Companies to Watch: John L. Scott Boise

Why eye it: Just over two years ago, Bob Bass, CRS®, GRI, and Craig Groves, CRS®, GRI, reengineered their 18-year-old company from top to bottom, stemming a free fall in its profit margins. Since then the three-office company is reaping an 11 percentage-point increase in gross profit. And it’s poised for further growth as efficiencies take root and new services are added.

Prospects: The company is driving to be leaner and meaner. Thanks to more efficient operations, stabilized commission splits, and more ancillary revenue, it’s generating more income from each transaction, and it’s doing it with fewer sales associates—110 compared with the 125 it had three years ago. Some managers and associates “didn’t buy into our new vision” and left, says Bass. Each remaining associate, on average, closes slightly more than 35 transactions a year (22 per year subtracting new-home sales). Among REALTOR® Magazine’s Top 100 Companies, the highest average sides closed per associate is just over 33. (See July 2002, page 31.)

What they did: Bass and Groves shifted from a salesperson-centric to a more holistic business model, which benefits salespeople and consumers.

Tapping resources provided by John L. Scott Real Estate, based in Seattle, with whom they affiliated in 1999, Bass and Groves boosted consumer services and marketing, such as providing individual Web pages for each listing. They also rewrote their mission statement to reflect the consumer focus, hired managers with the new vision, and brought in business- and life-planning trainers. The training, which helps associates and managers set goals, operate under accountability standards, and meet milestones, ensures consumers a more consistent service-oriented experience because associates and managers incorporate the training into their interaction with customers.

Results: The improved consistency and enhanced services have enabled the company to hold firm on its commission rate in the face of marketwide pressure to match discount rates, says Bass. That, more than anything else, has helped stem its profitability woes, he says.

What’s next: The company’s productivity level is set to grow as the reengineering settles more firmly in place. Says Bass: “We’re just at the infancy of our revamping.” In fact, the company is revising its new-home and home-site sales operation, which has typically made up about one-third of its business. About two years ago, Bass and Groves polled their clients. They found that clients were dissatisfied with the lack of dedicated associates in specific communities.

Viewing those findings as their marching orders, Bass and Groves hired two new-home managers, put dedicated sales associates in two new-home communities, and deepened the training associates receive when they’re detailed to work at a specific community. They achieved their goals of creating more knowledgeable sales associates, happier builder clients and consumers, and more monthly sales in each new-home community.

“Changing to a model that puts more emphasis on customer needs hasn’t been an easy process,” says Bass. “But we saw that if we didn’t change, our customers would go to companies with a service orientation.”