Ten years into their marriage, a couple goes through a bit of a rough patch. The husband isn't feeling loved the way he used to. He reacts by making some adjustments to his investment. Date nights every Friday, with entertainment and a nice meal out, are reduced to sharing a latte once a month. The gorgeous box of hand-selected roses she learned to expect on their anniversary now is considered an unwarranted expense. So this year she receives a package of celophane-wrapped daisies from the corner store. Rather than spending an evening watching movies together at home, with a bottle of quality wine, he thoughtfully texts her while shooting pool at the pub with his buddies. Within two months, the old magic is back, and he begins to restore the former loving gestures.
Yeah right! That misguided soul should have a divorce attorney on speed dial. Any hope of regaining the love always requires more investment, not less.
Getting back the love (when sales take a nose dive)
A few weeks ago I was invited to a meeting with a prospective client. She wanted to know what we could do in marketing herself online, for “super cheap.” Apparently the digital marketing agency she was with was “too expensive”, and she was looking for a lower cost solution.
I was curious to know why she felt she needed to cut back on marketing. She told me homes weren't selling, sales were down, so the marketing budget had to be scaled to match revenue. What she was describing is classic reactive marketing.
She went on to lament about the good old days, when she was selling a lot of properties. Back in the day, she was spending upwards of ten thousand a month in advertising; no problem. She told me she had ads running “in the paper, in real estate rag, and on the ass end of local buses,” and she had been “papering her farm area with postcards every month.” But more recently, sales were in the toilet, so she had only been able to afford $800 a month for SEO, content creation and social media engagement. Sadly, even that was now too much.
I did some quick calculations and discovered the marketing/sales ratio was almost exactly the same now as it had been in 2007. As she spoke, I realized that every time there had been a dip in sales, she had compensated by reducing the marketing budget. Sales then adjusted to reflect the reduction in exposure. She reacted to that drop, cutting marketing further. No surprise; sales dropped again… And now she was nearing the very bottom of a downward spiral and facing the very real prospect of finding a new way to make a living, after 18 years.
According to the ratio, proven over the past seven years, cutting the monthly marketing budget by a further 40% should reduce sales by roughly the same percentage, or worse. It wouldn't even cover her desk at the brokerage. It wasn't my business, but the numbers sent a shiver down my spine.
My recommendation was for her to consider increasing the monthly marketing budget, and becoming very actively involved on her end as well, with my coaching. Effective blogging and social media can be learned, and I proposed weekly check-in meetings via Skype. Leveraging resources in that way, together we could realistically achieve four or seven times the interaction with prospective clients.
When sales take a dip, the only thing that will turn things around is… well, sales :-). Cutting back on visibility will only cause them to dwindle further. When cash flow runs thin, it's easy to lose site of that.
Robert Herjavec commented on Shark Tank recently, “Sales is the life blood of any business.” Without marketing, and new clients, a business will surely die. Some agents try to build market share on referrals alone. Relying solely on word of mouth, they often grossly over-service and even pester their existing or past clients to secure new leads. They refer to this a “free” advertising. But time is never really “free.”
A downturn is the time to invest more — become proactive — forging ahead instead of retreating. I have seen a full-on effort in content development and social media engagement, and perhaps some AdWords, coupled with passionate follow-up turn the tide even in the eleventh hour. By dramatically increasing interaction with potential buyers and sellers, there is always hope for a comeback.
Have you ever felt you could not afford to invest the time or money ongoing marketing required? (I have. Been there, done that… reverse economy.)
Ever found yourself entering the dreaded downward spiral of diminishing returns? When revenue falters, do you blog more, or less? Engage more in social, or less? Hire a consultant or marketing pro, or let one go?