Why Marketing is VITAL to real estate investing success

Marketing is everything you do on a regular basis to promote your business

Real estate investors–new and experienced alike–are generally mostly focused on "doing the work"–finding a great opportunity, acquiring and upgrading the property. The "end game", they figure, will be taken care of by some broker. This holds true whether the goal is to rent-up or sell the real estate. Sadly, we can't really count on that as a plan for success. Selling or renting are sales functions. In this article we explain how sales efforts work best, most efficiently, when supported by a fully implemented Marketing Plan.

What is ‘Marketing’? Marketing is more than just selling, more than Salesmanship. Marketing is everything you do on a regular basis to promote your business–from the moment you conceive your business, to making your first sales, to your follow-up efforts to assure customer satisfaction. Marketing is a vitally important investment in your business requiring commitment and perseverance.

The approach is “programmatic” rather than random efforts, or on a case by case basis. This is important to assure regularity and consistency in your message: The public needs to know clearly and simply who you are and what you do or have to offer.

Your message may change over time as circumstances require. But, hopefully, in ways that reinforce understanding of who you are while celebrating the evolution of your business.

Selling real estate is only one part of your Marketing Program.

Real estate development for sale or investment is more than the “bricks and mortar” assembly of architectural and construction elements. In the end, the Product (housing, commercial or industrial real estate development) must be effectively put into the service of the end user: you must sell real estate and more. This is a marketing function.

Effective marketing is not merely to sell real estate, though sales are a vital attribute or high point of the marketing process.

Sales are not the outcome of the marketing program: to sell the real estate is to validate the effectiveness of your marketing program and fund the continuation of that program (and your very business or livelihood).

Broadly stated Marketing is everything you do to achieve that objective: To grow your business and – in the end – to stay in business. The most efficient way to accomplish this objective is to develop and follow a Marketing Plan.

Your Marketing Plan will be a clear statement of:

  • Who you are (in the marketplace)
  • What you do: How you serve your Market, your Customers and the Community
  • How you are going to achieve those objectives: Your Plan of Action

Your Marketing Plan

Any business opportunity with potential to develop into an ongoing business enterprise is well served by the preparation of a thorough written Business Plan. The very process of writing the plan requires examining the market in depth: your competition should be identified, your entrepreneurial readiness–both personal and financial–quantified, and financial projections developed to predict the potential income to be realized from your venture. The income projected is of course critical to the success or failure of the venture

A Written Marketing Plan = Real Estate Sales

Unlike the movies, where ‘If you build it they will come,’ the very creation of a product or service is no guarantee of sales or success. Entrepreneurs often rely solely on a great location, or ‘we’ll offer unusual/tasty/home cooked/fast food at a great price,’ only to find a less than overwhelming reception and disappointing receipts. The best of concepts can falter in the absence of thoughtful planning and preparation.

Real estate sales are developed by the preparation and execution of a Marketing Plan. Better sooner than later!

In real estate there is a common presumption the finished product (the completed rehab, the rental house or apartment) will be sold or rented by any one or more of the many real estate brokers active in the particular market. In a best case scenario in general this may be the outcome (you may after all sell the real estate). In practice, however, you will find these professionals are often ill equipped or insufficiently motivated to address your immediate situation.

You don’t want to be just another client, just another ‘listing’ in that broker’s inventory. As a practical matter you as the Builder have the greater credibility in the marketplace. When it comes time to sell real estate, you are often your best sales agent.

To be successful, the investor or rehabber must be proactive, with a clearly defined Marketing Plan addressing his or her needs. Such a plan may well include engaging agents or brokers to facilitate sales. That said, as with every aspect of any business, agents like consultants must be directed in ways that best serve your needs.

Furthermore, to focus only on identifying a particular agent to rent or sell your real estate is to minimize the ongoing marketing needs of your business. If all goes ‘according to plan', this first property is just that–the first of many to follow.

To discount or skip entirely the preparation of a thorough marketing plan is to risk falling into a pattern of crisis management occasioned by ill conceived eleventh hour pushes to sell your property and ongoing cash flow problems. As the saying goes: “That’s no way to run a business!”

Marketing is everything you do on a regular basis to to promote your business

Properly understood, marketing is more than just selling, more than salesmanship. Marketing is everything you do on a regular basis to to promote your business. This holds true from the moment you conceive your business, to making your first sales, to your follow-up efforts to assure customer satisfaction.

I am really recommending a programmatic approach or system to assure regularity and consistency in your ‘message’. To sell real estate is only one part of the program; similarly, advertising is only one part.

Your approach should be based on a written plan, revised and updated periodically. Your plan should lay out in detail just what actions you will take, within specific time frames, and at what cost. Recognize the Marketing Plan is initially just that: a plan, useful in helping think through the issues ahead, but only an exercise absent your follow through.

The idea is: to be successful, you must be: (1) committed to the program, (2) view your program as an investment, and (3) you must see to it the program is consistent.

To be successful, you must be:

(1) committed to your program,

(2) view your program as an investment, and

(3) you must see to it your program is consistent.

The three most important Marketing Secrets of all

Guerrilla Marketing’ guru J. Conrad Levinson calls these three elements “The three most important Marketing Secrets of all!”

To be sure, these three elements are closely intertwined. For the program to be consistent there must be commitment. That commitment is reinforced by recognizing the entire program is an investment in the overall success of your venture. And, ultimately, it is the staying power of your message, the steady consistence of your message, that reassures your present and future customers of the value of your product, in this case housing.

How to develop a Marketing Plan–

Step 1: Write your Position Statement

Answer Question #1– In developing a marketing plan specific to your business situation and opportunity begin by clarifying in your own mind your primary product or service. Is it only to "sell real estate"? More important is what benefit will you be offering your prospective customers that they are not getting presently?

Successful products or services provide a benefit to consumers that is greater than the cost of the product itself.

Benefits vs. Features

Marketers often confuse benefits with features and concentrate their energies on selling features. In fact features are elements of a product that deliver a benefit.

Examples: In an automobile, airbags (feature) provide lower risk of serious injury (benefit). Digital recording (feature) enhances audio sound quality (benefit). The Mercedes Benz logo (feature) is said to bestow prestige (benefit) on its owner. While no one would suggest these features are without value, it is the benefits that sell the product.

Try this now– Select Features vs. Benefits*

__ 2 bedrooms, 2 baths __ Play area for kids __ Cultural attractions __ Entertain friends.. __ Quiet neighborhood __ Lower energy costs __ Huge deck __ Eat in kitchen __ Low maintenance __ 1st floor laundry

Successful marketing is satisfying people’s wants rather than their needs. If a consumer needs a new pair of shoes because the old ones are worn out, in most cases they will buy a pair of shoes. Which pair they buy is generally determined by Style first and Value second. The ‘stylish’ shoe satisfies the consumer’s desire (want) for social standing and the enhanced self image that they feel comes with it.

It is that subtle sensibility that drives marketers to establish "brand recognition". If the brand of merchandise is well known in the marketplace, it must be better... Or so it is generally believed. In housing, the "product’s" features (prestigious address, modern kitchen, tasteful decor, etc.) may be thought to convey the benefits of security, stability or status.

In housing, the astute marketer sells Homes, not houses. A house is a commodity, a product, and satisfies the need for shelter. A Home on the other hand is where we live, where we hope to realize the benefits of happiness, security and well being.

In your written marketing plan the benefit(s) you are offering is/are central to your Position Statement. Here is what Canadian marketing expert Daniel Levis has to say...

What Are People Buying...?

Benefits, that's what! Whether you're selling in print or in person, it's a universal truth. And success in both worlds requires a counter intuitive approach. Allow me to explain.

As human beings, we are all pre-programmed from birth to behave in certain ways. And one of the strongest things that drive us is an awesome preoccupation with our own self-interests.

You really don't have to look very far to see that this is true. The world is cluttered with marketers whose messaging is about them (the marketer).

They talk about all of the features of their product, and the advantages of doing business with their company. Its just human nature to express ourselves this way when we've poured our lifeblood into the development of a product, or a business, isn't it?

But features, and advantages, are not what people buy. People Buy Benefits!

Here are some quick definitions–

  • Features - The attributes of your product or service.
  • Advantages - What the attributes of your product or service do.
  • Benefits - How people feel when they have the advantages of your product or service.

Here are a few examples– 1) This SUV has a Vortec 5300 V8 engine (feature), and it can pull 7000 lbs (advantage). It gives you a testosterone rush every time you drive it(benefit).

2) Its got an autotrac 4x4 system (feature) that kicks in automatically at cruising speed when you hit an icy patch on the highway (advantage). You'll drive with confidence and peace of mind, regardless of the weather conditions (benefit).

3) You'll be safer and feel more secure too, (benefit), because you can actually steer while you brake on slick surfaces (advantage), thanks to its advanced Antilock-braking system (feature).

Your copy has power when it contains all three elements, but it is quite natural and common to place too much emphasis on features and advantages. Even on copy that covers all three, the order is very often F­>A->B. I've found that B->A->F (as in example 3 above) often yields better results. And it stands to reason, considering our natural preoccupation with ourselves, doesn't it?

Benefits are personal and emotional. Benefits trigger opiates in our brains.

Think about this for a moment.

Does a possession, in and of itself, give you any personal satisfaction? Isn't it the feelings that you anticipate as a result of having it, that give you joy? Doesn't all human striving and endeavor boil down to the pursuit of happiness?

Incidentally, be careful with negative emotions. They can be useful at the beginning of a piece, but you must be sure to counter them strongly with positive ones before the close. Negative emotions are debilitating, which is exactly what you DO NOT want. You need your prospect in a resourceful, confident, and comfortable state of mind when you ask her to take action.

So how can you put this knowledge into practice? Make a list of all of the features of your offering, and map advantages and benefits to each one. Then take the most powerful benefits and work them into your headline and the opening of your copy.

You'll be pleasantly surprised with this approach because you end up with many more references to 'you', and 'your', at the beginning of the piece this way. Although don't get hung up on thinking you always have to fixate on the second person in your copy. Benefits can also be implied using first and third person stories to great effect.

Of course the order in which you present your benefits is also crucially important. Your prime benefit needs to be presented first, and in such a way as to set your business apart from your competition.

UNIQUE SALES PROPOSITION–your "USP"

You must have a unique, and clearly articulated sales proposition, that's loaded with benefits that are most relevant to your target audience.

The most successful approach is to target and dominate one small niche market at a time with this strategy.

Think of the benefits as the motive power that grabs your prospect's attention and moves her to action, while the features and advantages justify those feelings with logic. All three are important.

Regardless of whether you want to improve your personal sales skills, write better letters and proposals, or produce more effective ads and web copy, BENEFITS are what will set you apart and ahead of the competition. #

© Daniel Levis

Step 2: What is your Primary Business?

Question #2– What is your primary business? Surely it is more than "to sell real estate". Are you–i.e., your company or yourself–a Builder, assembling land, contracting to build, and selling the end product? You may be a Dealer or Rehabber, specializing in the improvement of distressed or functionally obsolete real estate for sale to the public? Or an Investor, acquiring real estate (vacant, distressed or perhaps improved by others) for long term active or passive investment?

Try to describe or state your business purpose in one sentence.

Levinson suggests you summarize your concept in seven words or less! An example he cites in his classic Guerrilla Marketing (Houghton Mifflin 1984) is a chap who wanted to offer courses in computer education. Knowing many folks have fears about new technology he wanted to diffuse their anxiety. At first he stated “I wish to alleviate the fears that people have regarding computers...” (Yes there was more.) In the end he boiled it all down to “I will teach people to operate computers.” He nailed it with those seven words.

Step 3: What is your Target Market?

You have identified the position you plan to occupy in the marketplace, and the Features and Benefits that will distinguish you from your competition. In the background has likely been just who you will be serving with your unique mix of features, benefits and services. Let’s “bring them out of the closet”. In your plan describe, in writing, your Target Market, your Customer.

Summing Up...

Refer back to the notes and conclusions you have developed. These taken together answer the ‘Burning Question’ of just what business you are in. Here the need is for clarity of purpose and intent. Not simply some diffuse sense of “messing around in real estate” or "I intend to sell real estate". Take a few moments to summarize... In marketing terms, this will be your Position Statement.

Having stated clearly your Position Statement, the ‘core idea’ central to your venture, your Marketing Plan should go on to identify specific methods you will use to engage your market.

Include discussion of advertising and public relations efforts you will use. Sales incentives, discounts, the use of such hybrid techniques as the ‘contract sale,’ or the lease option might be considered. How real estate brokers may relate to your sales activities should be discussed. A strategy for building and maintaining good customer relations should not be overlooked.

With your Marketing Plan in hand, you have direction.

You will never need to wonder "what's next"?


*(ANSWERS): _F_ 2 bedrooms, 2 baths, _B_ Play area for kids, _F_ Cultural attractions, _B_ Entertain friends, _F_ Quiet neighborhood, _B_ Lower energy costs, _F_ Huge deck, _F_ Eat in kitchen, _B_ Low maintenance, _F_ 1st floor laundry

 

© Philip Elmes

The Urban Rehabber Program