6 ways to increase your lettings agency's profits
Letting agents wanting to grow their businesses profits could benefit from these six tips from Agent Rainmaker’s Sally Lawson, CEO and Founder, and Kate Gregory, Chief Customer Officer.
New approaches to lead generation, increasing your managed fees, and adding a VIP category to your service offerings are just some of the ways that letting agencies could increase their profits, said Agent Rainmaker’s Sally Lawson, CEO and Founder, and Kate Gregory, Chief Customer Officer, in a Goodlord webinar. Here are six ways they suggest letting agents could improve their bottom line.
1. Drive more traffic to your valuation tool to increase landlord leads
Many letting agents use a valuation tool on their websites as a way of bringing in new landlords, but Sally Lawson thinks they could be going further to promote this tool and increase the number of leads coming into their pipeline. "Put it on a single page and start running Google ads and Facebook ads and start driving traffic to that. You will see a massive increase in the number of leads that come through to your business," says Lawson. "We're seeing agents getting as many as 20 new leads every single day." She also suggests utilising webinars as a means to increase landlord leads. "We had 250 landlords attend our webinar for legislation updates, where we offered them an opportunity to jump in and have a health check. And we'd normally get about 40 or 50 people opt-in to that, which is 40 or 50 lead opportunities."
2. Let-only landlords are an untapped market
"A recent study came out that said that 60% of landlords are choosing the let-only option or self-managing option as opposed to fully managed. I believe one of the biggest markets we have right now is let-only landlords and converting them to fully managed," says Lawson. "If there's a shortage of landlords in your area, it gives you an untapped market because most letting agents are ignoring them. Get on that phone, start talking to them, build a funnel to attract them, get them onto a webinar or whatever you need to do." Lawson thinks highlighting legislation changes is one of the easiest ways to do this. "I'm really concerned about the changes in legislation. I'm worried that you may not be compliant. I'm willing to offer you a free compliance health check. When you free, we can do this on zoom or face to face. I want to go through things with you and you start to have a conversation about the things they've got wrong and the risks that they're taking. Trust me, you will convert them."
3. Increase your managed fees by outlining how much you do for your landlords
Increasing your fees is perhaps the most obvious way that letting agents can increase their fees, but many are hesitant to do so. Lawson says that this is a mistake. "It's not just about increasing the standard monthly management charge, it is also charging for the extra bits that you do and stopping doing the stuff that you're doing for free," she says. You can do this by making it clear to your landlords exactly how much work is involved in managing a single property. "You go do inspections, free check-ins or free checkouts, deposit registrations, moving rubbish, meeting the clients, go into court, doing section 21s, deposit adjudications, honestly, crikey, and you're charging £50 a month. It's insane," says Lawson.
4. Try creative approaches to upselling your extra services
"One of the things I've noticed in the bigger business world out there over the last few years is that so many companies offer upsells," says Lawson, citing the "Other customers also bought this" example from Amazon. She says letting agents start thinking in terms of their "product line" and how they could expand it, from offering furniture packs to refurbishments. Kate Gregory notes that letting agencies who are already offering these services should think about different ways to package them in order to make them more enticing. "Bundle offers, packages, deals, things like that. We don't do anything like that in the letting agency world. And there's no reason why we can't do what every other successful business does."
5. Think beyond the traditional, three-tiered service offering
Have you thought about adding a VIP service to your proposition? Most letting agents offer only two or three service levels to landlords: let-only, rent collection, and fully managed. "If you have three services, the majority of people will go for the middle one. If you have two services, then most people will go for the bottom one, which is let-only, so I think you're doing yourself a disservice," says Lawson. She suggests letting agents add an additional, VIP service, that "makes people feel special" and includes bespoke elements such as one-on-one consultations. "We've found that when people have done this, around 30% of landlords will go for VIP. If you don't offer it, you're never going to sell it. But if you do offer it, what if, what if you could have 30% of your landlords paying 5% more?" Gregory adds that, again, it's important to think about how you position your VIP service: "It's about making one look better than the other."
6. Make sure your staff are bought in to your vision for a successful business
"How do you get your team to be really pulling and driving with you?" asks Lawson. "If you haven't got a good team around you - and of course you want to build a whole team of A-players - then how do you do that? It's really difficult." You can start by asking your staff where they see themselves in the future - for example, a branch or regional manager - and how that fits into your own plans for your business. "That's brilliant because you can say, I want to have more branches and I'm going to need regional managers. I'm going to need trainers.. I'm going to need people, directors with me as well. I'm happy to work with you on that. And then really work with them," she says. When you start bringing them into the vision, bringing them into the picture so that they're building the business with you, because if they're working towards their dream, they're also working towards your dream and you're working towards a common goal. And that will really make a difference. If you've got four or five, six people pulling together in the same direction, it's a very different business."
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