Real estate isn’t a numbers game. It is a relationships business. Though many have tried, no one has yet succeeded in turning the practice of buying and selling homes into an equation that can be worked out and solved on paper. But while your business is almost certainly built on human connections and powered by skills and knowledge that can’t be quantified, that doesn’t mean you can’t use data to better understand your strengths, weaknesses, successes and goals.
While there is probably no need to “moneyball” your whole approach to real estate, there are almost certainly a few measurable stats (apart from the obvious ones like GCI and closings) that can help you reach greater heights in your career.
Here are four metrics to track in your real estate business:
Appointment conversion rate
Very straightforward, this is simply the number of formal meetings you have with potential buyers or sellers, divided by the number who actually become your clients through a listing or buyer representation agreement. This can tell you how good you are at closing, since most likely if someone is willing to sit down with you and hear a pitch, they are ready to buy or sell. While coaches or perhaps even your broker might set a specific percentage as a goal, in the end, this metric is about you. If you are able to set up enough appointments that a 20% conversion rate nets you plenty of clients, there might be nothing to tweak in your pitch. Or, you might decide that focusing on that conversion rate is the most efficient way to boost your income. Either way, knowing how well you do when the chips are down can help you make a more informed decision.
Warm/cold lead ratio
While many agents focus on the size of their database, maybe equally important is the balance of that database. There is nothing wrong with having a CRM full of people who aren’t planning to buy or sell for more than a year, or who haven’t engaged with you in a while. Real estate is a long game, and nurturing those relationships is still a worthwhile endeavor. But if the overwhelming majority of your contacts are cold, you might need to rethink some of your strategies. Perhaps you aren’t reaching the right demographics on social media, or maybe you need to find a more engaging drip campaign to learn more about the less engaged folks.
Response time
Though you might have ways to automate your responses to inquiries or have an assistant or office manager who handles aspects of this, in the end people want to hear directly from the agent who can help them buy or sell a home. This applies not just to potential clients, but also current ones. Positive online reviews very often mention how quickly agents respond during the buying and selling process, so if you are having trouble returning emails, voicemails, texts or other communication from clients, it could be costing you referrals. If you aren’t satisfied with your response time, it is likely worthwhile to rethink your schedule, or even look at other investments that allow you to better keep in touch with those who need your assistance.
Cost per lead
While this is easy to measure in some scenarios—for instance, if you run a marketing campaign or ad for a specific period of time—it can be difficult to quantify in others. That doesn’t mean you shouldn’t try, though. If you run or attend lots of events, count how many contacts you create and how many leads come in, even if the payoff is not immediate. And don’t forget that cost isn’t just measured in dollars. If you can track leads by time investment, that might give you incredible insight into where your business can grow. Four hours of cold calling might feel like a lot, but it might be generating you more leads than the four hours you spend writing blog content.
You don’t need a math degree to understand just how important numbers are to the real estate business. In the end, these metrics are just providing a different perspective on who you are, how you operate and the investments you make. It will always be up to you to decide how—or if—you want to react to the insights they provide. But as always, knowledge is power, and using these metrics is an important way to build the power of your business.
