RISMEDIA, November 16, 2009-Can you recall lessons you’ve learned about the power of compound interest? I do. I can still remember my high school teacher showing charts of what happened to money when interest compounded from period-to-period over time. Here are two definitions for the word “compound”:
1. intensify: make more intense, stronger, or more marked
2. put or add together; “combine resources”
Compound interest is a powerful saving’s strategy because your savings intensify over time. This happens because you earn interest on the money you originally saved and then you earn interest on the interest previously earned. With each passing compounding period, your savings earn more and more interest.
I have a firm belief that the same effect can happen with your marketing. There are three fundamental ways you can harness the power of “compounding” in your marketing:
1. As you sell homes and earn commissions, you increase the amount of money invested into marketing. This compounding increases each year as does your sales.
To engineer this in your business, you must set a specific percentage of your commissions to save and allocate to marketing. In addition, you must have the discipline to increase this set percentage each year. From my observation, this compounding doesn’t actually occur for most agents. This is because most agents have a tendency to spend every penny they make. They don’t develop the discipline to save or re-invest a fixed percentage of their commissions.
2. Consistently testing new lead generation advertisements and lead conversion systems in your business.
In number 1, the goal is to increase the amount of money you invest into marketing. The trick is to use the additional marketing $$ to test new marketing campaigns. Marketing is really about testing. You must be testing new advertisements all the time. One new winning advertisement could help you sell hundreds of homes.
3. By creating marketing pieces that have the ability to be spread virally.
A viral marketing piece is one that is spread by word of mouth, to friends, family, co-workers, etc. Over time, this kind of marketing takes on a life of its own, moving through groups of people without you expending any additional funds to market it. Examples of viral marketing might be a book you wrote, a video, a free report, or an audio recording. The major component of this idea is to make the content of your viral marketing piece so good that anybody who receives it wants to pass it on to everybody they know.
I was able to capitalize on this viral strategy by offering a book I wrote as an eBook and giving each person who requested it the right to share it with others. Slowly but surely, we began to be contacted by people interested in our services who hadn’t requested the book but who had it passed on to them by someone. When we met with these prospects, they would explain that a friend of theirs gave them my book. This is compound marketing at its very best.
Think for a second about how powerful this sort of compound marketing could be for you over time. It intensifies day by day, week by week, month by month- brining you more leads, more sales and bigger profits.
Unfortunately, most real estate agents don’t think about compound marketing. They are very haphazard with their marketing. It’s the “dreaded” task that they put off and rarely get to because they’re too busy.
Here are a few steps you might take to compound your marketing:
1. Think long-term about your marketing instead of short-term
2. Make marketing THE priority for your business
3. Save a portion of each commission check you receive and reinvest it into future marketing
4. Increase the amount of commission you re-invest in marketing as your income grows
5. Always be testing new lead generation ads
6. Constantly test new approaches to lead conversion
7. Create viral marketing pieces and encourage prospects and clients to give them away
Make these efforts to compound your marketing, and you will be glad you did.
Rob Minton, who reinvented his real estate sales business to sell 269 homes to a limited number of clients in one year, has written a very practical book on how real estate agents can sell more homes.