Frank: Chad, you have an incredible story that I want to be the journalist of and get out from you. Where are you at right now with your production level in your second year?
Chad: This year, we’re on track to double our production from last year. I believe we have closed $22.8 million worth of real estate so far this year.
Frank: How many homes is that in your market in San Antonio?
Chad: I’d have to double check, but I’d say probably in the ballpark of 75.
Frank: In your second year? That’s incredible. No one does that.
Chad: Thank you.
Frank: I wanted to tell this story because as you know, many people struggle when starting out in real estate. They get caught up in things that don’t work or get distracted by shiny objects. Let me get this straight. Two years ago, you were a farmer in Kansas, is that correct?
Chad: Actually, I grew up on a small farm in Kansas. I went to college, met my wife there, and then we moved to Lubbock, Texas and I got into real estate there. I sold 20 homes my first year, 20 homes my second year, then I met up with Chris Watters and he had me come down to San Antonio and start the branch with just myself two years ago.
Frank: So you had a little bit of experience first?
Chad: I had a little experience, but I would say just enough to make me dangerous.
Frank: Why Chris? Why did you partner up with him?
Chad: I interviewed a ton of different brokers, and what I really saw was that Chris had a better understanding of how to build out a sustainable real estate model. Most brokerages can teach you how to be a good salesman, but I really wanted to have an exit strategy at some point and I could see that he had the foundation work for that and that he was keen about coaching and mentoring and he has been wonderful to get me where I’m at. I would not be where I’m at today if it wasn’t for his guidance.
Frank: Chris is not like a coaching company.
Chad: Exactly. It was very much actionable items and very tailor-fit for my situation.
Frank: I want to talk about how you got money so quickly. How much were you able to raise in your first year from local business on Chris’s Brand Ambassador program to help offset your lead generation expenses?
Chad: It was several thousand dollars each month. I think we got upwards of $10,000 a month towards the end.
Frank: $10,000 a month! That’s game changing!
Chad: Yeah, it definitely makes it a lot more cost-effective to get those leads and it makes things a little less painful when you’re teaching new agents the ropes and they’re screwing stuff up.
Frank: How did you raise $10,000 each month?
Chad: Chris told me what to do and I was a little nervous about doing it, but I basically went and found small businesses that we could send business to. Most small businesses don’t have a network of other small businesses to help them build and grow, so I kind of sold that to them and that they would get some insight from me. Things that we know inside and out in the real estate world, like lead conversion rates and those types of things, a lot of small businesses don’t really know about. I went and found these small businesses that were trying to grow onto the next thing and help them to be able to get there. Once a month, we get together and talk about different things to help their businesses grow. In the beginning, I was a little more nervous about it because I didn’t feel like I had a whole lot more information than the other businesses, but now I definitely feel like I have a lot of value to give other business owners.
Frank: How did you approach these businesses? How did you get your list? Let’s go a little bit deeper. What’s the first step someone needs to take to start raising money like you did?
Chad: The first thing I did was use LinkedIn heavily. Some of my best partners came from LinkedIn. The business owners on LinkedIn value networking and value other people. I made the mistake of shooting for some big accounts, but they didn’t really need me, whereas the other people I found were looking for exactly what we had. When I approached them, they were quick to jump at the opportunity and didn’t balk at paying to be part of the group.
Frank: You cold-called a bunch of businesses in different industries. What did you say when you reached out to them?
Chad: I pretty much just said, “Hey, I’m looking for a partner that I can send all of my clients to. I’d love to interview you and see if you’re a good fit for them.” That set the expectation that this is a two-way interview. Then I would meet with them and ask a bunch of questions to see if they were a good fit business-wise and if they did things ethically and I would feel comfortable sending clients to them. Then I told them if they wanted me to send clients to them, they would need to contribute so that I could grow the business to send them more and more clients.
Frank: What industries have you had success with?
Chad: Some of the big-ticket items are a lot easier. A roofing company, for example. A small-to-medium sized roofing company is great because there is a high return every time they put on a new roof. Most business owners look at it like, “If I get x number of deals out of it, then it makes sense.” When they join, I’m sending them business, and if their business is growing, they’re more apt to come back and say, “Hey, how can I get you more business so you can get me more business?” So HVAC companies, CPAs, wealth management companies, solar panel companies, home security, all different types of business where there is a high probability that we will get our client in contact with someone during the transaction or shortly thereafter.
Frank: How did you go about asking for the money? How much did you ask for? Is there a contract? What are the deliverables? Go through that presentation.
Chad: The contract and the deliverables are pretty simple. I would say that if you sell the wrong thing, you can lose your brand ambassadors. In the beginning, I sold leads and then I realized that’s kind of a hard thing to deliver on sometimes. If that’s all that they’re looking for, they’re always going to be looking for the next thing. So what I was really selling was helping them build their business better. Our solar panel guy was having some struggles with his sales team. He came from a background in operations so he runs a very smoothly operating company, but sales are not his thing. I was able to coach him on how to rebuild his sales team as opposed to the way he had it before.
Frank: Where did you get your confidence from to be able to call up a bunch of business owners and charge them all for coaching, essentially?
Chad: When I started in the business in Lubbock, I didn’t know anyone and I cold-called For Sale By Owners. Once you do that, I feel like everyone else is super nice compared to that. I’ve got thick skin, plus there are many, many different businesses to go for.
Frank: So you’re able to cold-call the businesses and actually speak to the business owner?
Chad: LinkedIn was very helpful. One of the mistakes I made early on was trying to go through business development reps. They’re great, but they’re not the people you want to be targeting for this. You want to try and get ahold of the small business owners themselves. They see value because if they give you money for advertising, it helps them grow. And if you’re able to help them build out their business, that could increase the amount of money that the business makes by hundreds of thousands of dollars. That’s a small price to pay. Whereas with a business development rep for a larger company, a couple more deals don’t really make a difference to them.
Frank: How many people do you have in your brand ambassador program right now? How many different businesses?
Chad: 10 right now.
Frank: And collectively, they’re paying you $10,000 a month?
Chad: Correct. I have some people with a little bit deeper pockets than others because they benefit more. For example, a pest control company doesn't have a lot of markup on their product so they need a lot of business from us before it makes sense. Whereas a solar panel company, if they sell one or two solar panels to a client we send them, they’re in a great position.
Frank: You’re doing a monthly business mastermind with them, correct? Explain that.
Chad: I have lunch catered in by one of our other vendors and we meet for two hours. Most business owners can’t afford a ton of time. They can’t be away from their phones for four hours, but I can get their undivided attention for two hours. Anything more than once a month, they don’t respect the time. That was kind of the sweet spot I found. We have several different flavors of what we do to add value. A business spotlight is one of the things. When we get a new brand ambassador that joins, I meet with them outside the meeting for a lunch a few weeks before to talk about their strengths, what makes them different from their competition, and their challenges. For example, we had an HVAC company that had extremely low turnover and that’s rare. They had a really strong culture, and a lot of us learned some things from them and implemented those. The spotlight is one of the things we do that helps them immediately buy in and feel like they’re part of the group. The flip side of it is that you have all these other businesses that are giving you ideas on how to get past issues. We had a home security guy who had trouble with a ton of turnover. Our insurance brand ambassador gave him the recommendation of changing the way he did his payouts with his sales team, which cut his turnover rate in half. It was something they do in the insurance industry that no one really does in home security. That’s kind of where you get the value of having different opinions on ways to do things.
Frank: How do you get paid? How do you collect their money?
Chad: We use Square and we have it set up to automatically bill once a month.
Frank: Was that hard for you to go out and actually ask for a credit card when normally you’re just asking for a listing contract?
Chad: No. It was pretty simple for me. I had an agreement explaining what our expectations were, what they were committing to doing, and a credit card authorization form. It's really not that difficult. I think a lot of real estate agents think that they don’t have anything to give. But if you look on LinkedIn at how many of these people are paying to be part of networking events and all they do is go and ask for referrals. They don’t help each other build their businesses and it’s basically a paid referral network. There are lots of people out there that want that coaching without having to pay thousands of dollars to get coaching from an industry expert.
Frank: I think that’s the big thing. This isn’t a BNI group. This is a business mastermind consulting group. How do you handle the objection of “I’m already in a BNI group.”
Chad: If you want to keep getting referrals, great. I’m not selling you referrals. That’s the key part. You have to focus on the business consultation and the coaching part. Also, talk about what their business model looks like and how they get their clients. You want to be very guarded with the group because collectively they set the tone. None of the people in our group have a go-to of “We do it less than everyone else.” That’s not what you want in your group. What you want is “We do this better than everyone else to add value.” That raises the bar, as opposed to lowering it.
Frank: So $10,000. What do you do with that money? How did you spend it?
Chad: It all goes back into advertising. Whether you use Adwords campaigns, different lead providers, billboard, radio, etc. Whatever it is your campaigns are, it helps keep your client acquisition costs down. As you are pouring it back into the business, it helps the business take off faster. Your agents are getting more leads, they’re fat and happy, they’re sending business to your referral partners. I frequently make statements to the office like “Hey, you have these leads because of these people here. Make sure that you help them out. They’re buying your leads.” They are genuinely thankful for that.
Frank: Would you say that the majority of the value they’re paying for is the mastermind? Is there anything else that you’re doing? Yeah they might get some leads, but you want to downplay that as much as possible, right?
Chad: Exactly, because they can go to a BNI group and get leads and they might be able to get them for less. Then if you have a dry spell where you’re not sending a lot of business to them, you’re done. But if you’re helping them to do a better job with their business, then you’re off to the races. Stuff that we don’t bat an eye about in the real estate industry can be mind-blowing. A lot of these business owners haven’t even thought about client acquisition costs. When you ask them where their leads are coming from, they don’t know. They don’t want to do advertising either because they say they were spending $5,000 a month for six months and didn’t really see any growth. Well, they’re not tracking. When I coach them on how to do that, now they’re interested in doing that and seeing what is going to work.
Frank: When you first started, how much money did you raise in the first six months in a brand-new market? You had a little bit of experience selling real estate, but you didn’t have any sphere or network when you moved to San Antonio. You went out on day one looking for money without any track record of selling homes in that market. In the first six months, how much money did you raise? And could you give our audience some insight on what they need to do when they’re in a situation of where they’re a brand-new agent or in a brand-new market? What do they need to know to do what you did?
Chad: The first key hinge that I looked for was a really solid lender. This can be difficult for some agents because they already have a great relationship with a lender, but if that lender isn’t contributing to their growth, then they’re just a leech. I went and found a great leader who was willing to contribute to advertising. That was a big portion of it. Then, it’s easier to find those people with bigger ticket items. I would basically set out and say, “By the end of the month, I want to make sure I have a roofer on board.” I would do the Miracle Morning, get in my prospecting hours, and prospect for roofers. Once I knocked down that domino, I went for a wealth management guy, then a CPA. Think about the people that you might need to get involved in a bumpy transaction. We had a hailstorm here a couple of years ago and have run into several roofing issues. That’s kind of a go-to for us. I don’t know how many transactions I’ve been part of where we had to get a CPA involved for issues with taxes. Think about those integral parts. You want those to be someone you can trust to refer business out to and that they’re going to see value in it.
Frank: A lot of this was probably just your eagerness and ambition of somebody wanting to invest in you and you got them excited and sold it. You didn’t really have a lot of transactions to show them that you can send them business. It was more that you’re going to help them grow their business and guide them with what you’ve learned with Chris.
Chad: That was the “Ah-ha!” moment that I had. I started getting a lot more brand ambassadors when I started talking about the coaching and quit talking about the leads.
Frank: Chad, thank you so much. Is there anything else you want to share with somebody that may want to duplicate the same model or anything that’s missing that you think could be beneficial to someone who wants to do what you did?
Chad: I would say that you have to believe in yourself to do it. I know that sounds stereotypical, but you have to believe that you have some value. If you don’t believe that you have any value to give, then you’re not going to be able to sell it. I genuinely felt that I could help other people to grow their businesses. I didn’t know a ton about business, but I could share what I did know. People saw value in that. Fast forward two years and I know way more about business and growing a business than I did two years back.