Commercial Real Estate Brokerage – Why the Pareto Principle is a No Brainer

There is a well-known business rule existing today called the Pareto Principle.  Basically it says that 80% of your new and existing business will very likely come from 20% of the people that you know.  The logic works well in commercial real estate brokerage across sales, leasing, and property management.

So how does this work for you?  It is just a matter of focusing on connecting with that core 20% group of prime clients and prospects over time.  How you can improve your connection with them over time?  Selectivity is a good thing when it comes to client interaction and new business.  As you improve the quality of those client connections, the new business starts to flow.

Understand the Pareto effect

So the message here is that you can use the Pareto Principle to improve your real estate business in many different ways.  It is just a matter of understanding exactly who you should focus on to improve the quality of the 20%.  Here are some points of priority to consider when selecting these very special clients:

• Property Investors owning a number of properties locally
• The business owners and proprietors of successful local companies
• Property attorneys and accountants acting for property owners and occupiers

It should also be said that the people within that prime group of clients and prospects should be flagged as VIP status within your database.  They should receive a special level of treatment, communication, and service.  Over time you can connect with them at double the frequency that would apply to other people within your database.

Get things started

Differentiate your communications and provide some real value to those VIP clients and customers segmented in the database.  What help can you provide them with?

Here are some ideas to help you improve the results that you achieve with some of those clients in the important 20% of your database:

1. Lessors or Landlords – The ownership of any commercial and or retail property is both complex and demanding. There are factors of risk involved with cash flow, rental, lease documentation, and property performance.  As the local industry specialist, you can provide some valuable strategies and ideas within each of those categories.
2. Lessees or Tenants – How often do you talk to local business proprietors and tenants? They will share plenty of information about the local area providing you ask the right questions in a professional and direct way.  You can consider offering the specialised brokerage services of tenant advocacy, and buyer’s agent.  There is nothing wrong with working for the tenants and the business owners locally.  You just have to secure your appointment with them appropriately given local property brokerage laws and the legal documentation required.
3. Business Owners – Many businesses today require properties within certain locations and with particular improvements. Many opportunities can be created through a broker specialisation within a business segment and or group of companies.  As a further extension of activity within this category of client or prospect, understand the value of working with local franchise businesses and franchise owners.  They will have unique and special requirements when it comes to property ownership and occupation.
4. Owner Occupiers – Some businesses deliberately buy properties locally to suit manufacturing and or business operations. Research all of the property ownership records for the region so that you understand exactly where the owner occupiers are currently located.  You can then approach them directly to understand property needs, the pressures of occupancy, and change factors.  A successful local business will usually be a prime suspect for property expansion or change within a few years.  Establish the right connections with the decision makers in each case today.  Stay close to the right people so that your commercial real estate brokerage business grows.

So now you can see how you can effectively use the Pareto Principle in your commercial real estate brokerage business.  Focus on finding and connecting with high quality people in the 20% range of VIP’s.