Creating Your Marginal Value

Key Concepts:
Pain of Change – All of the prospect’s feelings and experiences associated with new behavior and doing something different.
Consequences of Not Changing – All of the penalties your prospects incur because they are not doing business with you. This could include getting less for their home than they could or paying too much for their new home, finding themselves homeless for a few days, or weeks, because the Realtor did not do a good job of coordinating their transaction; finding themselves in the middle of a lawsuit because the Realtor missed some minor, but critical, detail; etc.
At the time you initiate contact, most of your prospects believe that they are doing quite well without you. They feel they have many choices when it comes to buying or selling a home. They also believe that if there are consequences associated with not doing business with, those consequences are quite acceptable. If either belief is true, you don’t have a prospect.
The Pain of Change > The Consequence of Not Changing = “No Sale”
Before you will ever sell a prospect with this mindset, you must successfully introduce the concept that there are indeed consequences associated with not being your customer.
The Pain of Change < The consequence of Not Changing = “Sold”
If there are not consequences to your prospect from not being your customer, you need to move on. If there are consequences, bring them up in the form of a question. That is totally different from talking about “what you do.” You seem like a sales person, instead of a consultant or an advisor. When you do this, you will bring to the surface what your prospect will experience in the absence of a relationship with you and access to what you do.
Exercise:
1. Think for the types of resistance you are currently getting from your prospects (both buyers and sellers). If you are focusing on sellers, it could be that your commissions are being under attack. If you are working with buyers, you could be experiencing a difficult time getting them to sign an “exclusive right to represent” contract. Grab a sheet of paper, and make a list of the pains and risks they believe they would experience if they made a commitment to work with you versus keeping their options open.
2. Now next to that list, make a list of how it turns up in your conversations with them. What are some of the things they have said to you that indicate the strength of their belief in the “Pain of Change?”

Now let’s discuss the concept of Marginal Value

Marginal Value – The things you do and the results you create that separate you from your competition. The basis for identifying the consequences your prospects are likely to experience without you.
Translation – The process you go through to translate the absence of your Marginal Value into consequences your prospect may experience.
Marginal Value does the following things:
> Separates you from your competition
> Goes beyond core competencies
> Is dynamic
Your prospects will work hard to convince you that you don’t have any Marginal Value, so they can take all the risk out of choosing the real estate agent with the lowest commissions.
Real Estate Agents who cannot defend their Marginal Value must discount their commissions to be competitive.
Real Estate Agents who have Marginal Value, and can defend it, will win without having to discount commissions.

Summary
There are certain core competencies that every real estate agent brings to the market. These competencies are things all competitors do and are essential to be taken seriously in the marketplace.
However, if you choose to compete based upon the core competencies that every other real estate agent does, you insure that you will be considered a commodity and your commissions will be under great pressure. As we warn our clients, if you talk about things like customer service, experience, being in the top 1% nationally in sales, or other common statements that Realtors make, you will be one of three or four real estate agents having to cut your commissions to get a listing (or rebate your part of your commission to attract a buyer). The danger of this is that you will always be under attack by someone who is willing to undercut your price.
The concept of Marginal Value says that in every market place, every competitor in that market place must bring something unique or something at the margins. This uniqueness is what we call Marginal Value.
It is essential to understand three things about Marginal Value:
1. If you have it, you don’t have to offer the lowest commissions.
2. If you have it, you must put it in play as early as possible.
3. If you don’t have it, you had better quickly begin to discount your commissions below what your competitors are offering or you will be driven out of the business. 

Exercise:
Grab a sheet of paper and draw three vertical columns on it. In the first column you are going to make a list of the top Strengths you offer your clients.
In the second column you will list every consequence the prospect experiences in the absence of that Strength.
In the third column, for each consequence, indicate: How it shows up? How do they feel it? What could it cost them? etc.

Review of Exercise:
Review columns 1, 2 and 3 and see if you can clearly see the difference in impact between what you are saying in column 1 and what you are saying in columns 2 and 3.
As the distinction between the more intellectual content of column 1 and the more emotional content of columns 2 and 3 becomes clearer, you will be mastering the process of translation.
Here is the main point about translation: If you talk about what you “do” and force the prospect to do the translation, they may not do it right or at all. This is high risk.
Circle the consequences in column 2 that you feel will be the most effective at creating or measuring your prospect’s awareness that life without you can be painful.
You will need at least three solid consequences for this process to produce optimal results.
Go back and do “so what” to your three strongest consequences and see if you can take them even deeper.