Episode 19: Why Niches Are Becoming More Profitable Than Referrals
Glenn: Hi! It’s Glenn McQueenie, and thanks for joining me on this podcast today. So today, the special guest is me, because I just wanted to take some time to really share some new insights that I’m seeing, which is really just reaffirming that the path to building and helping agents build niche markets is the right path to be on. There was a recent survey done in Vancouver by REW.ca and they basically polled about 2,300 consumers who had just bought a home in the last three or four years, and they asked them questions like:
- Would you use your agent again?
- Would you refer your agent?
- What would you look for in your next agent?
And it was really interesting what came out in that research. I think it’s one of the first times I’ve actually seen this research, where people, when asked how they would select a real estate agent, instead of them saying that they would refer their friend, or go and work with a friend – or if they heard of a friend looking for a house, they would just refer an agent they knew – they were saying for the first time, the most important thing that they would look for is local knowledge and local expertise in whatever they were looking for and trying to accomplish. And I think it’s so interesting, because when I was doing all of the research for this book last year, a lot of it kept coming up. I knew the more that we kept providing free information to the public, whether it be “The 10 Secrets to Staging Your House for Success” or “The 10 Secrets to Pricing for Multiple Offers” – the more we keep doing that and giving it away for free, Google just picks it up and instead of it being unique industry knowledge, it now becomes common knowledge. And so, the challenge that faces most agents right now is they just have a lot of common knowledge. They think it might be expertise, but the consumer is getting really clear right now, going, “Well, what do I need you for if I can just Google any of those answers to my questions?” I mean, I personally, I Google 10 or 15 times a day, if I’m looking or thinking about something. I just Google it, and “boom!” – up comes the answer.
So I think two things have happened in real estate. Number one is, when we released all of our homes and put them on the Internet, a lot of people (especially in Canada, where it’s really a more unified system than in the United States), go to REALTOR.ca and find just about every home that’s on the market. And I think it’s a fantastic thing for the sellers, but it’s certainly diminished a lot of the leads that the agents were getting when they had either a closed board, or it was only their company’s listings, and maybe they were getting some leads from there. Now, it’s pretty much common knowledge (all of the new listings that are out there). And the second big thing is the common knowledge that we just gave away for free. I think if this was a football field, and we’re playing a football game, we’ve already given up the first 70 yards back to the public. So our value now lies in the last 30 yards of the game – and the last 30 yards of the game is the reason people still use realtors, which is, “The price of this home and the risk associated with doing it myself is so high right now, that for this fee, I’m willing to pay somebody to handle this sale for me.” And that’s great. But the problem is, that could change. And I don’t know when it will change, but the only way for you to get away from this and to be able to create more value for your customers is to go really deep into one niche market. See, when you go into one simple niche market – maybe it’s helping seniors do sale-leasebacks on their house – well, that’s not common knowledge right now. Actually, most people have never even heard about it. And because of that, when you bring it up to them, they go, “Wow!” You’re perceived to have much more value and wisdom, because it’s something that they can’t easily Google. If your niche is helping divorced couples execute the sale of their house, there’s a lot of insider information you need and hacks that you have to learn in order to make that process really, really good. Do other agents sell homes of people who are going through divorces? Yes. But a lot of times, it’s one-offs or two-offs, and they’re navigating it as they go. What people really want and what a consumer’s really looking for is, “Where’s my guide? Who’s the guide who can help me in my unique situation? And my unique needs are: I need someone to give me the shortcuts on this very specific matter.” And that’s how value is created. If you look at what’s happening in the retail industry right now, a lot of the generalist retailers in Canada, like the Bay or Sears, are really struggling right now because they don’t really have an identity. No one, I don’t think, wakes up in the morning and goes, “You know what? We’ve got to go to the Bay today” or “I’ve got to go to Sears.” A lot of times, they’re like, “Hmm. I need slippers. I’m going to go to SoftMoc” or “I need workout gear. I’m going to go to Lululemon.” What they do is they attach one name to their unique need. And that’s what the whole game is with niche marketing. When someone thinks about doing this one thing, what is the only name that represents the inside knowledge that’s going to solve their selfish problems? I think your role would be to think about it like your niche focus really attracts people away from other realtors, because you just have targeted a market that really meets the selfish needs of that highly-focused consumer. Your niche should never, ever be designed to serve the majority of the market; that would be a commodity. You’d never be a niche. But when you design it to just hit one tiny part of a market, you start to realize this magic that happens: the deeper you go into your niche, the bigger your market actually begins to appear. And as a niche agent, you can avoid doing mass mailings. You see a lot of people farming in areas, or trying to take over farm areas, and in order to compete, they get their, (it’s not even a postcard size anymore – the postcard’s now grown like 400%) high, beautiful staged photo glossies, and they invest a fortune mailing it out to 10,000 or 15,000 people with a general message like “Free Evaluation,” “Free CMA.” And it really doesn’t speak to anybody. So the problem is, it’s a very expensive game to play. And whenever you’re trying to target a mass market, you need a massive budget to do it. So why would you ever want to do that? Whereas in a niche market, your laser focus allows you to maximize your return on your dollars that you spend in marketing, because you already know what the selfish needs and wants and aspirations are of your target market. And because you work so closely with them, you can change your approach very quickly if you start to see that different needs come up – you can just quickly adapt. You don’t have to watch and wonder what’s really going on in a marketplace. And the beautiful thing is, as your market share grows in your niche, you position yourself as the leader, because you achieve what we call that brand recognition of, “My single problem need right now is ______. Oh – that person solves it.” So there’s been some really, really interesting niches that I’ve been coaching agents on discovering, and I just want to share some of those with you so you can see what the whole point of my book, “The McQueenie Method” was. The whole point of the book really said, “Listen. Just be you. Take your natural strengths, take your interests, and just bring it to a target market of people that you want to serve because you really like those people.” So I was coaching with someone the other day, and it was a lady who just loves to play Bridge, and she plays Bridge once a week. Her target market is seniors who want to basically sell their house and stay in place, or sell their house and move down to a condo or Assisted Living. So she said to me, “Well, I keep being told that I have to lead-generate two hours every day.” And I was like, “Yeah. What I would suggest you do is lead-generate this way: why don’t you play five Bridge games a week? Because you get to play with different players all the time, and if you’ve ever watched people playing Bridge, they chat. They talk. It’s part of what’s expected.” I was working with an agent the other day who’s a goalie and loves to play hockey. And if you’ve ever been a goalie who plays hockey and you become an adult, you become really highly prized. You become hot, because every team needs a goalie. And I was like, “Why don’t you just go play goalie five or six times a week? Because now you’re working with your target market – they all like the goalie, and afterwards you all sit around the dressing room and drink beer, and people start talking about stuff.” If you like to curl, then just curl more often. One of the agents I was working with, his passion is mountain biking. He loves mountain biking, loves hanging around with people who mountain bike, loves to talk about gears and brakes and wheels and seats and all the stuff that I have absolutely no interest in. But those people do. And I said to him, “Why don’t we just marry your market?” And he said, “What do you mean?” And I said, “Why don’t we just bring your mountain biking to real estate, and why don’t we create the first mountain bike tour of homes in your city? These are all people who like to mountain bike. They’re looking for real estate. What better way to get them all together? Go through the streets. See a bunch of homes. Go through all the ravines. Do some mountain biking. Come up, see some more homes, and go back through the ravines. And then all meet up and have a beer and talk about the great ride you had and all the great homes that you just saw.” This is how you start to build tribes. You build tribes by just bringing what you really love to do to a target market of people you like to hang around with in that area of homes that you really, really want to sell. So I was helping someone the other day, too, who’s a mom with two young kids. And all of her friends, (because she’s in these mommy groups and both of her kids are under five) all hang out, and they’ve all become really, really good friends. Their biggest fear right now, (and one of their greatest aspirations) is, “Can we afford to move from this area to get into a great school area?” Because that’s the only thing that matters to a parent if they’ve got young kids under five. Their whole role and their whole focus is trying to provide a bigger and better future for their kids. And they are willing to give up what they want in a house if it means they can get into the right school district and get the right connections and social connections and better teachers and better education for their kids. It’s the only thing that matters. So I was like, “Well that’s perfect. Why don’t you just start – whether it be blogging, creating reports, having a Facebook page – whatever it might be, and tell stories about how you just helped somebody get into the school district they always wanted to get in for less than they thought they’d have to pay, and they actually got the house they wanted. And then this crazy thing happened that they were able to sell the backup house for way more than they thought, and they made the move for less than they thought they were going to. And now they’re set up in that school district, and they’re just so happy.” Those are called winning formula stories for your niche. And I would really recommend for the people listening here, that when people ask you, “How’s real estate? How’s the market?” that you really stop saying, “It’s great, and I’m really busy.” Or, as I heard an agent say the other day, “Oh, it’s crazy. Buyers are in multiple offers. They’re losing all the time. Sellers are so greedy.” And I’m like, “Okay. That’s called a losing formula speech in a real estate market.” You don’t want to be adding any more fear into your marketplace. What you want to be doing is having the conversations, because your business will grow at the extent and the quality of the conversations you have with potential prospects. So I would encourage you, that if you want to help young families move up to another neighbourhood, whenever you’re around young families, and they say, “How’s the market?” just tell them how you just helped a young family get what they want for less than they thought they’d have to pay, and they got more on the back end. I would use the same dialogue if I was talking to investors and an investor said to me, “Well, Glenn, how do you find the market?” I’d be like, “You know what? I just helped someone buy their first income property (or second, or fourth or fifth). It was able to cash flow at this rate. The return was really good. They never thought they’d be able to own that investment property, but we were able to get that investment property for them, and now they’re so excited to be building wealth over the next five or 10 years. And the great thing is, they were able to refinance their house and take 25% off of a line of credit on their house and get a 75% first mortgage. So it’s 100% financed, and it cash flows as positive.” Well those are winning formula stories for investors. And then say to the investor, “Oh, and by the way, I have another one, but I don’t have anyone else for this great property. Who else do you know?” So your niche market really becomes this journey about going really deep into a market to understand the inside information – the inside thoughts and fears and aspirations of the consumer, and almost reverse-engineering it from, “What’s keeping them awake at night? What’s their biggest fear?” and then directing all your marketing to that marketplace, answering all of their questions. I was in London, Ontario the other day talking to someone, and I said, “Why doesn’t someone here write a book called ‘The 12 Secrets of Buying Your First Investment Property in London?’ Who would want that book? I’m telling you, the people who want that book are everyone who’s thinking about investing in property in London. And the simple reason that you have a book, and you know the 12 Secrets, and you share it for free, increases the perceived value they have of you. And plus – since you’ve done a book, they think you’re the expert. They think you’re a really big deal.” So I just really want to encourage everyone: you’ve got to change the game right now. The game of real estate is changing rapidly. It’s no longer trying to be everything to everyone. It’s no longer really relying on just repeat and referral business, because what’s happening as more and more agents enter the marketplace, is your past clients and your sphere are getting picked off, because one of your favourite client’s daughter’s boyfriend just got their real estate license. And it’s a family thing, and we should keep that money in the family. So what we’re seeing is agents starting to lose almost 19% of their client base every year just because there’s so many realtors coming into the marketplace. So what’s your defense against this? The defense is to start taking 10% or 15% of your time, going in and trying to do the research, and finding out what your niche market is. But it’s only a niche market for you if you really love and are interested in it. Because if you’re not interested in it, you’ll have no enthusiasm for it. Your morale will be low, you’ll have no momentum, and you’re not going to do anything about it. And you know what? People are going to sit there and go, “Oh, you’re just doing this because you have to do it.” Whereas if you get passionate about somebody – whether it be helping women build wealth, mommies building wealth, seniors doing sale-leaseback, creating the first tour of waterfront homes in your neighbourhood (almost like a garden tour) – that’s the magnet that attracts the leads to your niche.
So I’m going to finish off with just three simple secrets why niche markets are so profitable. And then I would really encourage you to listen to other podcasts. I’ll be doing my two-day seminar in Toronto in June, and you can email me for more information on that. But let me just tell you about the three simple secrets why niche markets are so profitable. Number one is people want to work with people who get them. And when you’re positioning yourself as a niche market specialist to solve someone’s selfish need – that is why they come to you. Now, before you choose which market to dominate, you should do some research to ensure there are enough people interested in the service you intend to offer. Study your MLS statistics, and look at the underserved areas and the higher-margin areas. What you’re looking for is not high demand, low-margin; you’re looking for a market that has high demand and is also high-margin, because it’s sometimes easier to sell a $1,000,000-$4,000,000 house than it is to sell a $100,000- $400,000 condo or home. So why not? It’s the same amount of work, and you get paid 10 times as much. And you know what? People expect to pay more for a service or product that is customized to their individual needs. In other words, people will always pay more for you as a specialist than they will for a generalist. And this is really the first secret of why niche markets are so profitable, because the perceived value of your service increases so much from the customer’s point of view. And really, perceived value of your service is defined as the worth of a service in the mind of a consumer. And their perceived value of the service you offer dramatically affects the price that you can charge. People will pay more for a Broadway show than a local community theatre show. They’ll pay more to watch professional sports rather than amateur sports, and they understand that a surgeon makes way more money than their generalist family doctor, so the value is already programmed into your consumer’s mind. So take advantage of this psychology and offer customized solutions to or for your niche market consumers.
The second secret to niche market profitability is just to become the highly visible celebrity specialist in your niche. This may be by writing an article or blog directed to your niche market, creating a special report on how to avoid the top 10 mistakes of your niche, or by conducting monthly seminars for your target market. Being in front of your niche all the time means they can never forget you, and the questions they ask you give you the internal wisdom that allows you to adapt your marketing to answer those questions all the time, and more frequently. And a lot of those questions, especially if they’re very narrow, can’t be easily Googled, right? The other thing I would do is, when you become that celebrity specialist, you’re going to find out where your perfect-fit customer consumes their information. Are they on Pinterest? Are they on Periscope? Are they on Facebook? Instagram? Is it blogs? Websites? Direct mail? Videos? Podcasts? Where are they actually going to consume the content that fits their lifestyle? Step outside of your comfort zone and shine. Become the trusted expert on your niche market and watch in amazement as you grow a tribe of loyal followers, because you’ll discover that building your marketing becomes more targeted and way less expensive. It’s just amazing how little it actually costs when you’re in front of your target market all the time.
And here’s the third and final secret, and then we’ll wrap up my rant for today. The third secret to highly profitable niche markets is your marketing expenses decrease dramatically. People start coming to you instead of you chasing them. The magic of doing business in a high-interest, low-competition environment is that people actually want to consume what you’re offering. Your conversion rates are very high so you waste very little time dealing with imperfect or non-fit clients. Start referring those to other agents. Gum up their business. When you get so many leads of high-quality people who like, trust, and respect you, and revere the value that you offer, your business becomes amazing. Just think about it. Who were your five best clients last year? Just think about that for a second. Picture them, what it was like to go through that whole transaction with them, how much they appreciated you, and how you really loved real estate when you were doing it with your five best. Now contrast that to your five worst deals that you did last year, and just look at the disconnect. Get that feeling in your gut right now. It’s like, “Oh my God. I never want to work with those type of people again.” Well, that’s why you create a niche market, because it tends to attract only great, high-margin, perfect-fit clients. And your conversion rates are so high because you just never have to deal with non-fit clients anymore.
So these three simple secrets to niche market profitability are really simple to follow if done the right way. And the right way really involves you going first, and positioning yourself as the trusted resource, so you’re coming from this place of contribution, caring, drive, and dedication. It’s not the get-rich-quick scheme that a lot of competitive trainers are offering: “Here’s the one magic bullet that’ll just change your life.” No. You’re building a long-term business. But you’ll find that the riches are in the niches, because the margin and profit you make on every transaction is so high that you don’t even have to do as many of them.
So that’s my rant for today. I hope you’re enjoying these podcasts. I’m always looking for feedback from you, and you can email me at email@example.com with any of your feedback, or also let me know if you want to be a guest on my 25-Minute Real Estate Success Series Podcast. So have a great day, and we’ll talk to you soon.