There is nothing that attracts business more easily than dominant market share. When you have increased your slice of the pie to the point that it dwarfs your competition, the prospects begin to seek you out.
I coach an agent on the east coast who, in the two towns she dominates, single handedly sells more homes than the number two and number three companies in sales and unit volume. Last year she listed and sold 66 properties in her market areas, over which time the top competing companies together sold 59. And the balance just keeps tipping in her favor, because success breeds success and nothing indicates success better than dominant market share.
What is market share? Market share is the percentage of sales that you control in your marketplace. Market share can be based on listings taken, listings sold, buyer sales, sales volume, or sales by units. In any case, your share reflects the portion of total market activity that is represented by you or your company.
To calculate your market share, simply divide your or your company's production against the overall production of your marketplace. For example, if 575 homes sold last year in your market area, and if your company sold 215 of those 575, then your company handled 37% of all transactions and controls 37% of the market activity (215 ÷ 575 = .37).
Also, calculate market share in various market segments. You might find that your overall market share is low but that you have a commanding market share in a certain neighborhood or price category.
Market penetration is another way to describe market share. If you command large share of your market, you've achieved significant market penetration. If your market share is minimal, your penetration is minimal as well.
A single agent can't expect to penetrate a broad market overnight, if ever. For years, I worked the east side of Portland, Oregon - a geographic area that was home to 750,000 people. Even as productive as I was, with 150 home sales a year, my market share when compared to the size of the marketplace was miniscule. I barely scratched the market surface, let alone penetrate it. But within the market niche I'd carved, I was a dominant force.
A niche is a segment of the overall market. Niche marketers serve a select group of consumers whose interests and needs are distinctly different from the needs of the market in general. Think of niche marketers as big fish in small ponds.
You can create a market niche by serving consumers in a particular geographic area, consumers seeking a certain property type, a certain type of buyer or seller, a certain income category, the list is goes on and on. You can create a niche by focusing your efforts and increasing your penetration of FSBOs, expireds, non-owner occupied properties, or small multiplexes.
The key to gaining penetration in a niche is focus. You have to decide which smaller section of the marketplace you want to work and quit trying to be all things to all people. Then, once you identify your niche, you need to create presence, penetration, and dominance, following these steps:
- Make contact with prospects in your niche not just once but repeatedly over a compact period of time.
Studies show that it takes six impressions for a consumer simply to recognize or retain who you are. By increasing both the number and frequency of contacts with prospects, you can increase your market awareness, which is a first step in achieving market penetration.
- Make personal contact. For most agents, the preferred method of contact with people located in a geographic segment is mail. They mail and mail and mail their prospects to death. They send refrigerator magnets, note pads featuring the agent's name and face, local football, baseball, or basketball game schedules, annual calendars, and more. Guess what? That's not enough to achieve market penetration.
A few years ago, I started working with a client named Sue who wanted to penetrate a large gated community where the turnover of homes was brisk and the sales prices were high. She'd given herself a tall order because another agent dominated the market and controlled more than a third of all the community's real estate business. Luckily, though, the dominant agent had gotten lazy and reverted to easier contact approaches than face-to-face visits. Sue moved in with well-designed marketing pieces for use in mailing, but also with a well-crafted personal contact strategy. When all was said and done and her market share goal was met and exceeded, she determined that her success didn't stem from marketing pieces that were better than the other agent's pieces. Her success came from the fact that the people who lived in the gated community saw her frequently.
Whenever anyone in her firm listed a property in the community, she'd ask and receive permission from the listing agent to hold it open. Then, prior to the open house, she'd walk around the neighborhood personally inviting the neighbors. In between open houses, she provided the neighborhood with regular market updates. And on a constant basis she was personally very visible in the community, spending a few hours each week meeting and greeting her prospective clients.
When an expired listing came off the market, she showed up at the owners' front door. When a FSBO sign appeared in a front yard, she was there, as well. In fewer than 20 months she went from a single-digit market share to a share of over 30%. Meanwhile, the once-dominant agent went from 37% to less than 20%. She had been beaten by the effectiveness of personal contact.
How to achieve market dominance
To become a dominant market force, you need to take market share from someone else. Dominance involves growing your percentage of the overall marketplace until you control a greater share of market business than any competitor. In some markets, which are shared by a great number of competitors, a 10% share might be dominant. In other situations, where fewer competitors exist, you might need 30% or even a higher share in order to be the dominant player.
To gain market share and dominance, first you need to gain recognition, which results almost automatically from simply doing more than you are expected to do:
- Do more personal prospecting.
- Create more useable market and industry information.
- Have more communication with your clients.
- Do more for your community, by sponsoring picnics, baseball or soccer teams, or community events as a few examples.
Doing more than is expected will earn you recognition and create a buzz about how you are different. Your reputation will be enhanced. Suddenly, rather than being an unknown agent you'll be a “name,” a known entity.
Then, with the confidence you build through your awareness-development efforts go one step further. Dare to do things that no one else is willing to do.
Sue, my client in the preceding anecdote, was willing to take the risk of rejection by calling on people and meeting then face-to-face. Her competitor, even though she was the market's dominant force at the time, was unwilling to subject herself to the potential rejection. Of all the approaches I've seen, I believe that establishing more personal contact is the easiest, most cost-effective way to move to a position of dominance in a real estate market.
By taking each of the preceding steps - choosing a market segment, establishing contact, gaining awareness, establishing personal rapport, going beyond the expected, and daring to be different in your communication approaches - over a period of 18-24 months, you will penetrate your target market niche and be well on your way to achieving market dominance.