by Brian Broadbent
There are many similarities between the businesses of retail estate agency and life insurance — both are marketing a service, and for both the management of face-to-face contacts between potential buyers and the company’s employees is crucial to achieving sales. However, the two industries have developed very different business cultures — with the differences centred mostly on the way that salesmen are trained and managed.
Several life insurance companies have grown to a considerable size, with salesforces numbered in thousands, almost completely on the basis of a “hard-sell” approach. This may not have endeared them to the public, but one does not have to like everything about an industry to acknowledge its successes. And the life insurance industry’s success in training and managing salesmen has, in many ways, been extraordinary.
A life insurance salesman, living only on commission, has one of the toughest jobs on earth. Each day he must find his own customers, without the benefit of retail premises, from a population cynical about life insurance salesmen and unwilling to think about the financial consequences of death.
In some respects the job of the property salesman in an estate agency office is much easier. House purchase is a demand-led transaction and while negotiators may think that they have “sold” a property, in many cases the process has actually merely been that of the customer buying.
In the past, the relative lack of selling techniques in property may not have seemed to matter too much — given that the competitors would have been operating in much the same way. But the recent rapid restructuring of the industry has produced a much greater urgency to the search for sales expansion and profits to justify some of the extraordinarily high prices paid for chains of agents.
One effect of these changes has been an awakening of interest in sales training. Also, estate agency companies are re-examining the way that they manage their sales functions. Traditionally the career route in estate agency has been that of entry at the junior sales level, with promotion ultimately taking successful salesmen into branch management — with the further carrot of partnerships for the most able. In effect the system has created a situation where very often the only old salesman is a bad salesman — because he had failed to get promoted.
This contrasts starkly with the treatment of their salesmen by life insurance companies which provide them with a complete career structure. As a result they need never stop doing what they are best at — selling — in order to attain their personal financial goals, win praise or achieve status. In fact, the chairmen of many large life insurance companies are delighted when they are able to refer to the number of their “sales associates” who earn six-figure incomes — comfortably in excess of the main board of directors. Furthermore, life companies take great care to build the self-esteem of salesmen as they progress to ever greater heights of sales production, with orders of merit, and the “chairman’s club” of elite operators.
Developing selling skills in the context of estate agency means adapting to new patterns of behaviour, and behaviour is based on the hard-to-shift foundations of attitudes. The attitudes of estate agents have traditionally been very English and very middle class, according a low status to selling. Twenty years ago attitudes in the life insurance industry were precisely the same. What changed the picture was the importation into the UK of American sales management concepts by the direct-selling unit-linked companies.
These techniques had such a powerful competitive effect that the new companies quickly became larger than most of the established firms, which had been around for 100 years or more. Eventually the traditional companies accepted the inevitable and reorganised their own sales management structures to meet the challenge of the newcomers — using basically the same techniques.
There is no doubt that estate agency companies are wide open to competitive attack from firms prepared to take personal selling really seriously. Estate agents are only now beginning to see how vulnerable the marketing process can be at the point of sale. The small agent’s most likely delusion is that to provide a “good service” will be enough to see him through; conversely the national chains may be expecting too much from national advertising campaigns. Both types of agent are currently grossly underrating the role of face-to-face selling in the total marketing mix.
Developing and supporting staff so that they become committed and skilful at selling face-to-face requires a carefully developed strategy, demanding development and training activities going beyond the primary need for selling skills. Attention must be paid to the entire sales process, not only instilling the right attitudes and skills in the salesmen, but also providing the procedures, incentives and elements of customer involvement to maximise the creation of sales opportunities and the conversion of those opportunities into commitments to buy.
The insurance salesman is taught from the outset of his training to approach each new client not with answers, but with questions. In the jargon of training this is called the “factfind” — and yet really it is only common sense. If you were after a new home and talked to, say, five High Street estate agents, would you not prefer the one who asked some intelligent questions to elicit the type of property that you would like to buy? For instance, would it not be nice to be asked by a negotiator: “Where do you live now, and why did you buy it?”
Another lesson which an insurance salesman learns early in his life career is to recognise the monetary value of sales leads. Considerable costs are incurred in creating even a tenuous relationship between a salesman and a prospect. Such “warm leads” are nevertheless many hundreds of times more likely to be converted into sales than further efforts with the public at large. It therefore makes obvious sense to record details of all client contacts and for the salesman to feel responsible for following them up — and yet this simple procedure is rarely properly followed by estate agents.
Times have been good in the residential property sector over the past three years. A brisk market and rising house prices have been translated into rapidly escalating profits. The thrust of financial institutions into the estate agency market, mainly through acquisitions, has so far not made much impact on profitability, let alone the inability, of the remaining independents.
Nevertheless, this happy situation is unlikely to last for ever. At some point the cycle will turn down, house prices will stabilise and the “cake” available to all agencies will stop growing. Just at that point the financial and marketing power of the new national groups is likely to become significant as their strategic attentions are switched from market share growth through acquisitions to that of winning sales in the marketplace. In these circumstances, the house agents who take to heart the basic principles of sales management and train their staff accordingly are the ones who will survive and prosper.