Yesterday, I spoke about the first mistake any developer can make in project marketing and sales. As I said, I've seen a lot of developments stall or self-destruct at the hands of a developer who felt like he or she "knew it all." I told you about my friend the hotelier, who became a developer, then a travel "guru," then a marketing and sales "expert" capping off this illustrious and varied career with a stint as a financial products broker. His development is still just a patch of dirt.
Continuing in the same vein of "knowing it all," today I'll tell you what I've seen happen to developers who entrust their marketing efforts to brokers and sales people. Until recently, I've seen a lot of luxury brokerages trick developers into thinking that they were the total solution - a sales and marketing firm. I'll show you why sales and marketing under one roof make ineffective and wasteful bedfellows.
Mistake #2 - Hiring a Sales Agency and Branded Real Estate Broker to do a Marketers Job. In recent years, marketing real estate projects was more than just a lucrative enterprise for those who were doing the marketing - it was pure profit, plain and simple. There is a good reason for that - the best marketers got the job done.
When a luxury brokerage brand steps in and decides to become a marketing company they begin to over-leverage. Sure, they can leverage off their brand name for what seems like a quick win and surefire success, but this also means that they are leveraging off their core business. When brands experiment and begin to "know it all" (not unlike the hotelier I described yesterday), the Developer takes the hit. With a big name and a willingness to take an even bigger budget, I've watched developers dump literally millions of dollars of untraceable fancy print ads and ineffective web sites - all the while the brokers and agents who should have been motivated by selling the project, were lining their pockets with marketing dollars.
Marketing is a science - and a bit of an art. Marketing drives sales, sure, but as with any science or art (or both), this is something that is best left to experts, not amateurs (think about giving a High School Physics student the keys to the Hadron collider!). In my many years of working with the real estate industry, I've never once seen a brokerage bring in a graphic designer or copywriter to close the deal on a multimillion-dollar home; so why should the opposite make any more sense? The reason commissions exist is to get the sales team to work hard to close the sales, this is what they know and this is what they (should) do. The marketing team brings in the leads and brands the project; this is what they are paid to do. When both teams are working in their core capacity, the result is success. When the incentive model and expertise gets muddled - the result is millions spent, and a project bankrupt due to a wasted budget. I've seen this happen on a number of occasions.
Do yourself a favor. The next time a real estate brokerage says they can market your project, thank them for their enthusiasm, and offer them 2% more on the back end - so long as they carry the marketing load on the front end. Or spend your money wisely and get a marketing group and resources that brings in Quality, Quantity, and Qualified leads. Send the sales guys these leads so they can actually close the sale and earn their commission - the way they were supposed to get paid.