Doing Things Differently!

There may be a bit of a silver lining in this economic downturn. WHAT???!!! you may be asking yourself. Think about it! Developers have renewed or revived their commitments to clearly define the true value proposition for their communities and have taken another (closer) look at their pricing structure. These are very good things for consumers.

Also, marketing companies like us are being pushed to develop new and exciting ways to market properties. Ways that combine what worked from traditional marketing methods and combining them with new mediums and technology. We are pushing to be more creative and get outside the box.

And, when it comes to sales there is a return to relationship selling and client focused sales.

Combine these three things and it is a win-win for today’s real estate buyers!

WHEN WILL IT GET BACK TO NORMAL?

Guest Contributor: Jim Matoska, Principal of ESI Living

It may be a supreme understatement to say that things have changed in our industry in the last two years. Just talk to anyone that is connected with private club, amenity or vacation real estate and you are bound to hear the phrase, “it’s tough out there—we’re just trying to survive.” It’s almost become a standard greeting between industry peers, as they exchange war stories of how bad it’s gotten while sipping much less-expensive wine than in years past. House red is all of a sudden pretty tasty.

As we approach the spring, I am reminded of baseball, a game which I grew up playing and still enjoy today. It’s spring training in my favorite sport. This is the time when each team begins to assess the talent and make the necessary cuts to get down to their 40-man roster. Well, if the real estate industry were forced to do the same, there might not be enough talent left to field a team. Just scroll through your phone rolodex and see all of the names that were previously in the real estate industry two years ago and chances are that at least half are now out of the business completely. For many, the wild, sales-fest lifestyle that defined amenity-real estate employment for much of the early 2000’s is merely a period in history that will be told as an epic tale someday to a younger generation. Needless to say, it will be a cautionary tale.

In the wake of the meteoric rise and subsequent thunderous crash of the real estate industry lies the upturned lives of many that called this their profession. Salespeople, managers, developers; not one group has been immune to the ravages caused by the seemingly harmless, fun-loving pet that somehow turned on its owner. We didn’t see it coming. In such unexpected turn of events, we never do. But, in hindsight, maybe we should have.

There were signs all around us. For example, there was the second-year salesperson virtually fresh out of college who was living in a multi-million dollar home or driving a Lamborghini (or, in some insane cases, both). There was the closing coordinator who left her job at the Gap a year or so ago and was quickly earning six figures for a job that paid 1/3 of that in normal times. Of course, the new income meant purchasing luxury property otherwise reserved for those that worked and saved their entire lives before being able to do so. There was the property that sold for $300,000 on Tuesday and re-sold for $500,000 on Wednesday. Not just any, indiscriminate Wednesday, but the one that follows just 24 hours after Tuesday in the same week. Sometimes the seller couldn’t wait for those 24 hours and thus the phrase “simultaneous closing” crept into daily conversation.

In fact, I’ll never forget the impromptu meeting that I had with one of the gopher’s in the office. Not the furry kind that appears in a 1980’s Bill Murray movie, but the young kid in the office whose job it was to run errands, get out the mail, stock the shelves, etc (although he did have very large front teeth and a genuine love of digging). He was a quiet kid, and I use that term “kid” because even though he was in his early 20’s, he looked and carried himself like an awkward teenager. He cornered me in the supply room one afternoon and, after a long and somewhat uncomfortable stare, asked me how much money the salespeople made. I told him it depends on their skills, effort and a host of other variables but I did offer him a range based on the industry as a whole. He then asked, “Can I start selling on the team here because I see what they do and it’s not much harder than my job.” Before you chuckle too hard, it gets a little bit funnier. He followed it up by telling me that he would like to do that for one year and then, next year, he would like to have my job. I’m not sure what he thought my job was because I’ve been doing it for 10 years and I still have trouble explaining it to my wife. But it was a sign of the times. Everybody wanted to get into the easiest profession in America—amenity real estate sales.

Looking back on the period from 2002-2005, it was insane. Absurd. Choose the adjective that most expresses a feeling of over the top and it was that too. But as decadent and obscene a time the industry was having back then, the most recent examination of that same industry tells a tale of two professions. Yes, it was the best of times and now, for many, it is the worst of times. The Lamborghini is out of gas and up on blocks, the multi-million dollar home has lost both its “multi” and its “million” to become just a bank-owned home. The Gap is hiring back those that temporarily strayed. The property that sold for $600,000 is selling for $99,000 and we’ve had a new phrase creep into our daily conversations, “deed in lieu of foreclosure.”

How did we fall so far and so fast? By now, shows on CNN and MSNBC have given us a timeline and the sorted details of how and why it all happened. I don’t know about you, but for me it’s kind of surreal to watch a T.V. show that talks about an event in history and yet the ending to the story hasn’t happened because we are currently living it as we speak!

But the good news is that we are in it. What I mean is that we are knee-deep in the economic and real estate crisis and that is a better place to be then waiting for it to happen. It’s like being afraid to fly and dreading the cross-country flight from New York to California that is on your agenda next month. I would much rather be in the plane somewhere over Colorado then back in New York waiting to board. There is much more hope when you start to get close to the end of the long journey then when you are waiting anxiously to begin. Yes, you have to be in it to get through it and we are certainly closer to the end then we were two years ago so, from that standpoint, there is a reason for optimism.

Our company has a bit of appreciation for the times that have been thrust upon all of us. We had been in real estate for 10-20 years (depending on which Principal) prior to getting into the crazy days of 2003. We had witnessed the ups and downs to some extent (interest rates of the early 80’s, Gulf War in 1990’s, extreme stock market volatility of the late 90’s and, like most, September 11th) and understood that these were cycles that had to be dealt with and managed. We also knew that much of the industry success in 2003-2006 was due to the strong wind at the back of every sales person, marketing person and developer and that we were about to turn the corner where that same wind would be hitting all of us squarely in the face.

We were called many things when we announced that we were not going to renew our contract in May of 2007 and “wise” was not one of them. The company we were working with had just sold a billion dollars in real estate in 2006. Why would we leave a company that was experiencing that kind of success? The answer was that we knew—and had known for some time—that the artificial times were about to end and we needed to refocus on what had helped achieve success in the past. For example, what used to be a strategy to unveil a new community for the first time—called a Launch—had turned into a standard program for any new property release by default rather than by design. Since the market was bigger and hungrier than ever before, buyers consumed all of the inventory in one sitting, which meant by the time any new inventory was permitted and ready to sell, customers were lined up out the door waiting to purchase. Each property release was a sell-out and the harder we tried to ensure that each customer was purchasing to eventually use the property (what we called an “end-user”), the more creative the customer became in convincing us they were sincere. Talk about irony—we were trying, for the first time in our careers, to do everything we could to SLOW DOWN the pace of sales and the more we held back the mob, the more crazed they became. Yup, it was time to re-assess.

So, we took six months off to strictly focus on the fundamentals of day to day marketing and selling. Our goal was simple, to align our experience and systems with what the “real” market for amenity-oriented real estate was searching for. This meant identifying who the customer was that would use the private clubs or resort communities and what would they be seeking once the market began to cool off. After all, we spent the first 15 years of our career dealing exclusively with that customer and they would always be there, because that is who the industry was designed for in the first place. They just got pushed aside like the nerdy freshman who has a good heart and the best intentions, but can’t stand up to the senior bully who’s full of aggression (fueled by greed, in this case).

And what we arrived at has not only made us a better company, but has prepared us for the current market and what lies ahead. This crisis made us more focused, more creative and more willing to question everything that we had done. It also led us back to our roots—of focusing on day-to-day sales and marketing that had been the bread and butter of our success, but lately seemed to take a back seat to the event-driven marketing that was brought on by the vicious inventory cycles. This brainstorming also led to new internet-based and digital tools for our company and, although it was some of the toughest and most grueling work we had done in years (and are still adding to on a daily basis), it left us with 20 years worth of work that we refined and updated, all captured and catalogued. We finally had committed to putting it all down in writing and on camera so we could use it to help teach professional sales and marketing in a new era. Wow, if not for the change in finances, this would have been perfect!

Here we are now at the end of the first quarter of 2009. The fact is, it’s difficult to predict when it will “get back to normal” but we’re finding, minus the credit issue, that the psychology of the buyer and the prime motivators influencing that buyer are more closely aligned with what is normal than it has been in years. In other words, the reason that someone is buying today is almost identical to the reasons they were buying in the late 80’s and all through the 1990’s and early 2000. They are planning for pre-retirement; they are realizing their mortality and know a vacation home will stay a dream unless they act today. And, most important, they more clearly understand the value of time and the importance of family. They aren’t, however, looking to flip property, buy strictly as an investment or get in early just to save money. They are motivated by the true emotions that come with getting older and wiser and they are starting to pop their head out from underground. Yes, there are fewer than before, but the real buyer is back. A little scared, a little less-trusting and a whole lot more savvy, but they are quietly coming back and, if you are brilliant at the basics, you will not only make sales but will create a loyal group of fans that are just itching to tell their friends, “C’mon in, the water is fine.”

Here’s something else to consider. We’re looking at sales numbers and realizing that the industry got so skewed as to the definition of success, that sales numbers which seem meek today are similar to sales numbers that were celebrated in 1995-1999. Selling 50 properties with an average sales price of $500,000 was a solid achievement back then. Well, that’s happening right now, at least in the communities that we are working with and others that we keep in touch with. That is largely going over-looked right now in the industry and a big factor in getting back to normal will be in everyone—customers, sales and marketing personnel and developers—recognizing what the definition of normal really is and letting go of the unrealistic figures of a few years ago that serve as an unhealthy benchmark for comparison.

Of course, gone are the days of introducing a community or a new part of a community and it’s sold out in a matter of hours. That was never the intention of a launch to begin with but supply and demand took one piece of a comprehensive overall marketing and sales plan and turned it into a circus. We’re glad to see that fade away and so is the customer. Getting back to normal is now in the hands of the remaining developers and sales and marketing personnel and their ability to “hit singles” as we call it—working diligently with one customer who has the proper interest and motivations and supplying superior service to them at every turn. The customer is once again in control and working to maximize the relationship with each and every one is part of the “new normal” for those newer to the business and is “going back to the normal way of doing business” for those that have been around for years.

So, our belief is that we haven’t quite gotten back to normal just yet, but we are certainly closer now than we have been in a long time. We are convinced that the more credit becomes available, which seems to be showing some positive signs, the more that will help us in the quest for a more normal market. Regardless of when it all comes together, one thing is for certain, the developers and companies that have a solid game-plan that is rooted in the fundamentals of sales and marketing will be light-years ahead of the curve. That game plan, we’re finding, once again centers around the process of building a relationship with those customers that truly have an interest, whether for now or the near future, and designing and implementing tools that will foster that relationship throughout the entire process.

As we look around, one more thing is abundantly clear. Those that viewed this industry as a job are long gone. Those that view it as their profession and, more importantly, as part of their life, are still out there and, just like the today’s customer, there are fewer than before, they’re a little scared, a bit less trusting and a whole lot more savvy. And they still believe in the fundamentals of this business and have faith that customers still value the lifestyle provided by the communities they represent. And, if that is who is remaining, then we like our chances of finding our way back to normal sooner rather than later.

Jim Matoska is a Principal of ESI Living, an Orlando-based sales and marketing company that specializes in the resort, private club and amenity-oriented real estate industry. You can find out more about ESI at their website, www.EsiLiving.com, including their latest article written for Fairway Living Magazine. 

A little healthy competition.

To be in business, I think you must possess a healthy competitive streak. It is what makes you strive to have the best product out there. As a business owner, I consider myself to have more than my fair share of the competitive gene. True, some people may have suggested I get therapy, but what do they know. I admit to gritting my teeth when informed we have lost an account to a certain competitor or if the owner of that certain company was asked to speak at a conference over me. This is a normal, healthy response, right? Since it might not be classified as healthy, I deny all rumors that I have a dartboard in my office with a picture of that certain company’s owner on it.

I am puzzled then at my reaction when I got the news that this certain company has closed its doors. Considering my competitive nature, one might expect me to be pumping my fist, smiling and feeling smug. On the contrary, I feel deflated and somewhat shaken.

This isn’t the first agency we have heard that has shut the lights off. It is, however, the last one I would have ever guessed. Interestingly enough, of the recent companies that have decided to call it quits, they all had one thing in common. They all worked with development companies that could no longer pay their bills. This hits so close to home.
Speaking as someone with first hand experience with this, this is becoming a very unsettling trend.

Warning: Soapbox tirade coming up…Marketing agencies are left holding too many bags and do not have enough legal precedence on our side to fight back. Agencies have learned the hard way that we are not afforded the same legal rights, as say a landplanner or architect, when it comes to being able to collect fees owed. When an agency invoices go unpaid, it usually means that agencies can’t pay the vendors they owe on behalf of that defaulted client. There is no lien that you can put on the land. There is no judgment that you can file that is a sure thing. If the agency isn’t profitable enough to absorb that loss (and who is theses days) there are not a whole lot of options left.

Amy

Follow me:  twitter.com/coastalgirl142

Gain WOM by providing memorable customer experience.

For most businesses, marketing budgets are pretty lean. Every dollar spent is scrutinized like never before. Consumers are looking to save money, if they are even spending it at all. This economic climate has fueled the exponential growth in the online communities for coupon sharing, bargain shopping blogs. etc. Consumers love to tell other consumers about anything and everything, especially when it comes to saving big money and out of the ordinary experiences…good or bad. Positive Word of Mouth (WOM) activity can be used to benefit all marketing budgets, bare-bones or not. The integration of social media in our daily lives has provided more channels for WOM activity to take place than ever before. In fact, there are so many networks available for sharing information that the process of pin-pointing which one to focus on is a challenge within itself. For those businesses that provide a unique and memorable customer experience, an experience worthy of the “…and they’ll tell two friends and then they’ll tell two friends” phenomenon, the focus changes from which networks do you choose to create a presence on, to finding, monitoring and engaging the networks the consumers have chosen themselves. Ask yourself if your customer experience is WOM worthy?

Amy

amy@maximumdesign.com

twitter.com/coastalgirl142

Is it June 1, 2009 already?

We’ve heard many dates—days, months, years—mentioned as the date the real estate crisis turns a corner and starts to look up again. The most recent being June 2009.

Funny thing about that is many of our real estate developer clients are seeing a big up tick in buyer interest right now. They report that these potential buyers are no longer spouting the 2008 mantra, “We’re just looking. We’ve got to sell our house before we can do anything.” Instead, these buyers are saying they are willing to move some money around in order to take advantage of great mortgage rates and real estate prices.

If you think about it, can it get any better than it is right now? Interest rates around 5% and real estate prices, in many cases, rolled back to late 1980’s levels. A lot of people are coming to the very real conclusion that the time to buy is now!

So what is the June 1, 2009 date really all about? I think it’s just the date the national media will start talking about the real estate crisis being over. And, we all know that what the national media says is gold.

Kelly@maximumdesign.com

Relationship Marketing…it makes a difference.

Establishing a relationship of trust and authenticity in your sales cycle is imperative in the current economic climate. Consumer skepticism and reticence to get off the proverbial fence is fueling migration and immense growing popularity of social media. Social media allows for consumers to seek information and possibly engage in dialog that is relevant to them. The information gleaned from these social experiences is more meaningful and far more trusted than corporate advertising. Businesses that embrace the fine art of building and nurturing personal relationships have a far better chance making it through the current housing market. When developing a proactive approach to relationship marketing consider this advice when it comes to email marketing…..  http://tinyurl.com/8jybhg

Amy

amy@maximumdesign.com

http://www.linkedin.com/in/amytharrington

A Retreat from Excess, A Return to Reality

How can the “new” consumer mindset of controlled spending with a retreat from excess benefit the real estate market? It may be easier than you think.

Over the last few years, with advertising, we have attached real estate to the luxury market thus attempting to make real estate ownership a status symbol. I say we now need to return to a time when real estate ownership was a thoughtful investment sought by those looking for long-term financial growth and in most cases family enjoyment.

I borrow perfect phrasing of this sentiment from Christine Rosen and her article in the WSJ entitled The Bare Necessities: Marketing Luxury Goods in a Bad Economy, where she quotes a DeBeers ad:

“We’re overwhelmed by possessions we own but do not treasure… Perhaps it will be different now. Perhaps now is an opportunity to reassess what really matters. After all, if everything you ever bought her disappeared overnight, what would she truly miss?”

As people “reassess” what is of true importance to them, I believe real estate ownership will remain something to be valued. Its value, however, will be judged by much more than being a status symbol, it will be judged by family enjoyment, financial growth potential, and authenticity of experience.

Coupons are in vogue – again.

Early data indicates 94% percent of the population use coupons, a significant increase from and 86% in 2006 and 89% in 2007. When first considering this fact, it is no big surprise considering the state of the economy. But when you stop and consider what other factors may have been a contributing factor, the coupon resurgence seems to be yet another example of the power and ability of digital media to drive consumer behavior. Technology increased the potential and popularity of coupons 100 fold. The traditional coupon approach, the one size fits all, has long since proven to be ineffective.  We are now in the age of digital coupons…personalized, relevant and sent direct to the consumer. Special offerings are customized and delivered via cell phones, email or, my personal favorite, websites dedicated to unpublished deals. Yes, I acknowledge the coupon evolution is a result of weak economy (‘the find a need fill a need’ philosophy), but for people of all ages and walks of life to have completely integrated the pursuit of the digital deal so quickly into their lives is an awe-inspiring phenomenon.

Amy Tharrington
amy@maximumdesign.com

Another reason to love Disney!

I was reading an article on the deal Disney and Verizon made recently- see article in USA Today: http://tinyurl.com/6e5cmo  that will allow Disney to provide exclusive info to Verizon users if they opt-in for this free service. Could this work in our industry for with database marketing? Would the allure of getting specials via something other than mail or email be enticing enough for our market to off-set programming and development fees? Yes, we could just send another email with the same offer, but would this approach work—-at least until something else comes along. Curious to know if others are using this and what response has been.

amy@maximumdesign.com

http://twitter.com/coastalgirl142

Another up and coming social scene?

According to AdAge there is another social community taking shape. Unlike Facebook the user profile appears to be a little older. Good news for those of us targeting the boomer market segment. AdAge reports… “Older consumers seem just as willing to compare notes over a glass of a wine at places like the fast-growing Gather.com. With a median age of 42, the 2-year-old site has attracted advertisers including Kraft, Nestle, American Express, HarperCollins, Simon & Schuster, Schwab, Amtrak and Starbucks. Gather’s 500,000 members cascade reviews and recommendations through their ranks.”