Why Real Estate Sales is a Numbers Game
How is your real estate sales career going? Are you swimming in leads, and awash in cash? Or languishing while your phone and inbox sit quiet? Time and time again, bright eyed real estate agents ask: what is the key to success? Why can’t I get ahead? You have a great photo, you have your license. What gives?
There is one thing I can’t stress enough to new real estate agents: We don’t Sell Houses. We Sell ourselves.
Don’t worry – I’m not asking you to sell your soul! Perhaps a better way to phrase it is that when you are a real estate agent, you sell real estate services (not homes). Imagine a shopping mall in your community. How many people walk through the doors, visiting some shops – while walking by others? For each person who visits a shop, how many will walk out with a purchase?
Today, let’s talk about thinking of “numbers” and chances in sales – and why they are extremely important to your success as a real estate agent.
What are the “Numbers” in Real Estate Sales?
The term “numbers” is really just a blanket term for the statistics that matter in your business. Success in real estate really comes down to a few key metrics, on which you need to focus:
- Activites
- Leads
- Prospects
- Deals
Real Estate Sales Activities
These are the tasks you do that draw leads to you. Things like knocking on doors, social media posts, cold calls, follow-ups and chance meetings are all examples of sales activities. Advertising is not a sales activity; it is paying for leads (not a bad thing, but a different thing).
Real Estate Leads
These are the inquiries that you generate or that come to you from your activities. Leads are incoming calls, texts, social media messages and emails. Leads are clients responding to your follow up that they want a market evaluation on their home, or to meet and discuss the plan for their next purchase.
When Leads Turn Into Prospects
When you speak with a lead, and they decide to take action and proceed to the next step in the transaction, they become a prospect. A prospect is actively searching for a home with you, or has listed their property for sale. A prospect has signed an agreement to work with you (rather than leads who simply dissolve back into the ether).
Deals – Closed Transactions
When your prospect makes a decision that translates into a cheque for you, you have a deal. This includes waiving conditions/subjects on a purchase contract or achieving a successful sale. Congratulations! This is arguably the best point in the process – where your work pays off.
So Where are the Sales Numbers?
This is where things get interesting. An important thing to never forget: You have zero control over every phase of a deal or client journey. This means you have no control over turning leads into prospects, or prospects into deals (though its always worth a try!).
The only thing you have control over is the number of activities you perform.
Sales Conversion Rates and Your Batting Average
If you only have a chance of turning an activity into a lead (or a lead into a prospect), you must increase the number of chances you have. Let’s say it takes you 10 activities to generate one lead, and 5 leads to generate one prospect, and 5 prospects to generate one deal. How many activities must you perform to achieve a goal of 10 deals?
The answer is 2500 activities. Broken down over the course of a year, this is about 48 activities a week. If you can do this, your batting average is about 1.9%. Not bad! If you can improve your lead-generating effectiveness and double the number of leads you convert, your average rises to 3.8%. Getting better at each stage of the process can increase your effectiveness and grow your paycheque!
Your Pipeline Equals Your Sales Success
If you don’t have leads, you can’t expect to have any prospects. Same goes for deals (and by extension, paycheques). Your main focus must be on growing your pipeline of leads by performing activities. Helping current clients through the sales process is important, but your main “job” must be generating leads. Ensuring adequate business opportunities coming in is the only way to ensure adequate business success on the other end.
Always remember: The activities you do over the next 30 days will feed you for the next 90 days. Don’t starve!
Personally, my goal is to get a lead every single day. Either via a combination of prospecting & marketing, referrals, or internal database sales. Generating activities is the first step, but the rubber really meets the road when you start to improve your lead conversion to prospects (and then prospects into deals). A good salesperson can take leads and turn them into gold.
Real Estate Sales by the Numbers
Even if your basket of deals is full, you need to stay focused on what is coming around the corner. Generating new leads and prospects is the only way to keep the taps flowing and the good times rolling. Its tempting to rest on your laurels after a big deal you’ve worked hard on closes, but shouldn’t you already be working on your next whale?
In one of my upcoming articles, I’m going to break down some of the smartest ways to generate leads in real estate (or any kind of professional sales). It’s easy to talk about improving your numbers – but actionable tasks and plans are the surest way to hit those goals. So stay tuned!
Cheers,
