Commercial Magazine

Surviving the 80/20 Iceberg

Honing your sales techniques is crucial when fewer financing deals are available

By Mark Monro

If you’ve recently attended any industry-related conferences or other events and have spoken with colleagues and competitors, you may have reached the conclusion that 2019 could be a tough year for commercial real estate lending. Across many different industries and their associated sales teams, companies typically have the same ratio of sales to successful salespeople — 80/20.

In other words, 80 percent of sales are generated by 20 percent of the sales force. Commercial mortgage brokers and lenders should know the reasons why this ratio is so consistent, and what loan originators in the top 20 percent do that the other 80 percent don’t. It’s a great question, and it’s absolutely something they should be asking. After all, buying a home is one of the most significant investments and achievements of a lifetime.

Regardless of the reasons — whether it’s rising interest rates, tighter standards from traditional lenders, frothy real estate values, or sponsors and investors who are not as confident about the direction of the U.S. economy — they add up to what many commercial mortgage professionals say will be a lower volume of business this year. So, what should you do to remain successful in 2019?

As the late author Dr. Stephen R. Covey described in his best-selling book, “The 7 Habits of Highly Effective People,” one of the characteristics of being successful is to “sharpen the saw.” In other words, you should work on improving yourself through continued learning. If 2019 is going to be a tough year for lenders and mortgage brokers, it might be the perfect time to sharpen your own saw. With today’s easily accessible podcasts, audiobooks and TED Talks, for example, it is fairly simple to stay up to date on the commercial mortgage industry and learn ways to sell more effectively.

There are a number of other ways to close more loans in a shrinking real estate investment market. These include having a positive attitude, effective networking, marketing for new business, knowing your competition, honing your presentation skills and following up with clients after a successful transaction.

Take the initiative

One of most important tools a commercial mortgage professional can utilize is a good attitude. A successful salesperson will look at the smaller markets for lenders and investors and realize they need to double their efforts in downtimes.

 They will see opportunity when others see doom and gloom. They will take responsibility for their actions, while others will blame someone else for lower sales figures. They also will realize that much of their competition will disappear if they stay focused on being among the top 20 percent of the sales force.

Next, a successful loan originator will utilize the playbook on effective networking. Your network should include past customers, friendly competitors, industry experts and other professionals at trade shows and professional seminars. Past clients have already purchased your product or service. Have you called or met with them to ask for their help in referring someone who could use your services? After all, the worst they can say is “no.” If you practice the way you approach others, however, you may get some warm leads.

The majority of salespeople — including loan originators — never think of asking their competition for referrals. If you reach out and create valid give-and-take business relationships, you will be surprised at the amount of additional business you can obtain from friendly competition. Most good salespeople want to help their customers, even if it means the customer uses someone else for a specific product or service. In the end, the customer sees that the good salesperson actually had their best interest in mind.

By attending professional events and trade shows, you can stay current with news about the commercial mortgage industry. If you treat these events as true sales opportunities, you will be amazed at the number of quality leads and contacts you can get by working the room. How many of your peers will simply hang out together and have a beer? Be different and sell yourself, then watch success come rolling in.

Targeted marketing

When business is slow, it can be difficult to market for new business. But that is precisely the time to double down and market even more. The difference is that you need to zero in on your target market with a metaphorical rifle, rather than using a “shotgun” approach to find your customers.

When business is booming, it is easy to shotgun your way to success. “Shotgun branding” works in an environment where you can’t stop getting customers — a market in which everyone sees you, knows you and finds your photo in magazines or trade publications. Once business slows down, however, your brand-related sales revenues may stop coming in, too. Thus, you need to target your advertising rifle directly to the core prospects you want to reach.

Challenge your employer to use targeted advertising dollars, and see if you can get a tenfold return on your investment. Any marketing department head would be thrilled to get $10 back for every $1 they spend on advertising. Suggest a three-month test to prove your point about targeted marketing. If you are successful with this tactic, you will have the additional clients you need to grow your sales figures.

You should ask yourself how well you know your competition. Commercial mortgage professionals should ask their prospective clients about other financing sources and the reasons why the client is considering using them. When you are making a sales pitch, you should be able to give the pros and cons of these competitors. The top 20 percent of salespeople can tell a prospective client more about the competition than the competition knows about itself.

It is up to you to act as a consultant and review all proposals — yours and the competition’s — for your client’s sake. If you do this sincerely and effectively, he or she may realize they can trust you for help in making the right decision. Furthermore, as you describe your competition’s pros and cons, make sure you use the old sales tool of FUD — fear, uncertainty and doubt. The more FUD you associate with your competition, the closer you are to closing another deal.

Make an impression

When it comes to sales pitches, consider your presentation skills. Are you presenting in person, over the phone or via e-mail only? You should be tracking the success of your proposals and asking trusted friends or peers in the industry to critique your presentation style and delivery.

If you are doing the same things repeatedly, it might be time for a change or tuneup. In fact, you may need to work on all three presentation mediums — in person, phone and e-mail — to remain in the top 20 percent in 2019. At first, this will be tedious to accomplish, but if you work to improve, the rewards will include more closed loans.

Make sure to follow up appropriately. Many salespeople make a strong presentation directly to a prospective client and then don’t ask for the sale. They literally say, “Thank you for meeting,” and leave without ever asking, “When do we start?” or “When do I deliver the product?”

Maybe they are afraid of getting rejected, but this is a great time to find out if the prospective borrower has any issues with the proposal. It is much better to smoke out problems in person than to leave and try to follow up with future e-mails or phone calls.

If the client asks you something that you cannot answer immediately, make sure you tell them exactly when you will get back to them with an answer. At the very least, if the client tells you they need to think about their decision, find out specifically when he or she will make one. Always be sure to provide a post-presentation summary and give the client multiple ways to contact you with any questions. Don’t let any stone remain unturned.

When you look back on 2019, will you be in the top 20 percent or the lower 80 percent of loan originators? The outcome is largely up to you.


  • Mark Monro

    Mark Monro is the director of strategic markets for Seattle Funding Group. He is based in Solana Beach, California, and has more than 20 years of experience in real estate and construction finance. He previously worked with Washington Mutual Bank and U.S. Bank, funding more than $1 billion in construction transactions across the western United States in those positions.

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