Don't you just hate it when you inquire with a marketing or promotions company and they begin by pricing your gross profits to determine what you should be able to afford to pay them?
As the title says it must be working because I hear this approach over and over again. This morning someone, who I met on Linkedin, boasted such great success with customer acquisitions, Lead generation, that I had to inquire.
First let me quantify that I am not sold on companies that put themselves in between myself and my customer and them want to sell me their information. I know we have just come through a time where this has been seen as the magic bullet. First we saw people who bought website address's and names and then worked to sell you the name, then that evolved into capturing the customer lead and selling you that.
I am in the big ticket sales business. Most my customers will find me on their own because there are limited numbers of people who can do what we do and as well as we do it. Lets not argue that point, we'll save that for another conversation. But this sales method of determining what I might make from a client and then asking for a portion of that does not make sense. My thoughts are if you provide a product or service then you know what your costs are and then competition should dictate your price.
This morning a person used a formula, not sure who to give credit to for the formula, but he determined that the life time value of my client is $45,000. I'm not going to add any credibility to his formula as if he really wanted me to buy into it he would have asked me for more realistic numbers. He used an average home price well above my market area as a whole. He used a commission from that sale well above what I charge to my clients. He then used a full value not split fee to use in his formula.
Then he applied multiplying numbers which I am not sure where they came from to arrive at this $45,000 number. More important than the idea that one real estate client has a lifetime value to a Realtor of $45,000. More important than the idea that he wants me to use this to determine what I should be willing to pay him. More important than his unrealistic conversion rates. He did not ask or allow me to buy in? He shot any credibility he has or had.
Is this what it has come to? We find ways to disrupt the market and extract what we want based on what a company might possibly net from a transaction? I am sorry but I was raised on hard work, honest play and payments based on the efforts energy and services provided. I am not a fan of buying my way onto a list or paying for referrals either.
Of all the many service we provide, any and all of them can be priced ala cart. We set prices based on our costs and the services provided, not what you might be able to get in a lifetime relationship. If you need an appraisal for example, there are costs for the trip to the property, the inspection required, the research necessary, the report itself, the pictures included. If you did not need original comp photos, we will save some money and therefore we can offer you a lower price. Simple right?
My agents will call me on occasion and ask for us to be a part of a service of one kind or another that hey see as the next best greatest thing to bring them easy clients. I always suggest we just cut out the middle man, stop looking for the short cut and go and do the work that is expected and they too can acquire the aid same customers without paying the added fee for the shortcut.
Here is the test I use whenever I am approached about buying leads; Do they know for a fact what their conversion rates are? Never have I had anyone who could give me a positive answer that I could believe. Anyone could run a free money add or a sweep stakes ad for example and collect the contact information, then sell it to someone and that someone will not likely gain any results.
Or how about all these places that want me a a vendor to sign up to be on their list. You know the lists I am talking about. The Betty Lou list of sub contractors or some such thing? The boast having an inside track or of properly vetting the people on the list, while really all they are doing is selling the spots on the list and then selling you a membership as well in some cases. I am on several of these lists and I am telling you that based on what they required of me they have no better list than the phone book will do for you.
I'm sure there is some deep physiological reasons why this works, and I am not the guy with all those answers, But lets stop trying to take every possible shortcut and take the time to do it right. In the end we will all be better off.
Thank you for allowing me to vent, I feel better already don't you? Be blessed.