David Lawrence is the head of sales and marketing at Follow Up Boss, responsible for helping real estate teams achieve growth within their business. He regularly connects with leaders in the industry to bring their experience and learnings to the doorstep of ambitious real estate professionals worldwide.
Building Accurate Sales Forecasts for Your Business
If you want to know whether your agents are filling up your company’s pipeline enough, learn how to make projections based on appropriate data.
March 25, 2019
It’s impossible to check the pulse of your business if you don’t have a clear view of what’s happening with your pipeline. You must have an accurate sales forecast to anticipate what’s next for your business, jump on market opportunities, and avoid potentially costly mistakes. If you do it right, you’ll be able to close more deals in the process. You can make smarter moves and close more deals if you use sales forecasts to:
- Make smarter hiring decisions. Brokers can learn the right time to recruit new agents and avoid hiring too many or too few salespeople with an accurate sales forecast, according to author and business consultant Michael Soon Lee. Knowing what’s in your pipeline can help you avoid being in the position of having too many agents and not enough leads or vice versa.
- Motivate your team. Sales forecasting also helps you see which team members are leading the pack and which may be in need of additional training or support. You could create a daily sales forecast for agents who need extra motivation to meet their goals and a quarterly forecast to see whether your entire team is hitting its target.
- Stay ahead of the market. How long do your listings stay on the market? A sales forecast can give you an idea of the average time it takes your team to sell property, which is important information you can pass on to future clients so they are better prepared for the transaction.
No matter what metrics you use to track your performance, sales forecasting can help you set, monitor, and evolve those metrics based on what’s happening in your unique market. You’ll be able to solve problems before they arise, all while making better decisions for your team and budget. Here are some helpful tips for how to design effective sales forecasts for your real estate business.
- Analyze industry data. Too often, real estate pros base their sales forecasts on a gut feeling or wishful thinking. But data is a powerful tool. If you’ve adjusted your forecast for a predicted drop in sales, don’t make new hires a business priority unless you’re already grappling with a staffing shortage. Instead, focus your marketing efforts on potential home buyers who, despite any downward trends, are likely to move ahead with a purchase, such as millennials with growing families or leads looking to relocate for work.
- Carefully track how and when leads enter your CRM. Real estate deals can take weeks, months, or even years to close. Use your sales forecast to estimate the average length of a sales cycle based on property type, agent, and past trends. If you keep your eyes on your CRM, you’ll have no problem adjusting your strategy to do more of what’s working and boost conversion rates where you can. As a major bonus, your team also will have a more accurate idea of the commissions they’ll be making over the course of a quarter or year.
- Monitor agent performance. You’ve probably heard this before in your office: “I’m confident they’ll buy within 10 days, and the deal will be worth a kajillion dollars.” It’s not a bad thing for agents to be optimistic about their ability to close, but these rich estimates don’t always come to fruition. The only sure way to guarantee that your expected revenue becomes actual cash flow for your business is to monitor your agents’ progress. A smart CRM will make it easy to track agent performance and assess follow-ups on a monthly, weekly, or even daily basis.
Make no mistake: Excessive optimism and a lack of accurate data will only bring disappointment down the road. Though you can’t use a crystal ball to predict the future, you can build accurate sales forecasts to increase your chances of future success.