If ever there was an industry that lives or dies by the performance of it’s salespeople, it is real estate. But real estate sales, like insurance sales, suffers from a cripplingly high failure rate when hiring new salespeople, and the reason is that these industries employ highly ineffective processes for identifying and hiring fresh sales talent.
Some Things You Probably Didn’t Know About Salespeople
1. As a talent-based vs. a learned skill, exceptional sales effectiveness is often inversely correlated with academic interest. Sales people typically do not shine academically. It is not that they are stupid, they simply have other priorities – like building social networks – and they typically have relatively little brain space allocated for theory.
2. Psychological theory cannot predict sales success. Psychometric and personality profiling tests are of little or no value in predicting whether an individual can sell or not.
3. Sales excellence can be coached but not trained. You can’t train a person for a job they cannot do and some people will never learn to sell as long as they live. So hiring and training estate agents who lack the necessary talent is a monumental waste of time and money.
4. Selling is a contact sport and classroom based sales training is of limited value. Real learning happens in the field and most great sales superstars have had mentors or coaches, and one of the most critical roles of sales management is coaching in the field.
5. Top performing salespeople cannot sell in all markets. A hugely successful account manger in the packaging industry would probably be a disaster in new business development in real estate. Another fact of note is that most great salespeople make very poor sales managers. Less than 15% of great salespeople in real estate make good managers-----scary thought!
Why Hiring Processes Fail
The typical interview-based hiring process is marginally more effective than flipping a coin (51%)
Typical Selection Processes
Hiring success rates aren’t much better than a coin toss*
Selection Method % Over “Chance”
Typical Interview 1% increase
Personality Tests 1% increase
Experience 5% increase
Scorable Interview 7% increase
*International Personnel Management Association, Feb. 1999
However with new predictive actuarially-based assessment technology provided by HR Chally of Dayton Ohio, a structured scorable interview and proper reference checks, a hiring accuracy of >90% is possible.
In recent discussions with real estate executives, they were asked to define the characteristics they associated with successful agents. These were:
• Assertive
• Hard working/High energy levels
• Outgoing personality
• Good interpersonal skills
• Good attention to detail
When a validation study was conducted, these attributes were found in equal measure in the super performers and the abject failures. In other words they were “nice to haves” but not predictors of success. Further correlation studies revealed that the real success drivers were:
• Lead development
• Problem solving
• Qualifying leads
• Commits time and effort to ensure success
• Closing skills
• Opportunistic
Another phenomenon encountered in real estate sales, is new entrants to the business who start off brilliantly but leave after a year or less. This drives managers of realty companies nuts, but the answer is not difficult to find. Quite simply, there is a mismatch between the individual salesperson’s natural selling style and what is required in real estate. For example, account managers----the classic “relationship” salespeople----really thrive when they look after a small portfolio of customers or accounts with whom they build deep, and often lasting business and personal relationships. However, put them into a deal driven industry with a fairly short and intense sales cycle, they seldom last. They have the selling skills to do the job, but they simply don’t like it and move on.
The barriers to entry in real estate are low and, regrettably, many new entrants to the industry have little or no chance of surviving in a tough business. The resulting attrition rate is high and horrendously expensive, notably the costs of lost opportunity. Increasing hiring accuracy can have a dramatic impact on the profitability of any real estate company.
Hiring Ineffective Salespeople Costs Real Estate Industry Millions - To learn more about this author, visit Peter Gilbert's Website.
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Dave Kurlan
Dave Kurlan is the founder and CEO of Objective Management Group, Inc., the industry leader in sales assessments and sales force evaluations, and the CEO of David Kurlan & Associates, Inc., a consulting firm specializing in sales force development.
Dave has been a top rated speaker at Inc. Magazine's Conference on Growing the Company, the Sales & Marketing Management Conference and the Gazelles Sales & Marketing Summit.
He has been featured on radio and TV, including World Business Review with General Norman Schwarzkopf, in Inc. Magazine, Selling Power Magazine, Sales & Marketing Management Magazine and Incentive Magazine.
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He created and wrote STAR, a proprietary recruiting process for hiring great salespeople, and he writes Understanding the Sales Force, a popular business Blog and is a contributing author to The Death of 20th Century Selling and 101 Great Ways to Improve Your Life, Volume 2. - Visit Dave Kurlan's Website |
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Peter Gilbert
(Visit Peter's Website)
Peter began his sales career with Ecolab
Inc in South Africa.He spent 14 years with
the company in a variety of technical and
sales roles, with his final assignment
being as CEO of the South African
operation. He then founded the South
African affiliate of Philip Crosby
Associates, and fulfilled the role of
Sales Director for 7 years, during which
period the company became the largest TQM
consultancy in the southern hemisphere.
When the Company was bought by Proudfoot
Consulting, he assumed the role of Sales
Director for three years, before leaving
to establish Chally SA, specialising in
sales assessment and recruitment
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