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19 April 2010

Agent Segmenting as a Coaching Tool

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Companies that “Segment” agents by production levels, typically group agents in ‘quartiles’ by arranging them in descending order according to some specific unit of measure. For example, Adjusted Gross Commission Income (AGCI) is a commonly used metric in the segmenting of sales agents.   Although beneficial to a degree, I find this traditional concept of ‘quartiling’ to be somewhat limiting and narrow in scope. Considering the changing face of real estate business, and agent’s inclinations to work in alternate environments, there is a clear need for more flexible analytic views.

As a result, business leaders should have tools available to them that allow for the segmenting of associates in many and varied ways. Consider the five examples below:

1. Traditional quartiling Four groups with non-producers at ‘the bottom’

In many companies, the fourth quartile has little or no production whatsoever, as these individuals have yet to acquire critical skill sets.  Partly as a result of this, the most positive results often come when focusing on the second and third segments.  Create an environment whereupon each agent can generate a minimum of one monthly transaction (listing or sale.) This environment should include training, coaching, sales agent business plans, upholding minimum production standards and in some cases, the re-directing of non-producers.

Agent Segmenting as a Coaching Tool

2. QuintilingThe traditional view but with all non-producers as a ‘fifth segment’

3. Virtual agents Analyze how your virtual agents compare to one another as well as to traditional and 100{0a8e414e4f0423ce9f97e7209435b0fa449e6cffaf599cce0c556757c159a30c} agents

4. 100{0a8e414e4f0423ce9f97e7209435b0fa449e6cffaf599cce0c556757c159a30c} Agents Analyze how all of your 100{0a8e414e4f0423ce9f97e7209435b0fa449e6cffaf599cce0c556757c159a30c} agents compare to one another as well as against traditional and/or virtual agents

5. Years of service Identify training and coaching needs by viewing production in relationship to ‘years in the business’

Although most brokers acknowledge the “80/20 rule” (that 80{0a8e414e4f0423ce9f97e7209435b0fa449e6cffaf599cce0c556757c159a30c} of the sales are transacted by 20{0a8e414e4f0423ce9f97e7209435b0fa449e6cffaf599cce0c556757c159a30c} of the agents,) too few actually measure it.  I would like to encourage you to challenge this ‘traditionally accepted’ rule when viewing and analyzing your agent productivity. It is my clear and unwavering belief that with proper coaching and support, a far higher percentage of sales agent population will become successful and profitable to your organization and to themselves. Regardless of their past level of success, sales associates should be offered the help and support of management in identifying key areas through which to improve their business. Remembering this critical point will assist you in retaining the best and brightest sales agents within your demographic.

16 thoughts on “Agent Segmenting as a Coaching Tool

  1. I love your idea of adding years of service and virtual offices to the list of consideration!

    I think proportions could be added to the mix (there's surely a better word for this, but hear me out…). Luxury agents will be less sides but make more per side whereas suburban resale in a new home subdivision will have to produce more sides and make less per. Perhaps the proportion of specialization could come into play?

    The wonderful side effect could be agents and teams considering what their actual expertise is, rather than "I sell all things to all people at all times in all places."

    1. Lani, Excellent idea! In my view, the benefit of this approach is the ability to develop "best practices" (to use the term loosely) in any area of productivity. By comparing agents who do business in like types of real estate (your luxury example), or who hail from a similar work situation (virtual agents), leaders are likely to develop better means of comparing productivity among liked minded agents.

      We could also provide some type of scaling (perhaps this is the word that you are after?) in comparing differing types of production, but it may be a somewhat harder case to make. I say this because comparing dissimilar production will, by definition, require that subjective assumptions are made and opinions always vary widely when it comes to creating these types of parameters.

      Thank you for your comment, Bob

  2. Bob, scale is the PERFECT word for it! 🙂 It is subjective, so I don't know that it would work for the BHGRE brand across the board but perhaps on a team or city level it could?

    1. Lani, That makes sense. The definition of scale does vary a great deal from market to market and it is a rather subjective term. I guess that I have always felt that if business leaders can get the right concept in mind, the details around the process will follow.

      Thank you for your response. Hope that your weekend is great! Bob

  3. Bob:

    The 80/20 does not apply to our business. Here's a typical breakdown of the "decile analysis" of producing agents in a typical MLS (in this case, MRIS, the nation's largest.) Non-producing agents cannot be measured and are not included.

    % % %
    of of of
    Active Units Volume
    Agents Closed Closed

    1.0%13.4%11.6%
    3.0%24.9%21.5%
    5.0%32.8%28.3%
    10.0%46.6%40.6%
    15.0%56.5%50.2%
    20.0%64.2%57.9%
    25.0%70.4%64.5%
    50.0%89.1%85.5%
    75.0%97.1%95.3%
    100.0%100.0%100.0%

    In most MLSs, ony 63% of member agents close one or more transaction in an anual period. Consider that using the numbers aboce, the bottomw 50% of agents with production share in only 14.5% of the volume and commissions generated.

    I hiope your brand has a solution!

    1. Pat,
      Your statistics look lamentably true to me, so thank you for sending them along. I notice your next response as I am writing so please don't worry, the intention of your columns is quite clear. The disconnect between the statistic and the desired results is this…Statistics can diagnose the problem, but quality leadership is the only thing that solve it.

      To me, it is all about productivity and quality standards. As I once heard it said, "Real estate is too easy to get into, too easy to get out of, and too optional when agents are in it." No words spoken about our business have ever been more true. It is when, and only when, business leaders get clarity and muster up some guts to put these types of standards in place, that the problem will be solved.

      Nice to hear from you,

      Bob

  4. Instead of segmenting just by production, have you considered profiling your agents by client satisfaction? Since brand strength and profitability is largely dependent on positive experiences with a brand, it seems to make sense that brokerages manage their agents by the level of service and satisfaction they deliver in addition to their sales performance. Operations that regularly measure client satisfaction using systems like QSC, have found great methods for cross-referencing their most productive agents with their ability to build the strength of their brokerage brand. instead of focusing just on short-term sales results, it would be great if brokerages monitored their brand strength and agent strengths based on the lasting impression they are leaving with customers.

    1. Marilyn, I think that you have a fascinating idea here. the concept that i was hoping to convey is that agents can be segmented using any common denominator. All too often, in the past, we have tended to have tunnel vision and only view agents results in one particular way. Every new set of data and every new segmented view will help business leaders to coach their agents more effectively to success.

      I am very familiar with QSC and have been involved with companies who employ this service. It also appears that many on-line services across the county are contemplating including agent ratings in tools where consumers can select their agents. This is a great development and the real estate community should embrace it wholeheartedly.

      Thank you for your thoughtful comment

      Bob

  5. Great point, Marilyn. Business owners in every industry recognize that customer satisfaction is absolutely critical to driving growth, so it makes sense to segment based on those who are doing the most for your brand.

    Considering quality of service/customer satisfaction in addition to current productivity when segmenting enables you to plan your coaching, training, marketing, recognition and rewards to accelerate the growth of your business.

  6. Scott, Your point is well stated. Given that all of us have "have nothing but our good name' (as the expression has it), quality of service delivery will not only bolster business, but will also be a key element in attracting new, high quality agents. Most importantly I think, quality control makes a company a better and more rewarding place to work.

    Great words. Thank you

    Bob

  7. I think its important to know what the real estate agent's goals are.

    And I don’t mean business goals. I mean personal goals.

    Personal goals should always come first, you can help them build their business goals to be in alignment with those personal goals.

    I like the idea Bob of trying to segment so as a brokerage you can compare apples to apples….AND my experience has been:
    Maybe one of your real estate agents wants to coach their kid’s basketball team this year.
    Maybe their production falls from $5 million to $2 million and they are OK with this.
    Are you ok with this?

    Will you even know why their production dropped?

    I see many brokerages just assume the agent is failing or no longer trying, instead of reaching out and engaging them in their new interest for the time being – or showing them ways to help sustain their business while they are coaching the kids basketball team.

    I take from your post and the comments that you can't lump all your agents into one box and label it. To that I agree.

  8. Darin, I definitely like your point here. I suppose that I sometimes take things for granted that are not necessarily a foregone conclusion. Really, leaders must understand that there is no such thing as coaching anyone, until we know 1. What the person wants to accomplish and 2. The time and resources available to them. Once we agree on this, we can then even segment our agents by "working time available' or something to that effect. This will once again tell us how they are performing next to like minded agents.

    Thanks for your comment….Bob

  9. Darin, My pleasure and thank you again for taking the time to voice your ideas here. Looking forward to exchanging more ideas in the future.

    Regards, Bob

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