Posted on Sunday May 15, 2011 6:28 PM
by Joseph Kazickas 2 Comments »

It isn’t easy to build a great lead generator like hamptonsrentals.com. The website keeps us busy servicing the enquiries we receive. By phone, or via email, the work of converting our leads into closed transactions is non-stop. Especially this time of year.

In order to succeed you need thick skin, organizational skill sets, a work ethic, and the desire to earn money. Each interaction must also be framed as an investment in the future.

Real estate brokerage business models that evolve in the 21st century are bound to be disruptive to the status quo. We already know that one website, our own hamptonsrentals.com, is having a major impact on how the local vacation rental market is serviced. We see it in the behavior of our competitors. And customers.

But a great lead generator, which serves as the foundation of your business model, creates problems as well; problems which one wouldn’t readily anticipate.

One area we needed to reinvent was agent compensation.

Traditionally, an agent’s share (%) of the commission he receives on a transaction increases as the amount of gross commission he has brought to the Broker grows. Historically it started at 50/50, and went up from there. Always worked well, and seemed fair.

But what if your business model is built around lead generation? And it’s successful? What if the emphasis on service becomes just as important, if not more so, than the commission potential itself? Some mechanism needed to be developed in order to encourage agents to understand that the transaction itself had a value, irrespective of it’s underlying potential monetary value.

We decided to move to a point system for determining an agent’s share of the commission. The more points an agent earns from any of three pools of opportunity and performance (listings which transact, leads that are converted, and cumulative gross commission dollars earned) the higher that agent’s split becomes.

It seemed too simple to be faulty. So that’s what we decided to do.