When you look at companies that have succeeded in turbulent times you, will find those that embrace strategic planning fare the best. Strategic planning is found to have a positive impact on organizational performance and is a must for enhancing an organization’s capacity to achieve its goals.
As a title professional, now may be a good time to review your strategic planning process and look for ways to improve it.
Before you begin, it’s important to realize what a strategic plan really is. A strategic plan is a complete and comprehensive activity. It is not document or slide presentation created at the beginning of the year and then tucked in a drawer. The steps of the strategic plan include selecting your team, analyzing current situations and considering future possibilities, defining objectives, creating the plan to realize the objectives, communicating and implementing the plan, and monitoring and adjusting the plan. As you see, “planning” is an important element of the strategic plan, but it’s certainly not the only element.
Here are some things to keep in mind while building and executing the various parts of your strategic plan.
Selecting your team
Be really honest about your team’s strengths and weaknesses, and where you might need to upgrade. An essential requirement for performing the strategic plan is to make sure the members of your team are up to the challenge – psychologically strong, honest, respectful of competitors, accountable, focused, principled and confident but not arrogant. Are their moods appropriate? Nothing thwarts a plan like negativity from a leader, and nothing helps motivate a team who can share their passion for the future of the organization. Ask yourself: do the members of your team embrace the importance of strategic planning, or do they think it’s a distraction from the “real work?” If you’re a business leader, it’s important to reinforce the importance of strategic planning, particularly in a challenging market environment.
Analyze current situations and future possibilities
The next step is to assess current situations and future possibilities both inside your business and outside in the market. The idea here is to ground your assessments about the current situation. Asking the question “where are we now?” is a way to think about this analysis. Internally consider your systems, procedures, and people. Look at your income and balance sheets, sales projections, customer satisfaction, market share and competitors. A SWOT analysis (Strength, Weakness, Opportunities, Threats) is commonly used. When you have considered the present circumstances and characteristics of your company, then move externally to review and write out your assumptions about customers, competitors, the market, and the economy. Try to stick to the facts and leave emotion and speculation out of your data gathering. As human beings, we have a habit of overestimating our capabilities, so it’s important to ground our assessments.
Defining objectives
With your facts in hand from gathering data, now it is time to set objectives. Asking the question “where are we going?” is a common way to think about this phase. Consider the future you would like to see for your business. What are you hoping to produce at the end of the year, in 18 months, in two years? People tend to think in one, short time horizon, so it’s important to consider your objectives over multiple horizons of time. It may also be helpful to view your business objectives in light of your organization’s Mission, Vision, and Values.
One problem with many plans is that there are too many strategic objectives. Keep it simple and real. Get clear about what’s important and urgent and what is not. Of course, remember that people − real human beings − must perform your plan. Be realistic about what your team can do, and what they cannot do. Finally, do one last “gut check.” Ask yourself if your objectives are competitive enough. Said another way, will you be satisfied if you achieve your objectives? While it’s important to think simple, it’s also important not to think too small, particularly in a challenging market like we have now. You need objectives that will get the job done.
Strategies and tactics to realize objectives
Now it’s time to ask “how will we get there?” How will the objectives you have outlined be achieved? Consider the work your organization faces as you seek to convert on your objectives and make a plan specifying the members of your team who will do the work, by when, to what standard and how much you expect it to cost. It’s helpful to think in terms of SMART goals – Specific, Measurable, Achievable, Realistic, Timebound. After you have a rough plan, it’s important to try to pick it apart. To plan with confidence, it’s worth considering where the plan is most likely to break down. Some common flaws include poorly trained employees, poor data gathering and analysis, underestimating competitors, disregard for the importance of new tools and technology obligations, overestimation of sales skills (or other skills), and the lack of new products and services to keep up with change.
Communicating and implementing
When communicating your plan to the company at large, keep it simple, keep it SMART and make it important. Your plan has taken a lot of work and it represents a brighter, more successful future for your company. It’s a big deal, and it’s worth getting excited about. Your management team has a key role in holding the strategic objectives and tactical focuses outlined in your plan. Reinforce them. Be proud. Encourage your team to repeat over and over again what the team is doing and why. Use the same language, the same distinctions, the same graphs and charts. Communicate budgets, timelines, and what people are doing what. Honor their work by sharing key metrics and tell stories about milestones achieved. Hold regular meeting rhythms for key employees that focus on breaking down barriers and resolving issues that stand in the way of team goals.
Monitoring and adjusting
The final step in performing the strategic plan is to monitor, evaluate progress and adjust as needed. As a traveler checks the signs along a road while completing a journey, so to must we track progress toward our objectives. If you are a leader, it is important to maintain discipline and enthusiasm for the plan. Remember that adage that no plan survives first contact with reality, so adjust as needed, but … resist the temptation to trash your plan completely. On tough days that temptation may be strong, but remember the brighter future you and your team have envisioned. Keep progress moving toward your goals, even if you must take a step backward now and then. In closing, the strategic plan is a living and evolving set of commitments. Performing it requires continuous updates, interpretations and assessments of key metrics and situations. The more effective your practice of the strategic plan, the nimbler and more resilient your company will be; greatly enhancing your likelihood of success in these turbulent times.
Cyber criminals are busier than ever. Staying safe requires fraud awareness and the right business insurance coverages. Jerome Magana of SSIS Securance and Tom Weyant, Alliant National’s Risk Management & Data Privacy Officer, sit down to discuss the latest fraud trends and tips for making sure your businesses is positioned to recover in the event of a cyber fraud attack.
Forecasters Remain Cautious Given Inflation, Interest Rate Uncertainty
The real estate market has cooled over the past quarter, as buyers face mounting economic pressure from inflation, bloated housing prices, and escalating interest rates. But the question in most forecasters’ minds is what will happen in 2023 with inflation and interest rate projections in – as yet – unknowable territory.
Although experts are all over the map when it comes to predicting interest rates – projections for 2023 are currently ranging from 5% to 9% – everyone agrees that it largely depends on the Consumer Price Index and the Federal Reserve’s interest rate decisions that result from that data.
Economic predictions are often based on “the way it happened in the past,” but economic fundamentals are rarely exactly the same mix as in the past. Such is the case today, where economic fundamentals are largely stable and housing inventory remains tight – a promising recipe for a decent, albeit softer, purchase market in 2023.
Rodney Anderson, Executive Vice President, National Agency Manager with Alliant National, noted on a recent October Research webinar that while we are currently experiencing a slowdown in the market, it’s difficult to say what portion of that is seasonal and how much is interest rate-related.
“We’ve had a sellers’ market for a long time, and now, we are returning to equilibrium,” he said. “But if you look at the number of houses on the market, we are still in a sellers’ market, with a lot of regions experiencing only a 3-months’ supply, so there is continued support for prices to remain fairly stable.”
Although there remain a lot of unknowns, many economic forecasters retain a sense of cautious optimism based on what we do know, while lenders and real estate professionals are facing the reality of lower sales and originations in 2023.
Key Factors: CPI and FOMC
The Federal Reserve’s battle against inflation remains one of the key factors in the overall economic outlook for next year, as well as the outlook for the real estate markets, since with each incremental rise in the interest rates, a new segment of buyers will be priced out of the market.
The Federal Reserve has maintained a hard line with regard to inflation, and Federal Reserve Chairman Jerome Powell did not soften his tone during his Dec. 14 presentation following the December meeting of the FOMC, where he announced the Fed would be raising the interest rate another half percent.
“Price stability is the responsibility of the Federal Reserve and serves as the bedrock of our economy,” Powell said at the outset of his speech. “Without price stability, the economy does not work for anyone and without price stability we will not achieve a sustained period of strong labor market conditions that benefit all.”
In addition, Powell said he anticipated that “ongoing increases would be appropriate in order to attain a stance of market stability that is sufficiently restrictive to return inflation to 2% over time.”
One positive indicator in December was the Consumer Price Index, which showed inflation had slowed to 7.1%. While that stat was encouraging, Powell said it was not enough to deter further interest rate hikes.
“It will take substantially more evidence to provide confidence that inflation is on a sustained downward path,” he said.
With the target federal funds rate range now at 4.25-4.5% and Powell suggesting further hikes, it is now anticipated that the federal funds rate could rise to 5.5% in 2023, adding some further deterioration to the pool of potential buyers.
Federal Reserve reports stable economic activity
The Federal Reserve’s Nov. 30 release reported economic activity was flat or up slightly across most of the districts, a sign that the economy continues to hold its own despite the known headwinds of inflation, high interest rates and global issues.
Reports across sectors were uneven. Not surprisingly, lending, home sales, apartment leasing and construction all exhibited slowing trends while improving inventory in the auto industry has resulted in an increase in sales in some districts. In addition, spending was up in travel and tourism, and as well as in restaurants and hospitality. Manufacturing was also up slightly on average.
Employment numbers remain steady
Total nonfarm payroll employment increased by 263,000 in November, and the unemployment rate was unchanged at 3.7%, according to the Dec. 2 release from the U.S. Bureau of Labor Statistics. Notable job gains occurred in leisure and hospitality, health care, and government. Employment declined in retail trade and in transportation and warehousing.
Consumer confidence concerns were largely allayed by record Black Friday and Cyber Monday spending. Although inflation has taken its toll on consumers, low unemployment has kept spending steady across many sectors, including mortgage and rent payments, a factor that is keeping foreclosures contained.
Employment is also a major factor in keeping foreclosures down, and while labor demand is weakening, according to the Federal Reserve, businesses are expressing a reluctance to lay off due to hiring difficulties. Most importantly, most districts reported a fairly positive outlook, pointing to stable or slowing employment growth and at least modest further wage growth moving forward.
Real estate and lending projections
While the economy overall appears to be stable, the real estate market continues to decelerate.
According to the National Association Realtors (NAR) Nov. 30 report, pending home sales slid for the fifth consecutive month in October, falling 4.6%. Three of four U.S. regions recorded month-over-month decreases, and all four regions recorded year-over-year declines in transactions.
While there are always seasonal declines in the fall, the year-over-year number was more dramatic, with pending transactions down 37%.
“October was a difficult month for home buyers as they faced 20-year-high mortgage rates,” said NAR Chief Economist Lawrence Yun. “The West region, in particular, suffered from the combination of high interest rates and expensive home prices. Only the Midwest squeaked out a gain.”
On the upside, Yun was hopeful that the upcoming months will see buyers returning to the market if mortgage rates moderate, as they have in the past few weeks.
Taking a hard look at the numbers, Freddie Mac, in its most recent analysis, noted that home sales have fallen to a forecasted 5.4 million units at a seasonally adjusted annual rate in the third quarter of 2022 from 7 million earlier this year. The GSE forecasts that home sales activity will bottom at around 5 million units at the end of 2023.
“We expect house prices to decline modestly, but the downside risks are elevated,” Freddie Mac noted. “As the labor market cools off, housing demand will remain weak in 2023, potentially resulting in declines in prices next year. However, home price forecast uncertainty is wide due to interest rate volatility and the potential of a recession on the horizon.”
Freddie Mac predictions include:
Overall originations are expected to hit $2.6 trillion in 2022 and slow to $1.9 trillion in 2023
Mortgage originations will end the year at $1.9 trillion and slow to $1.6 trillion
Refinance originations slowed to $747 billion and will deteriorate to $310 billion in 2023
The Wild Card: Consumer confidence
Data can certainly tell us a lot, but at the end of the day, consumer experience and assessments can impact the long-range reality, and consumer confidence is decreasing, according to the Conference Board Consumer Confidence Index.
While not dramatic, the index backtracked to 100.2 from 102.2 in October. In addition, consumers assessment of the current conditions decreased to 137.4 from 138.7 last month, and consumers’ short-term outlook declined to 75.4 from 77.9.
Consumer confidence can keep the economy and the real estate market moving forward, while hubris can take us into unsustainable territory, as we learned in 2008. A little reality check may not be a bad thing as we all continue to keep tabs on the data and plan for a softer market in 2023.
An abnormally hot real estate market fed by low interest rates and the unexpected burst of buying during the COVID-inspired escape from the city may be finally cooling down in response to rising interest rates, inflation and a skittish Wall Street.
While real estate is taking a direct hit from rising interest rates, inflation is also reducing potential homebuyers’ buying power, especially in the low to mid-range properties. But there are a few upsides that could help us weather the storm.
The team at Alliant National has compiled information on the data points that will most impact the real estate market in Q4.
Inflation and Supply Chain
Two of the biggest challenges in 2022 are likely to persist through the end of the year and into 2023, inflation and supply chain disruptions. Additionally, the war in Ukraine has resulted in Russian energy supplies being cut off to Europe and economic pressures triggering inflation, the rise in interest rates, and potential recessionary trends are creating a confluence of uncertainty.
Concerning current economic trends, the September edition of the Federal Reserve’s Beige Book, indicated that economic activity was unchanged, since their July report, with five Districts reporting slight to modest growth in activity and five others reporting slight to modest softening. However, the report also noted that the outlook for future economic growth remained generally weak, with districts noting expectations for further softening of demand over the next six to 12 months.
Market Fundamentals Remain Steady
Despite deteriorating conditions for some home buyers, steady employment numbers should keep real estate moving through the end of 2022. Although the number of buyers competing for each property has decreased in the last few months, homes are still turning over relatively quickly and, in most regions, are sold at the asking price or more.
Continued tight inventory is expected to keep most markets competitive through the final quarter.
While there is no doubt that the real estate market is likely to continue to slow, especially if the Federal Reserve follows through on yet another rate hike, economists remain watchful of other indicators that could bode well for softening the impact.
According to Fannie Mae’s most recent release, GDP is projected to grow 1.3% in the third quarter of this year, followed by 0.7% growth in the fourth quarter.
However, most economists agree that consumers have been far more unpredictable in recent years and better than predicted GDP growth in Q4 could mitigate some of the other headwinds.
Home equity, another positive indicator for the housing market, has increased dramatically over the past decade. The value of homeowner equity in the United States increased from approximately $8.77 trillion in 2010 to approximately $21.1 trillion in 2020, according to TransUnion. CoreLogic reported recently that homeowners gained another $3.6 trillion from 2021 to 2022 as home values continued to escalate, providing some solid financial strength to help homeowners weather a potential downturn.
First-Time Homebuyer Numbers Dropping
During an October Research webinar in September, Selma Hepp, Executive, Research & Insights Interim Lead of the Office of the Chief Economist for CoreLogic noted that the real estate market is experiencing its biggest hit from first-time homebuyers, who are increasingly squeezed out of the market by the trifecta of higher prices, higher interest rates and inflation that is pricing them out of the market.
In spite of that reality, first-time homebuyers, though making up a smaller percentage of homebuyers in recent months, did bump up their participation in August.
Part of that continued interest could be that many buyers are still finding buying more appealing than renting in markets where rents have escalated faster than monthly mortgage payments in recent years. That reality combined with increasing wages in some sectors is helping offset the trifecta.
Strong Employment Outlook Encouraging
U.S. employment numbers have remained strong through the summer, with the economy adding 293,000 jobs In June, 526,000 in July, 315,000 in August, and 263,000 in September, in spite of recession concerns that predicted otherwise. There are 2.0 job openings for every unemployed person, so the demand for labor is strong and should remain so through Q4, though job openings appeared to be on the decline in October.
In mid-September, the Q4 ManpowerGroup Employment Outlook Survey (NYSE: MAN) indicated that the global labor market was likely to remain strong with steady hiring expected to continue through the remainder of 2022.
ManpowerGroup Chairman and CEO Jonas Prising reported the need for technology talent along with the growth of employment opportunities in finance, banking, and insurance are keeping the labor market strong, especially in the U.S. This along with the fact that the U.S. labor force participation grew to 62.4% in August bodes well for the real estate market as we finish out 2022.
While employment remains strong, the Conference Board Economic Forecast for the U.S. Economy, released on Sept. 14, forecasts 2023 GDP growth will slow to 0.3% year-over-year.
Service-based industries live or die by the quality of their customer service. While other industries rely on their products or supply chains, service enterprises primarily differentiate themselves through the experiences they offer. Today’s savviest service-related companies are acutely aware of this. They also know retaining customers is much easier and economical than finding and converting new ones.
Recently, Missy Trubatisky, Alliant National’s Underwriting and Escrow Training Manager, called upon her years of title insurance experience to develop and present a training entitled “Customers for Life.” The presentation offered numerous examples of how title agents can build a superior customer service program and ultimately grow their businesses. Read on for some of the major takeaways.
It’s About Mindset
Perhaps the biggest thing to remember about creating “Customers for Life” and delivering superior customer service is that it is a bigger endeavor than any one action or campaign. Instead, it requires a complete shift in mindset. You must treat every deal like it is the most important of your career. Is this asking for a lot? Maybe. But it’s what your customers expect. And if you are in the services game, why would you want to do anything else? Missy says there are a few easy tricks to start shifting your thinking on this matter.
First, make every situation an opportunity to succeed, not an obligation to fulfill. Next, remember to present yourself professionally – every day and during every closing. Lastly, remember the golden rule, and then go one step further. Treat others not only as you want to be treated, but also as you would want your mother or children treated in the same situation, Missy says.
Opportunity vs. Obligation
You might be thinking: “Sure, it’s easy to talk about changing your mindset. Pulling it off is another thing entirely.” However, Missy says that when you start breaking it down, you quickly realize that it is not quite a Herculean lift. Instead of looking at it as a major undertaking, view customer obligations and opportunities as roughly the same thing.
We all know that working with customers entails at least some obligations. What matters, though, is how you choose to look at it. For instance, agents need to deliver the title commitment – typically within 20 days. Your obligation here is to deliver the commitment before the 21st day. Your opportunity is to deliver it in less than a week. In doing so, you demonstrate superior customer service; you provide the WOW factor. Making an obligation an opportunity isn’t as hard as you might think. It just involves a subtle shift in mindset, she says.
That’s Not Quite All
It would be nice if that was all it took to deliver superior customer service. But there is a bit more to it than that. Displaying ethical behavior, maintaining a sterling reputation, and engaging in effective communication also influences whether you can create customers for life.
How can you display ethical behavior in business? That’s a deep question. There are so many layers to ethical behavior, but for simplicity’s sake, Missy says you can boil it roughly down to integrity and character.
Your character is what others believe they know about the kind of person you are. Your integrity directly impacts how people view your character. It speaks to whether people view you as trustworthy. Trust is the basis of obtaining customers for life, Missy notes. When customers trust that you will do what you say, they will come back repeatedly.
Unsurprisingly, whether people consider your business ethical will determine its overall reputation. It will also dictate its longevity. When you are a service-based business, your reputation is all you have; you must protect it at all costs. This is where accountability comes in. It’s okay to make a mistake. We all do it. What’s important is how you address it. Here’s how you can go about making it right:
First, own the mistake
Second, figure out how to fix the mistake
Third, don’t try to hide it or sweep it under the rug
Lastly, learn from it, and don’t make the same mistake again
The final part of creating customers for life involves prioritizing effective communication with your customers. But before you can do that, you must first listen to their needs, Missy says. That means listening from beginning to end. We’re all guilty of formulating our side of the conversation even while others are formulating theirs. When we do that, we miss out on vital information that we need to know. We fail to understand what is important to our conversation partner.
Conversely, when you understand what is important to another person, you can show that you care about them. This creates the foundations of a trusting and mutually beneficial business relationship.
Alliant National: Committed to Building Customers for Life
Building a reputation for superior customer service takes real work, but when you are caught up in the day-to-day minutiae, it can be difficult to make needed changes. Still, there are numerous steps we all can take to improve our customer service and make our clients feel more appreciated and valued. All that’s required is going back to the basics. Missy emphasizes this when explaining the genesis of her presentation and how Alliant National seeks to help agents create loyal, lifelong customers. “Everyone needs a reminder from time-to-time on good basic customer service skills and the importance of developing those skills,” she said. “It’s critical for Alliant National to present these courses to offer a unique perspective to a vital skill.”
Want to learn more about creating “Customers for Life?” Check out Missy’s full presentation here.
