I want to take a minute before I get into the topic for today to discuss the Kobe Bryant tragedy. It’s had an impact on many of us.
Not all of us are full-time followers of the NBA, but we are all sons, daughters, husbands, wives, significant others, sisters, brother and a friend.
His tragic, sudden passing alongside his young daughter, Gigi, hit us hard. Mortality is real and when we are reminded of it, it can take our breath away.
As you watch the coverage on Kobe, I ask that you look at it through the lens of being “competitive and compassionate.” They are not mutually exclusive. You can be successful and a giver and a friend all at the same time. Watch the reactions of those closest to him and how he made them feel. Of all his accomplishments, this is what I have been most impressed by as I observe the Kobe Bryant story.
When interviews with Kobe are posted, look for words and phrases that include “wonderful father,” “process,” “teammates,” “family,” “hard work,” “strategy,” “drive,” and “good friend,” to name a few. Pivoting back to our current topic, “To Grow Your Business, Know Your Numbers,” there were several numbers that Kobe made non-negotiable.
He got up early at 5:00 a.m. or stayed after practice and would have a specific goal for number of shots made. In an interview with Sports Illustrated, he talked about how he did not leave the gym until he hit 400 shots. Hitting 400 shots was part of the process of training his brain to execute during game time. He was great on the court because he prepared to be great. You’ll hear many other mythical stories about Kobe over the coming days but remember -
You can be competitive and compassionate and that is what it means to be elite.
What numbers do you use to guide your business?
When I was selling full-time, January was somewhat of a let-down for me because I felt like I had to start all over again at zero. That is until I changed my thinking and changed how I looked at my production. I added a category that we call "12 Month Rolling." I didn’t give up my YTD tracking, but I added a column that tracked the rolling past 12 months. That figure better allowed me to track my real progress by comparing where I was at the same point just one year earlier. If you want to grow your real estate business, this is an example of a number you should know.
The key word in that sentence is business. I didn’t say, if you want to grow your real estate hobby, this is an example of a number you should know.
A real estate hobby essentially means that you have no plan. You “hope” you’ll do well and, as I have told you in the past, “hope” is not an action plan.
If you are going to run a real estate business, in addition to your production numbers, there are 5 essential numbers you need to track, monitor, and improve to grow your business:
- Database Count: How many clients do you have in your Top 100? How many people know you, like you and trust you as their real estate broker? If you grow and strengthen that number, mathematically your business will grow.
- Churn Rate: What percentage of your business is NEW Clients. If you have a high percentage of brand new clients versus referral and past clients, your churn rate is high. You want to have the opposite. After 5 years in this business, your goal should be to have 75% + of your business coming from past clients and referrals, keeping that churn rate at 25% or lower. A really mature business will have a 90% + rate being past clients and referrals.
- Touches Per Relationship/Per Year: Do not throw everyone in the same category. It's a huge mistake if you do. You need to review each Platinum client every 21 days, Gold every 30 days, and Silver every 45 days and then execute on a mass email or direct marketing campaign to your entire database at least once a month.
- Value/Profit Per Hour: What is your time worth to you? Know your value and outsource any task that can be done for under your value per hour. If you are newer to the business, your profit per hour is low so you need to do the basic, non-sexy stuff to grow that number.
- Expense Ratio: The newer you are to the business, the lower that number will be. The more you outsource and market yourself, the higher that number will grow. An expense ratio is the percentage of cost vs income. In my opinion, that number should never go over 25-30% and that is only if you have multiple assistants and a massive marketing budget. A new agent should spend less than 5%.
Those 5 numbers, if monitored and improved, will grow your business.
There is a reason that I am so sold on teaching you how to build a relationship-based business versus a transactional business. On top of it being so much more enjoyable, financially and mathematically, it just makes more sense. Your past clients, according to the Direct Marketing Association, are 18 times more profitable to market to than going out and getting new business. To grow your business, know your numbers. If you know your numbers, you can evaluate what is profitable. If you know what is profitable, you can do more of that!
Let me give you an advanced concept that I have just started using with some agents that have a more mature business. A mature business does not always mean high production. It could mean that the agent is laser-focused on their vision and what makes them tick, what makes them happy. You’ve heard me say “If it is not a hell yes, it’s a hell no,” right? That requires making a decision. Sometimes you have to make the decision quickly, so you need to have a pre-determined “Hell Yes Filter.” These agents have started making decisions based on the following:
- Geographic Location - if it is not in the agent's area of expertise, it is referred out.
- Price Point - if it is not at a price point that is in the agent’s wheelhouse, it is referred it out.
- Client Type - if it is not a past client or a referral from a past client, it is referred out.
- Transaction Type - if it is not a type of transaction in which the agent is an expert (e.g. (Commercial and Distressed), it is referred out.
If you know when to say YES, and only say YES to your areas of expertise, you will be able to grow your business and live a happier existence. Your “Hell Yes Filter” tightens as your business becomes more mature. When you are newer to the business, that filter is much more flexible.
So, like I said, to grow your business, you have to know your numbers. The math will help you make much better decisions. When you can increase the percentage of good decisions, the happier and more productive you will be. My goal for you, which has been consistent from day one, is for you to live a happy, productive life. Happy agents sell more real estate. I can teach you all of these proven mathematical concepts, but YOU need to go out and implement them. In the end, it’s all math.
