Real estate sales is a numbers game. Prospecting is a numbers game, as well. The problem is, too few agents actually know their numbers and how to track them.
This section helps you understand and set objectives for your ratios of contacts to leads, leads to closings, appointments to contracts, and contracts to closings. Knowing this information moves you almost immediately into the league of our industry’s most productive agents.
The law of accumulation
The law of accumulation basically says that achievement is the result of ongoing and constant effort. Everything in life, whether positive or negative, compounds itself over time.
An illustration of this involves money. If you want to be a millionaire, all you have to do is save a little on a consistent basis and the law of accumulation takes over. If you put away $2.74 a day from the time you were 20 until you were 65 and you received an average rate of return of 9 percent over those years, you would be a millionaire. You would’ve saved about $45,000 over those 45 years; the law of accumulation did the rest. If you asked most people whether they would trade $45,000 for $1 million they would, of course, say yes, but few people would make the effort of saving consistently on their own.
You can expect an equally incredible return when you invest in prospecting.The catch is that the reward for your miniscule investment of prospecting effort doesn’t happen overnight. You have to prospect for 90 days before the
law of accumulation does its thing. The benchmark is 90 days because it takes that long to build up enough leads in your database. Agents also only get paid at the end of the transaction, and it usually takes at least 30 days to
close a transaction once a buyer and seller agree to terms. Finding a home for a buyer or finding a buyer for a property you’ve listed often takes at least 30 days. You have to put in the effort before you can expect compensation. As my good friend Zig Ziglar says, “Life is like a cafeteria. First you pay, and then you get to eat.” In other words, life isn’t like a restaurant where you eat your fill and then the bill comes.
The power of consistency
Marginally successful agents take a binge approach to prospecting. Highly successful agents are far, far more consistent in their efforts.
You can easily find time to prospect when you have no listings, no pending transactions, and no buyers to work with. The secret, however, is to continue to prospect even when you’re busy with all the other activities.
Look at a typical agent’s annual income stream and you’ll see that it goes up and down like a yo-yo. Most agents have four to, at the most, six good income months per year. The rest of the time: nada. If you could overlay their revenue streams with their prospecting numbers, you would see that when prospecting tapers, revenue decreases, leading directly to the business void that follows.
Your job as a salesperson is to fill a pipeline of leads so you always have new prospects to work with. And the only way to keep a healthy pipeline or conveyer belt of leads is to prospect consistently.
Tracking daily goals and results
Any business in sales can be broken down to a series of repeatable numbers that, over time, will produce a predetermined result. Once you establish goals and track your performance over a few months, you’ll be able to
determine the activities you need to earn the income you desire.
When I was selling real estate, I decided that I needed one appointment per day in order to reach my income goal. I knew through tracking my numbers that I needed three leads to create one appointment. What’s more, I knew I
needed to make twelve contacts to generate one high-quality lead, since I knew that two of three leads would be “tire kickers” — contacts who didn’t have the desire, need, ability, or authority to either list or buy in the reasonably near future.
Based on that knowledge, I determined that I needed to make 36 contacts a day: 12 for each of the three leads I would need to result in one appointment.
Yes, 36 is a miraculously large number of contacts, but in the long-run, you’ll find that reaching that number is well worth your time. Use Figure 5-1 to establish and track your own prospecting numbers.
The law of averages evens out your numbers over time. Don’t evaluate yourself on a single day’s achievements. Even a week is too short of a period for evaluation. I’ve had days when I didn’t set a single appointment. Matter of
fact, I probably endured weeks of getting skunked. Over a three-month period,however, I was always within a 5 percent margin of error on my numbers.
To store your prospecting information and ensure your prompt and ongoing follow-up, use contact management software, such as GoldMine, ACT!, or salesforce.com. Also, look into real estate-specific software packages, such as TOP PRODUCER or Online Agent, which are designed to help you with your sales functions and also with business management, including market reports, correspondence templates, and even tracking your closings.
Regardless of the system you select, you must be able to access your contact database with reliability and ease.
Don’t apply a shoestring budget when managing contacts. Minimally, you’ll want to invest in a computer (preferably a laptop) and all the software necessary to build and run your business, from contact management to MLS access, to agency management.