Dirk Zeller is a speaker, author and CEO of Real Estate Champions. His company trains more than 350,000 real estate professionals each year through live events, online training, self-study programs and newsletters. He's written several articles and books, including Your First Year in Real Estate, Success as a Real Estate Agent for Dummies and Telephone Sales for Dummies. To learn more, visit http://www.realestatechampions.com.
Make Sure You Know the Score
As legendary coach Vince Lombardi said, "If winning isn't everything, why do they keep score?" Here are some key "scores" you should track to determine if you're a winner in real estate.
February 1, 2011
Being successful in business isn’t all that different from being successful in sports. In professional athletics, if you follow the score, you always know who’s ahead. It may not indicate who’s going to win in the end because momentum can swing, but the scoreboard is a key part of the game.
In business, the scoreboard is a key part of assessing performance as well. Do you have a scoreboard? If you do, what numbers are on it? How often do you check it? When the numbers point to you being behind, what do you do?
So many things in life amount to scores of sorts. For instance, your bank account is a score, your cholesterol is a score, and your credit score is … well, you get the idea.
Let me share with you what needs to be on your business’s scoreboard, so you can win in real estate. First, you need to have the income goal for the year. Then break it down further into closed units, listing side units, and buyer side units. You also need the micro view as well. That’s the scoreboard that most agents lack, yet need to achieve a greater level of success. Here are some of the key “micro” scores:
- What percentage of your listings actually sell?
- What are the average days on the market for your listings?
- What’s your average cost per transaction?
- What are your total expenses divided by units sold?
- What is your business source breakdown (percent of referrals, past clients, etc.)?
- What are your sales ratios?
The sales ratios are the most important numbers that are often missing from an agent’s scoreboard. If I asked a thousand agents reading this article what their sales ratios were from contract to lead to appointment to closing, I’d bet not one of them in that group would be able to tell me.
Yet it’s in this micro view where the business “game” is won or lost. The booming real estate market covered up a lot of problems, mistakes, and errors in business from 2004 to 2007, but those blunders are well exposed now. As Warren Buffet put it, “When the tide goes out, you know who’s been skinny dipping.”
Knowing this, what do you need to do each month? What does your monthly scoreboard look like? What is the number of listing appointments you need this month to drive your business forward? What conversion rate do you need to have on those appointments? (Don’t say 100 percent, because that just tells me that either you don’t go on enough appointments or you don’t go out and compete in the open market. Not even the best practitioners are good enough to get them all, unless they go only on sure-thing appointments or on very few.) How many listings do you need to sell this month? Based on your current inventory and the quantity of that inventory, what are the odds of that happening? If you’re like most real estate pros, the odds are longer than you think because your inventory isn’t priced as competitively as it needs to be in today’s market place.
How many buyers do you need under contract this month? Where are they going to come from? What lead sources will produce those buyers? How many buyer consultations will be necessary to secure the necessary prospects? What sources and strategies will generate those leads? If you are short on leads at the beginning of the month, what will you do?
Knowing your scoreboard and connecting your strategy and plan to the scoreboard is essential to a successful outcome. In the end, the first step in your scoreboard is at the macro level; then take everything down to the micro level.
The bottom line: Don’t wallow without a defined scoreboard any longer. It’s important to your success!