting method. Long term prospecting involves centers of influence, advertising, farming, etc. The thing to consider is that long term prospecting takes 12-18 months to bare any fruit. For any income short of that time-frame you will want to implement short term prospecting. People that are new to the business, or even established agents that want to generate additional commissions in the near future, should utilize short term prospecting.

With short term prospecting (cold calling) there exists powerful ratios that Keim recommends you measure. For example, it will take a certain number of cold calls to get a lead, and a certain number of leads to close a sale. Once you establish what you ratios (percentages) are, you will be able to predict your income with astounding accuracy. If you're new to the business, Keim recommends asking your manager for help in guessing approximately what your numbers will be. This will help you know how many cold calls you need to make.

A thorough list of the various methods that you can use to contact prospects is as follows:

• Door knocking – the most dreaded but often the most effective.
• Workshops and seminar – free and informative.
• Client gatherings or client parties – you're the link between the guests at your gathering so inevitably they talk about you.
• Booth at events and trade shows – hasn't been successful from Loren.
• Direct mail – recipes, newsletters, testimonials, etc.

Keim is careful that we should offer something of value to our audience (prospects). When we offer something of value we, “lower the barrier of resistance a client has for calling you.” It is for this reason that Loren is a big advocate for advertisements that look like news articles. Useful information is more effective than ads that are cute or endearing. Cute and/or humorous ads do much to build name recognition but they do nothing to get the phone to ring.

If you're terrified of writing advertisements, or news worthy articles, Keim recommends you go to gooder.com where Dan Gooder and his team have various "free" reports which are available to you for a fee.

Regardless of the method you use to generate a lead, Keim says the real intention is to place each person into a system of follow-up that will build familiarity over time. Sending out useful information helps to build a relationship with your prospects. It is much like what I'm doing with these book reports. The great Zig Ziglar said something to the effect that if you help enough other people get what they want, you can have what you want.

Loren writes, “One of the primary differences between successful mega-agents and everyone else is that mega-agents create systems into which they plug prospective clients that allow follow up with those clients.” To do this most effectively you will need some sort of CRM such as ACT or Top Producer. Business and sales are very much about timing. Your follow-up system (also commonly known as “dripping”) is what will keep you in front of your prospects. And, when the time is right, you stand a good chance of getting their business.

Back to long term prospecting. One area that is vital is your sphere of influence. These are the people you know. For obvious reasons, this group should be constantly expanding. Your goal is to keep these people aware of what you do and consistently ask for referrals. It's important to remember that you don't want to be pitching these people every time you contact them. That would be a recipe for destruction. Rather you want to pleasantly, yet persistently, drip on these people over time.

Also, it's a good idea to host client gatherings as another form of long term prospecting method. This could include everything from a movie night to a welcoming party for clients that are new to a neighborhood. And, of course, farming is probably the most famous long term prospecting method. As you probably know, farming is where you select a geographic, or demographic, group of people and drip on them until you are the "go-to" realtor for these people.

Keim refers to Tom Hopkins and how Mr. Hopkins would deliver pumpkins to his farm every Halloween. Keim Realtors tried the pumpkin idea but it didn't work too well for them. Instead every year he and his team deliver American flags. Though he doesn't mention it, I have to imagine he's talking about the fourth of July. Of course, after pumpkins or flags, you need to follow-up with door knocking. Keim says, “Within 24 to 36 months of consistent contact, you should achieve a market share of 25-50% of the homes in that market.”

The short term prospecting methods include:

• Cold calling
• Door knocking
• Vacant lots
• Expired listings
• For Sale By Owner

As the name suggests, short term prospecting doesn't need to take much time in order to create clients. Loren explains, “Picking up the phone and calling people takes almost no time, and can generate immediate clients.” If you are reading this overview, there's a good chance you've spoken with me before. Keim prefers a simple and direct approach on the phone. This is where you call someone, identify yourself and simply ask if they know anyone (including themselves) who is thinking about selling their home.

Door knocking is a great option but Loren says, “Many agents use the 'mean people' excuse for not door knocking. The truth is that you will find far more friendly people than unfriendly.” Door knocking is tremendously useful in the neighborhood of a home you have just listed or sold. For maximum effect, you will want to touch each door at least three times. The first time is right after you list. The second is to invite them to the open house. And the third time is once the house sells. Again, the entire time, you're not just knocking for your health, you're looking for prospects.

With regard to vacant lots Keim suggests, “Search your local tax records for vacant lots. Call the owner and ask them if they're planning to build on the land or if they're planning to sale the land.”

“Although the expired listing market can be a very lucrative source of business, it is one market where you will run into a lot of competition from other agencies and other agents,” according to Keim. As you undoubtedly know, you're not the only one who has access to expired listings. Once a listing expires the home owner suddenly gets dozens of calls from agents. Half of these callers will say exactly the same thing because they've been trained by Mike Ferry or Floyd Wickman.

Stopping by the house that has expired is better than a phone call. There's a good chance the home owner is upset because of his recent experience with a realtor. Offering guarantees in writing is one good way to get past this resistance. But remember not to go overboard and shoot yourself in the foot with these guarantees. Another option is what a couple of Keim's agents, named Wayne and Tim, do. They pull the expired listings and drive to each house at 5am and leave promotional material, informing the owner of the situation, on their door step. This way the home owner gets the information just as they're leaving for work. This is one way to beat the crowd and get to the owner first.

In your literature Keim is big on creativity. Loren and his firm once used what he called the “Crumpled Letter Campaign.” This is where they print there direct mail piece, crumple it into a ball, and then flatten it back out before sending it. The headline to the letter said, “For your convenience, this letter has been Pre-Crumpled.” The prospects who receive the letter can feel that it's different and their curiosity leads them to open the thing. Once opened the humor of the headline gets them to read further.

As you know, statistics show that FSBO's will eventually list with an agent. But you need to be patient. Keim writes, “Rushing in and telling them about your services and why they will never sell on their own is a recipe for failure.” Loren prefers to contact the FSBO and tell them, up front, who he is and that he isn't calling to list their home for sale. Keim knows that many FSBO's do want to sell on their own. But that doesn't mean the FSBO won't let Keim help them find the next home they purchase. So he becomes their buying agent.

To sum up the moral of the short term prospecting story, Keim talks of reading about, “A Real Estate firm that had 25 agents and 25 telephones, but no desks … the story indicates the importance of getting out there and meeting people because that's where your business really is.”