RISMEDIA, January 15, 2009-Wouldn’t it be great to control your sales destiny? You can’t just command sales to happen, of course, but what if you could actually drive the sales process? Simple answer: more sales.As real estate agents we are taught sales. We learn how to ask the right questions, how to close for a decision, how to draft contracts and more. Over time we also learn basic management, things like keeping a contact database and figuring income and preparing taxes. Rarely, though, do we learn the other side of sales management-the things we can do to take control of the sales process and make it our own. If the old “grip and grin” sales game isn’t getting you all you need, try this management approach and watch yourself actually drive your success for a change.
Setting it up
Real estate sales is a big job, but we can break it into pieces that don’t overwhelm us.
This comes in three parts:
– Sales Cycle
Without a goal not only can’t we manage success, we wouldn’t recognize it if we saw it. Make yours a realistic annual income and post it where you’ll see it every day. Next, convert that number into your hourly pay rate (hourly rate = annual income / 2000, if you’re working 40 hour weeks). That hourly rate helps you understand the true cost of your sales activities; we’ll get to that in a moment.
Now let’s look at your sales cycle. This is the set of stages people go through on the way to becoming satisfied customers. A typical sales cycle moves people from total stranger to contact, from contact to prospect, then client, pending sale and finally to a closed sale. Yours may be different, of course, but you get the idea. Stages give us realistic milestones: it’s hard to deal with “make a sale” all in one bite, but we can handle “convert five prospects into clients”.
Now list the sales activities that feed each stage of your sales cycle. Advertising gets you contacts. Cold calls help get prospects. Listing presentations help get clients, and so forth. Sales activities are the tools we use to move people from one stage of our sales cycle to another.
This may be far enough for some agents, even though we’re not really managing yet. If we stop here we’ve already defined our sales process and a set of tools, and we know which tools to use for which purpose and we know what needs to be done to get a client through the whole process.
To actually manage our business we need to use this knowledge. We will want to measure where we are and how we’re doing, and then choose what we should do next.
Filling in the blanks
Imagine now if you knew how many people are needed in your sphere of influence to make your goals, and at which stages of your sales cycle they’re needed. Imagine if you could tell which activities give you the best return on the money and time you put into them. Imagine if you could see how much value you actually earn each week, regardless of when commissions are paid. These are not only possible; they’re easy with the right tools. Without the tools you can still estimate most of what you need; the accuracy might be lower, but you can make adjustments over time.
It starts simply enough: find the number of transactions you need to make your goal based on your average commission per sale. This is your unit volume target.
Now look at that sales cycle again. How many pending sales do you need to hit your target (assuming not all will close)? How many clients will you need to get those pending sales? Estimating target levels for each stage, then comparing to the actual number of people in each stage, lets you pinpoint areas of need and select appropriate activities. Need more clients? Do more warm calls to your prospects.
You can estimate the income potential of your current sphere by knowing the current level at each stage and estimating a conversion rate from each stage to the next. When you compare that to your annual goal you can either confirm your goal is realistic, adjust your goal, or work to change the size and makeup of your sphere. Again the right tool makes this easy, and surprisingly accurate.
Activities are even more telling. If you estimate the value you get from each one, along with the cost of each (including your hourly rate), and track how many times you do those activities each week, you can get information like:
– The total value you earned each week. Enough to meet your goal?
– The total cost you incurred each week, including your time.
– The return you get on each activity, and which ones give you more bang per buck.
– The net return you’re getting on your invested time and cost each week-making sure you earn more than you spend.
– The total time you put into sales activities each week, and if it’s enough to meet goal.
In the driver’s seat
Doing this just once gives you a new understanding of your business. With the right tools, though, you can get it all in a just a few minutes a week, and with much more accuracy. Now it’s practical to select weekly activities to build flow through your sales cycle. It can also be an automated “accountability partner” for yourself or your team.
Tweaking your settings over time lets the system ‘learn’ your business and adapt to market changes. Managing a common sales cycle is a great way to coordinate a team. Many agents will even check their earned value daily to make sure they’ll get enough done in a week.
The sales cycle gives us the means to manage, and a tool like SellSharp makes it a snap, but process itself isn’t management. We’re managing when we build the best system for our business and when we use live information to drive what we do, to measure how we’ve done, and to see how we can do better.