CEO of TheHouseBuyinGuys LLC
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Let's face it: It’s getting harder to win at the sport of business in 2020. Competition is making it harder to find deals, and your customers are pushing you to lower prices. Covid-19 has scared off potential new clients. Our Nashville-based flipping and construction company has experienced this firsthand. By differentiating to win business in a hypercompetitive market and grow organically without increasing overhead, we managed to thrive even in these challenging times. By incorporating the following four strategies, your real estate business can too.
1. Do what your competition won’t.
Anyone who is in the residential fix-and-flip business knows most clients are retiring landlords, most of the time a tenant is involved, and most of the time it's difficult to compete on price. Large competitors can afford to offer them more money for their property by taking lower profit margins and profiting on volume. As the little guy, you have to compete another way or shut your doors.
The biggest obstacle when selling a home that has a tenant is the tenant. Nobody wants to inherit tenants, so the market makes offers contingent on the tenant moving out. This creates complications for the landlord, who just wants to sell the home. Building in a free "tenant relocation plan" with your offer if a great way to win business, especially when you are not the highest offer. Work to find the tenant a place to live, and then pay their new rental deposit and manage their entire move.
In our experience, landlords love this. Sometimes they are willing to take a $10,000–$15,000 reduction in price because with this offer, you are the only one who can close when they need to This differentiated approach can help you lock out your competition and lock in deals with your clients even when you are not the lowest offer, and it can provide big growth for your company.
2. Find your ideal customer, and fire everyone else.
When a new construction company starts it is usually all over the map. It takes on every customer it can get: builders, homeowners, investors, small jobs, big jobs — you name it, put it on the schedule! The problem is the company becomes too busy serving so many needs for different clients that the service goes down the toilet, and staff frustration boils.
We realized our favorite clients were new fix-and-flip investors like ourselves, so we fired all customers who weren't fix-and-flip investors. At first, it can be nerve-racking firing your customers. You feel like profits are pouring down the drain. But now, your difficult clients go away, and your free time starts to fill up with your ideal customers. Your ideal customers are easy to serve, which enables you to do more projects in less time, and your staff become experts because they serve only the specific needs of that client. Now, more profits come in with less hassle.
3. Automate your referrals.
Have you ever reached a point of saturation where more marketing dollars don't produce more convertible leads? Business is stagnant, and marketing costs are going up — like, way up? If you are going to grow, you have to figure out how to generate more clients quickly without spending any more marketing capital.
To do this, create a referral campaign. Send handwritten letters with gift cards to all the clients you have served, asking if they know any other people who may be a good fit for you to serve, and then pick up the phone and follow up with them after they receive the letters. Start awarding referral checks to people who refer business to you. Then, every month, set up a drip campaign and send out a video showing someone receiving that referral check to all the past clients you mailed. This is how we grew our business 10% organically with no extra marketing spend, and you can too.
4. Leverage other people’s time and marketing.
Identify other businesses that are spending money on marketing to produce clients who are a good for you but not for them. For instance, if you are an investor who purchases distressed property for cash, reach out to local real estate agents. Their biggest pain points are typically working with difficult clients, turnaround time on commissions and building brands. When an agent gets a client with a fixer-upper, red flags go up. But if you can give that agent a quick turnaround, prevent a dilapidated property from hurting their portfolio's brand and make the sale super easily, then you have a referral machine for life. Now, when their marketing dollars generate these types of clients, they can refer them to you.
By implementing these strategies to differentiate yourself from the competition, you can turn your small real estate business into an organically growing, hypercompetitive entity in any market.
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