For an agency, growth is a critical factor to both, building the rent roll as an asset, and offsetting natural attrition. As the agency gets bigger this attrition becomes a bigger hurdle. In smaller agencies, often sales into the rent roll, and referrals from both staff and clients, are often enough to keep up with this attrition. Once a rent roll starts to exceed 300-400 properties, there requires a need for a specialist business developer to drive new business for the agency. It will no longer survive under its own momentum.
One of the first myths we need to ‘bust’ before we look at the way business developers are paid, is the characteristics of a business developer. I had mentioned in a previous post, that property managers don’t make the best business developers. Now that wasn’t a stab at property managers, it is merely that the characteristics required to be a great property, are not at all similar to those required to be a great business developer. Business developers need to be considered as salespeople, because that is what they are. Not just by title, but by profile characteristics. A salesperson is driven, persistent, goal oriented and motivated by the ‘success and reward’ cycle. This being the case business developers should be paid like a salesperson.
There are many different remuneration frameworks for paying business developers, however one common factor in them all, is that they are low base salary, with a high commission component. As mentioned above, salespeople are driven by the ‘success and reward’ cycle. When they write new business, they expect to be rewarded for this success. As a principal, don’t begrudge this, capitalise on it. The momentum obtained, from a well structured ‘success and reward’ cycle, will drive new managements into your business, and keep the business developer working at the highest level, doing what they do, driving your new business initiatives forward.
The ideal commission structure will depend greatly on the agencies cashflow. In many cases the agency is happy to pay out, what they receive, to offset cashflow. In other words, if the agency receive one weeks rent as a letting fee, they pay the business developer one week's commission as remuneration for writing the new business. There doesn’t need to be a connection between the two. I find the best way to structure remuneration for an agency is to look at both, what you expect from a business developer in regards to performance, and what would be an acceptable salary to meet those expectations. Then you can work backwards to ensure that your expectation will deliver on the salary that is, at minimum, better. The key to a solid remuneration package is that both parties benefit equally from the outcome.