Business Intelligence: The Number One Thing You Can Do To Reduce Anxiety And Fear Around Where Your Next Deals Are Coming From
So today, how to reduce fear around where your next deals are coming from through diving into business intelligence. There are 3 main steps to upping your business intelligence in your real estate business:
- Segment your bank accounts.
- Understand where your business is coming from, and how to acquire it.
- Develop a strategy based on your goal.
Lets dive in.
I wanted to start off by going into a situation that I had early in the team-building of my career. I remember we had a down month and a miscalculation in our books. So I brought my right-hand gal in, her name was Kathy. I closed the door behind me, and I said, "Kathy, it's all over. We're not going to make it." And she's like, "I know. I've always thought this was going to happen." And I'm like, "What? I never thought that until now."
It was because we weren't keeping track properly of the metrics within the business, not just the books. When you have that, as you grow your business, the bigger you grow it, the scarier it gets. I mean, if it's not bigger than you, you're not thinking big enough. When it gets to that level where it's like, "Oh my God, I got all this responsibility, and overhead, and people relying on me, and vendors, and bills I got to pay," you got to be able to think clearly. You must have a plan.
You must have the right metrics to watch in order to be able to sleep at night. To avoid freaking out your team or your right-hand person by telling them it's all over, we're going to crash. Which ultimately, I don't remember what the resolution was. It was like we miscalculated something that we miscalculated, and it wasn't as bad as I thought. And the funny thing was, I thought I was just going to have to put some money in the account. That's why I was freaking out so much because you know me, I don't like doing that.
I'll never forget something that changed my paradigm on the matter, was a story that I heard. I don't know if it's true or not, but it was about Michael Dell and how he built Dell computers in his dorm room. He scaled out the entire business and then went down to where he was at now.
And so, for me, like I never forgot that, with Michael Dell. No matter where you're at now, to get to the next level, you must improve upon this particular topic. We'll go into more techniques to get you to the next level below. If you can't get to the next level, you're not going to be able to… You have to master this in order to be able to get to the next level. And so, start with where you're at and build up from there, but also have a bigger vision for what you want it to be in the future.
It's all part of the process. What are the most important numbers I can look at to know what's going on in the business? From A to Z, what's going on in the business. Then, I can make intelligent decisions on what we need to focus on. And I can do this because I can see what the bottleneck is in the process.
Hence what we're talking about specifically, which is business intelligence. And as you progress, even if you're just a single agent, you need to have some business intelligence. You have to have numbers that you're tracking in order to understand where your strategy is going to take you. Then you can measure and tweak and test to determine whether or not you're getting closer to the goal.
The bigger the business, as you grow your business, the more in-depth your business intelligence needs to be. My brother and sister-in-law at Culver's, if their labor efficiency ratio drops below a certain percentage, they send people home. They have to, in order to have a profitable day. What's the labor efficiency ratio? They didn't teach me that in school. And so most of us, as real estate agents, don't have MBAs and we don't know these types of things.
But in all seriousness, let's just dive into some of these things. From the beginning, if you're an agent and you don't have any business intelligence, in other words, you're not tracking specific things in your business, where do you start? And what led me down this path was literally our meetings with Jeff and how sophisticated our business intelligence has become over the years. We couldn't run this business without really having a strong handle on these numbers.
And the natural tendency that I have is to be conservative when I don't know. If I don't know, then I'm not spending. And then what happens? You don't have growth, and you can't get to the next level, and you don't understand why you're not getting the next level. It's just this glass ceiling, and you go through the motions, and you can do all the wishful thinking you want. It's just not going to happen without the action and the activity.
And in order to have the action and activity, I'm talking to people who are like me out there, you're going to have to know the numbers so that you feel comfortable with the outflow of cash, quite honestly, with the ability to invest, whether it's in training and education, or marketing, or personnel, multiplying yourself through others.
In order to do this, you have to be able to track and you have to be able to know. And I think it really starts with being able to have a plan to understand, consistently, where your transactions are going to come from. Because if you don't know where the income is going to come in, it's very, very difficult, especially if you're looking at your bank account and it's thin, to feel comfortable with an outflow continuing without that changing.
Yeah. So, I talked to an agent yesterday that I talked to on Friday as well. She does probably about 40 a year or so, somewhere 30 to 40 a year, in Montana, too. So, she's doing pretty well. And she was like, "It's just now the end of the year, so this is always the time where I go back and look because I got Zillow coming in, and it's historically done pretty well for me, but I don't know how it did for me this year. I don't know what came from the sphere, I don't know what came from referral."
So she has no way to look on an ongoing basis. She just has this process where she's at least looking at the end of the year to make sure that she's making decisions going into how she's going to split up her budget or whatever it may be. But she was like, "Well, I don't want to do newspaper stuff, because that really doesn't work anymore. And I don't want to do this, and I don't want to do that, and I don't want to do this because those are things that I've already peeled off of my budget."
So it was like looking at it, and it was looking back on it. But as you're going, for me, personally, that'd be like us running something for an entire year, and then being like, "Did it work or not?" And I think that probably comes from what we're trying to accomplish being really clear. We have a very specific goal in mind. So, we have a specific goal that we're trying to hit by a specific date, and we know if we're on pace or off the pace.
Everything we do is the same stuff that agents need to be doing. And the deeper we dive into it, the more value we get to bring to you guys, which is awesome. I mean, there are not many products out there that I know of. I mean, even coaching, their customer acquisition style is a little bit different, generally speaking, than a real estate agents. And then, other lead gen platforms and products, we dove into their marketing yesterday, a totally different type of a scenario than what we implement to generate business for ourselves, which is also what we prescribe for our customers to generate business.
But I want to give some actionable steps. I want this to be more tactical, as you would say, Jake. What's the first step? I think the first step if you don't know where to begin, is to silo and segment up your bank accounts, and I've said this before, but I'll say a bunch of times, and determine what percentage of your income goes to you and what percentage of your income goes to your business. And those need to be treated as two separate people. Oftentimes, that means in order to be able to do that, either increasing production to get more income or decreasing your overhead. Whatever you have to do, keeping the overhead low is the secret to life, I think the dude said in The Gambler, John Goodman, or whatever that movie was.
I mean, it is helpful to be able to implement this and segment your income. Because a lot of times, agents get a commission and they think it's all theirs. And it's not. A good chunk of that is Uncle Sam's. And then a portion of it needs to go back into your business. I mean, imagine if a burger joint, as I mentioned earlier, Culver's, just took all the cash every day and they didn't save money for inventory or employees. It would be, as the book says, having a barbecue instead of milking the cow. I mean, you could do it for a few days, but as soon as you run out of that beef or hamburger patties, the employees don't get their checks, the show is over.
So I think that's step one. Step one is segmenting. And at a minimum, I think it should be 50/50. Depending on your income level, half goes to you, half goes back into the business. Half goes you, half goes back into the business. That would be a really good place to start. I remember the first time I had ever untethered my own personal account with my business account and the real estate business, and it felt really good. Because I didn't have to worry about both in the same way that I used to.
And I don't care if you're a buyer's agent, if you're on a team, you need to be putting these practices into place regardless. Because at the end of the day, there's a saying my dad always gave me, who looks out for number one? You. Who is number one? You. Only you look out for number one. So you got to do this for yourself so that you can make proper decisions, think clearly, and… Let's keep progressing.
So I think the next step would be understanding where your business comes from and what it takes to acquire that business so that you can feel comfortable knowing that you're going to have consistency in income. And even if it's an inconsistent consistency, you're going to find patterns there. Would you agree?
With most people in real estate, the most consistent thing that is happening, if you're not consistently generating leads from the same source, or you have been for a little while, is most people start with their sphere and referral. And I usually, whenever I'm unpacking a conversation with somebody, "Okay, tell me what your goal is, and then let's figure out a plan on how we're going to get there." I'm like, "Okay. So with your eyes closed, you might be closing 10 to 15 deals a year from your sphere and referral. So we can count on at least 10 or maybe 12. We can count on once a month, on average. And like clockwork, will shape out to be… Or six, one every other month. But if the goal is 50, then now we know we need to come up with another 44."
Let's unpack that a little more, too. What other sources? So we talk about digital marketing in online lead gen all the time, but the metrics of tracking are the same, regardless. You're going to have the top of the funnel, whether that's calling expireds and how many expireds you need to call in order to get you an appointment, the appointment would be more the middle of the funnel, when you meet with them would be the bottom of the funnel. I don't care if it's expireds, FSBOs, going to some type of trade show, you just need to have these metrics know that you can count X, because just guessing is horrible.
Guessing causes all the anxiety. Furthermore, the more business intelligence you have, the less you'll need to play the guessing game. What happens when you run your business in that manner, and you don't have those things siloed and separated, and you don't have an understanding of where your business is going to come from, you tend to do things that suck. You end up in a position where you're in a lot of high rejection scenarios because you're leaking the information of how needy you are. A small percentage is the amount of information that comes out of our mouth, the rest is all body and everything else, tonality and what have you. I forget what it is. It's like 80% is nonverbal, or something to that effect.
But in order to be confident, in order to be clear, it's having this understanding of where your business is going to come from. For me, I can't imagine not turning advertising dollars into commissions because I understand business intelligence. I understand the things that are required in order to not be in that position are those high rejection scenarios, which suck. And they're also very disheartening when you have somebody you've shown a million houses to go buy from someone else when you call them, or you missed the listing when you were, in multiple interview scenario situation. Especially when you were counting on that.
So for us, we have two main pillars that we track separately. Internal sphere and referral type thing, where we have our list of people that have been with us for a minute. And then we have our online lead generation, which we can break down more, but we look at it overall, just two pillars.
This is where it gets somewhat complex, and I'm trying to make it as simple as possible. So there's an overall goal that you're trying to get to in some timeframe, real estate, really good to look at it from an annual point of view. So 2021, I want to do 30 million in production. I talked to somebody the other day, he was super clear, 15 million is the goal this year, the next year it's going to be 30 million, trying to scale his team, all this fun stuff.
So when you silo it and you're looking at each key metrics. For example, how many leads come in? How many of those people do you have conversations with, do you contact? Of those, how many do you have appointments with? And then how many become closings?
There are a couple of extra steps that you can layer in there, but from a simplistic point of view, if you could just track those numbers per source each month, the amazing part is that if you ever are off, or way ahead, or you hit your numbers, you can go back and look at what those numbers were, and you're like, "Oh, that makes sense. Oh, that makes sense."
Either we changed something in the pitch, and so, our conversations changed, so the appointment to close ratio was off this month. But when I go back and I've listened to the calls and I'm like, "Ooh, we tweaked something here. And something changed in what we were offering or how we were offering it." And we just got to go back to it and we're going to fix this thing. We're going to get right back on track. But it's so easy to diagnose and fix and not let a whole year go by, and be like, "Oh, that's why I didn't hit the goal."
Whenever someone tells me what their goal is, I try to break it down to, "Oh, that's this much per month." Because obviously there's some seasonality and whatever, but if you can average that over a certain timeframe, and you actually have tracked your numbers, you now have the formula to be able to do that at any point. So it's like, you don't have to pigeonhole yourself. For real estate, it's probably looking at a three-month timeframe of what the activity was three months ago to what your production was. It's got that delayed gratification.
This is why, if you have business intelligence in Real Estate, you'll track these numbers and you see three months ago, all of your activity numbers are really high. You had a bunch of leads come in, you had a ton of conversations, you had a ton of appointments three months ago, and then the next two months are light because you were working with all those people. Welcome to the real estate rollercoaster of the up and down. Because the activity that you did not do for the next two months, it's going to hurt you for, now, the next two months. You might've made 20 grand this month, but the next two months are going to hurt.
Well, and this is the trap. Because what happens is, if you don't do this right, you'll never get on a track that will allow you to consistently and comfortably invest into yourself and into your business. And what happens is, agents will have that good month, and then they'll go buy some stuff, and then three months later, they'll be like, "Oh, well, I had these four deals fall apart and I spent all that money already. And now I'm scrambling and I'm fearful, and I don't have the mental clarity and wherewithal to continue to invest back into my business." And the reason why is because they don't track the numbers. They don't track the outcome. That's why having business intelligence is so important.
And personally, we believe the ability to turn advertising dollars into commissions is the highest and best skill, or into any type of return on investment, is the highest and best skill you can have in business, period. I was talking to, and I keep bringing up my brother-in-law, I guess he's on my mind, him about digital marketing for Culver's. He sent me this thing, and he's like, "Hey, these guys do this. What do you think?" And it wasn't very sophisticated. It was digital marketing on Facebook and things of that nature. It was so many views, this amount of thousand dollars per views of the ad. And I was like, "Bro, try it. Test it." You don't know until you test something. That's the secret to having business intelligence.
Because you're so confident in your ability to sell. To be dropped into the market, and turn on marketing, and be able to sell real estate.
You develop that, and you've been able to see it, over the years, be consistent with what the numbers are. You've been able to train people to do the same thing. So you have confidence, and it's that confidence that allows you to be comfortable. Could you imagine if you dropped into a market where the average commission was like 15 grand? It'd be hard to invest $15,000 into marketing, get hundreds of leads, and not be confident that you'd at least be able to get your money back.
So very, very smart, smarter than me, marketers always say, "You should never have a budget.". Your budget should be unlimited if your ROI is positive on something. The only thing you should ever have is a testing budget. A good testing budget is what you would make off of one sale. You've got to be confident that you can at least get one sale out of a test. And it might be the place to continue to dig or not.
With real estate, most people don't think like that. It's like, your average sales price is $500,000, so you have a $15,000 commission. I might be willing to invest a thousand or $2,000 to see if this is going to work. Having business intelligence is just a little bit of a paradigm shift of running your business like a business. Ciphering off two different accounts, so you have something that's based on a goal that you're trying to accomplish.
From there, you start to develop the strategy, based on the goal. I always talk about looking at it every day, looking at it every night. And then you have to have those metrics. For us, it's real simple. We ask, how many leads? How many of those leads turn into appointments? How many of those appointments turn into actual shows, so the show ratio? Finally, how many of those people that showed turned into, for real estate, a face-to-face? And of those, how many turned into a commission?
And once you have that watermark, I mean, it's just that simple. You can scale it, that's nailing it, now you scale it and you can just turn it up at will. And there are challenges to turning it up. Don't let me oversimplify it for you. I mean, there's always going to be challenges. If you want to turn it up, you might need to get more people. You might need to get more time. You might need to get more systems in your business so that you can structure your day properly. Then, you can have the luxury of turning it up, for example or hiring an assistant so that you don't have to do a lower dollar amount of activity tasks.
There's always a new problem at each level. But you're never going to get there unless you have business intelligence to help you track and guide you on what you're trying to accomplish. That way, you know if you're on track, or off track, and how far off, and where you're off. Is it the conversation that you're having, and the skillset that you need to have there? Is it sales training? Maybe you're meeting with these people, but you're not selling them.
Maybe you don't have a good presentation for listings. For example, if you're working with a buyer, maybe you're not really clear on how to knock them over. There's a lot of good training out there. That's when you would take some of that money from your business account and invest it into the training. Or you would start to look to whatever resources were available. I mean, YouTube, there's so much training. It's crazy. I wish I had YouTube. But at the same time, it's a gift and a curse, because of priority confusion, where do you go? Where do you start? What actually is important to watch?
But it's situational, and it's based on where you're at right now and what you need to be learning. I forget the specific term, but it's learning on demand, I think is what Steven Larson called it. And I love it, because I don't like to just learn for the sake of learning. I like to learn for the sake of implementation. If I can't implement it right then, and then determine if it was a benefit, it's not interesting to me. And that's kind of the key.
But I think to begin, Google business intelligence, understand the metrics that you need to be looking at. And if you'd like some help with these things, go to marketmakercall.com. Check out how we help you with all of this, including the lead generation, the acquisition, and being able to consistently understand where your income should be coming from, what you need to do to tweak it. I'm going crazy on my little pitch here, Jake. You're feeling sorry for me with your facial expressions. I love it. I love it.
Well, what I'm trying to say is, wherever the bottleneck is, we'll help you with it. Whether it's getting the leads in, getting the appointments to show, what you're saying to the appointments to get them face-to-face, where we stop is on the sales training. If you can't sell them when you meet them out there, you need to get some outside sales training. And there are a lot of resources for that. Maybe we won't stop there. Maybe we'll keep going down that path, too.
Right. But when you're clear on what your destination is… My car just started leaking coolant. I took it in. But you know how I knew what was wrong is when I turned on the car, it said coolant low. If it just started smoking, I wouldn't know where to start. But that's the beauty of having a dashboard that tells you what's going on and where to focus. It takes the guesswork out of it, it takes the emotional part out of it, and it's just, these are what the numbers are, this is your problem. I don't care if you think that's your problem or not. The numbers say that that's your problem, so solve it. That's why it's business intelligence, not business emotion.
Seeing it as it is, not worse than it is, as Tony Robbins says. And then go to work fixing it. I mean, it's a fun process. Who you are now is not who you'll need to be, in order to achieve what you're trying to achieve. That's how you become that person, is through that process. And you just continuing to learn and acquire those skills. So take us out, brother. I got 2%.
Yeah, buddy. We cleared it out. So as we always say here at Market Maker, you are always just one pre-positioned appointment away.