The “R” word is one of the most feared words in the marketplace today: RECESSION. There’s a lot of debate around whether the United States is in recession, but whether you call it a recession, slowdown, correction, or a normalization, it’s clear the market is changing.
As a title professional, now may be a good time to consider taking action, particularly if you’re already seeing some slowing in your market. New situations like this present new dangers and requirements, but they also present opportunities.
Let’s start with the dangers. The most obvious threats are reduced sales or revenues, which could threaten profitability and put pressure on cashflow. Those are troubling possibilities, but good management techniques can help you navigate these potential headwinds. Here are some steps to consider:
Keep a close eye on your business metrics
Get accurate revenue numbers and watch them carefully.
Seek realistic sales projections. Know what’s in your pipeline, and in your customers’ pipelines.
Watch expenses closely.
Know your “cash-burn” rate (i.e., how long you can operate at a loss).
Hope for the best, but make a plan for the worst
No one likes layoffs, but you should have a plan. Make this as soft as possible. You may consider salary “freezes” and percentage salary reductions as an option should conditions warrant.
Work with landlords, vendors, suppliers, and banks for more favorable terms.
Build a “war chest” or “rainy day fund.” Having cash-at-hand is prudent.
Consider a line of credit. Seasonal slowdowns, roughly October through February, may make cash flow challenging. One alternative may be to obtain a reasonable line of credit from a trusted, local lender that can be used for short term coverage of payroll or extraordinary expenses “just in case” it is needed. The line of credit option creates flexibility for expense management.
Having discussed the dangers, here are some new responsibilities you may face in a contracting economy:
Get your game face on
Things are a lot more competitive. There is more competition for each revenue dollar. Prepare your team to compete more effectively.
Keep a close eye on your competitors. Know what they are doing and where they may be looking to take market share, your employees, etc.
Take special care of your best customers. Know where your revenue is coming from. “Show the love” to customers who may be at risk.
Find partners you can trust. Look for loyalty, financial strength, and assess the risk of being betrayed. Some underwriters may put increased pressure on you to make minimums, or they may cut staff or divert resources to support their direct and affiliate operations while neglecting your needs. Find the partners that are going to be highly responsive to your needs so you can get your difficult deals closed.
Watch out for “bad moods.” Your team members may worry about slowing market conditions or even about being laid-off. Fear and stress can make it difficult to compete. Company culture is important. Stay close to your team and engage them. Get their input. Share your action plans.
Make new commitments. Revise sales projections and requirements for the sales team. Now is the time to invest in your team’s selling skills and marketing efforts.
Find efficiencies. It’s time to streamline processes and improve your systems. Seek ways to do more with less.
If you cope with the threats, fulfill your obligations, and have adequate financial capital, you may have the chance to take advantage of opportunities in a slowdown. Some of these opportunities include:
Improving the quality of your team
Upskilling – consider education and training for your staff including CE, CLE, and sales training.
One consideration is to hire top performers from competitors. Of course, you want to remain vigilant for competitors looking to “poach” your employees.
Become a bigger and better company
Now may be the time to consider purchasing a competitor for a discount to expand into new markets and to obtain new capabilities.
You may wish to rethink your customer experience and employee experience to give you a competitive edge.
Streamlining management and operations can help you become a more agile company. This might include bringing in new technology to do more with less and to improve turn time and accountability.
Consider making new offers – such as commercial transactions, education and training for your real estate agent customers, or new digital capabilities for customers such as mobile apps.
Regardless of whether the economy experiences a soft landing, hard landing, stagflation or a recession, anticipating what you might do in advance of these situations is essential to the success of title professionals. By planning ahead, you can overcome market challenges and adopt a new “R” word to describe your organization: RESILIENT. Of course, your Alliant National agency representative or agency manger is always available to discuss market conditions and ways to help your business thrive!
You are looking at a photo of a house on Mexico Beach, Florida which was the location that Cateogry 4, Hurricane Michael, made landfall on October 10, 2018.
Almost all of the homes surrounding this home were built to 1970s Category 3 hurricane standards set by the local government. You can see what happened to them. Catastrophic destruction.
This particular home was built “for the big one.”
In this case, a Category 5 hurricane standard, able to sustain winds of 250 miles an hour and very high storm surges.
The owners of this home took the time to think for themselves and choose to work with different standards, higher standards, so they could cope more effectively with the new set of threats being created by climate change.
Given the picture above, here’s the question to ask yourself as an independent title agent: What standards am I building my business to?
Where am I getting those standards and what is the motivation of the source that is giving me that information? How reliable are they? Is it appropriate?
As the Independent Underwriter for The Independent Agent, we at Alliant National think for ourselves.
What should those standards be considering that our agents success is our success, that we don’t compete with them by having direct operations and our entire business model is organized around helping our independent agents thrive?
As you may have surmised, our standards are higher. Alliant National is the independent underwriter for THE FINEST Independent agents in the industry, and we have evidence to prove it.
From 2013 through 2017 the title insurance industry had an average loss ratio of 7.7 percent. Alliant National’s loss ratio for that same period was 3.4 percent. That’s performance!
How do we do it?
We offer quality assurance certifications to help our agents meet the needs of regulators and bolster their credibility with REALTORS and lenders.
And we have our own processes verified and certified to be the finest in the industry.
AUTHORIZED SERVICE PROVIDER
The Authorized Service Provider designation is determined by an audit using the stringent SSAE 18 Type 2 (SOC 1) examination process.
We send a formal letter and seal to each agent for every year they carry the Authorized Service Provider distinction, which can be shared with third-party vendors.
CERTIFIED SERVICE PROVIDER
The Certified Service Provider designation also comes with a formal letter and seal, which can be shared with third-party vendors.
To achieve this elevated distinction, an agent must submit additional documentation for review while satisfying Authorized Service Provider and ALTA Best Practices standards.
SSAE18 TYPE II CERTIFIED
Alliant National was the first title insurance underwriter in the nation to obtain an SSAE18 Type II compliant status and is the only title insurance underwriter to achieve compliant status for four consecutive years.
ISO 27001 CERTIFIED
We’re also the only title insurance underwriter in the industry to receive an ISO 27001 certification, validating that we adhere to the most rigorous International Organization for Standardization (ISO) requirements – just another example of how Alliant National assures quality and helps manage risk for our agents.
So choose your standards carefully.
Know the motivations of your underwriters and why some set standards high and why others set standards low so you’re more at risk.
Our standards are built to last, built for the big one, and built to help our agents thrive.
When you speak or write about your title company do you bring up what is different and better and trigger immediate interest? Do you elaborate on what is new, unusual and of great value to your customers? Or do you speak and write about what is ordinary and common and trigger immediate indifference to your value?
There are fundamental principles of economics at work here. The simplified explanation is that people assess value at the margins or edges of common offers. It’s called the Principle of Marginal Utility and Marginal Value.
For example, when you see an ad for a new smartphone does the ad inform you that you can store telephone numbers and text and email people from it? Or does it focus on things that make the smartphone an extraordinary camera, with face ID, and with uncommon face recognition that allows you to mirror your expressions in 12 Animojis so you can reveal your inner panda, pig or robot?
Whenever we as human beings are introduced to something NEW we are hardwired to make an assessment of its value. That’s what you want to do with your sales conversations and the content on your website and social media – provide compelling explanations about the extraordinary value of what you offer that your competitors do not offer.
So are you speaking and writing about your differentiatiors and separating yourself from your competition or are you speaking and writing about what is common and ordinary and triggering people into an assessment that your company is ordinary and should be “priced” (low) to differentiate itself?
When you are common you are priced. Margins are low. So you have to focus on VOLUME. When you are different and your customers value that difference, margins are higher. You can focus on VALUE instead of volume and think of ways to increase your customers’ willingness to pay a premium by inventing new ways to enhance the customer’s experience.
What’s your story? And how do you deepen your story to make it more effective, strategic and competitive? Here are five essential things to look for to deepen your story and make it more compelling:
Your Big Why
Why does your title company exist? Why do you go to work every morning?
Of course, we know you need to make a living, but going deeper than that, what drives you and your company? What is the purpose behind you and the company you lead?
Look for a BIG why (not a small why), something like you believe that home is the most important place on earth or that you believe in homeownership as part of the American Dream.
What you’re trying to do here is demonstrate your sincerity and passion for what you do – and motivate your employees and customers around a unifying cause.
Your Title Company’s Achievements
These have to be highly-valued to be effective. Giving to charity, being in business for 10 years, serving the community, and producing happy customers are not highly valued achievements.
What have you done that is great? Unusual? Look for that.
Your Title Company’s Principles
What matters to you most? What values guide your company’s behaviors?
Pick three and have some wonderful “specific” stories about how your team was influenced by your principles and acted in ways that really helped your clients get ahead.
Your Value Story
Why is your title agency more important, useful and worthwhile to use? What do you offer that other title companies do not? Remember that people assess value on the edges or margins of common offers.
More convenient office locations? 24/7/365 closings anywhere, anytime? Best follow-up? Higher tech? CE classes for REALTORS? E-closings?
Your Reason to Act Now
What bad things could happen to the people who do not use your services? What risks are they taking? What compelling reasons can you give without speaking badly about a specific competitor? Learn to bring these forth.
The competitive reality is that a title company needs to be in continual Story Deepening bringing forth the importance of their products and services, speaking their competitive advantages and superior value to customers and prospects. If you don’t, who will?
Your company has an unlimited supply of stories to share. By incorporating a steady narrative based upon your company’s purpose and guiding principles, you can take advantage of strategic storytelling to gain a competitive edge.