In 2007, the bottom dropped out of the housing market and real estate values in the United States fell by $6 trillion.
During this time, Paula Burlison was working as a realtor in Las Vegas, Nevada, one of the hardest hit markets in the country. While other realtors floundered, Paula not only managed to keep her business afloat, but continued to make a substantial income as well.
How did she do it? By understanding the data that drives her business.
Paula tracked her activities and their results, and in doing so was able to calculate the return on investment for each. This allowed her to focus on those activities that would provide the greatest ROI.
She says, “I know how many contacts it takes to get a listing appointment. I have to make 36 contacts. And then [I track] the number of appointments I need to go on to get a listing – which I’m at 85%. I get 85% of the listings I go on.
Those are the numbers I track; the number of contacts to get an appointment, the number of appointments to get a listing contract. And the other thing I track is my average commission. So I know, if I break it down, that for every person that hangs up on me, I make $13 [for expired listings].”
By understanding the data, Paula is able to understand where her efforts are the most profitable. How can you utilize your data as successfully as Paula?
1. Track Your Data
Keep track of how many average contacts you have to make before you get an appointment. Then keep track of how many of those appointments are actually kept and not cancelled. Then out of the appointments you go on, how many of those result in signed contracts?
2. Calculate The ROI of Those Efforts
For example, if you know that, on average, contacting 100 expired listings results in a 7% appointment rate (7 appointments), and that of those appointments, 20% will turn into signed contracts (1.4 contracts) and your average commission is around $5,000, then your ROI for 100 contacts will be $7,000 (1.4 x $5,000 = $7,000). The return on investment for each call is $70, whether it leads to an appointment or not.
3. Run The Numbers For All Types of Leads
Apply this to process to FSBOs and see what numbers you get. Compare it to the numbers from Expireds. Which earns you the best ROI? How about your sphere of influence? What returns are you getting there?
4. Compare The Data
By collecting and comparing this data, you can easily decide which activities are worth more of your time and focus based on their ROI. It takes the guesswork, and much of the frustration, out of lead prospecting.
Don’t overlook the data that drives your business. Paula’s work is a powerful example of how understanding the data and using it to focus your prospecting activities can have a dramatic impact on your success.