The number one thing you can do to reduce anxiety and fear around where your next deals are coming from, and this will probably surprise you what the answer is, and the best part of it all is it doesn't cost you anything, maybe a little bit of your time, but it doesn't actually cost you anything to do.
It's not something that costs money. It's a business activity. So I wanted to start off by going into a situation that I had early in my team building of my career. I remember we had a down month and a miscalculation in our books. I brought my right hand gal in, Kathy, and 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."
This was because we weren't keeping track properly of the metrics within the business, not just the books. When you do that, as you grow your business, the bigger you grow, the scarier it gets. 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, people relying on me, and vendors and bills I got to pay," you got to be able to think clearly, and you must have a plan. You must have the right metrics to watch in order to be able to sleep at night and 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 resolve was. It was like we miscalculated something 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.
"You must have the right
metrics to watch in order
to be able to sleep at night.."
I think this, as far as this topic is concerned and as we dive into this, a lot of times where do you start? And I'll never forget something that kind of 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. And what he did was he scaled out the entire business as it was big and then went all the way down to where he was at now.
I never forgot that with my Michael Dell. And so I think that no matter where you're at now, you will find a way to get to the next level and you must improve upon this particular topic and the techniques that we're going to go into in order to get you to the next level. 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. So let's dive into this a little bit.
That's a good place to start. I still have vision boards. I'm a little lazy about it nowadays. I just write it down and pin it to where I put the crap out of my pockets every night and get it every morning. I don't necessarily have the visual part, but I got the words and the goals that I want to achieve. I think where that kind of leads to, it's actually probably the starting point.
It's all part of the process. And it's like, what is the dashboard and the most important numbers I can look at to know exactly what's going on in the business from A to Z, what's going on in the business without getting completely overwhelmed with too many numbers or not enough information. But I can make intelligent decisions on what we need to focus on 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 and some numbers that you're tracking in order to understand where your strategy is going to take you and be able to measure and tweak and test along the way to determine whether or not you're getting closer or farther away from the goal.
My point is, 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 own fast food restaurant, and if their labor efficiency ratio drops below a certain percentage throughout the day, they send people home. They have to, in order to have a profitable day. Well, you may think, what's labor efficiency ratio? They didn't teach me that at school.
Most of us who are real estate agents, we don't have MBAs and we don't know these types of things. And a lot of times we got to pay people to regurgitate them for us a lot more than probably is necessary. 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 Abrams 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 yeah. I mean, you just wouldn't want to deal with me if we didn't know. Nobody likes to say, "We're spending what, where, why?"
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 to the next level. It's just like 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. In order to have the action and activity, 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.
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.
]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 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 when 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 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 where … 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?" You know what I mean? And I think that probably comes from what we're trying to accomplish; being really clear. Like 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 pace.
Which we've been off pace on our internal goals, and the cool thing about this for me is, all of the things that we do, it's probably because I don't know any better. They're all structured in the same way you would structure a real estate business, marketing, cash conversion cycle, customer acquisition cost, cost per lead, cost per appointment, the conversion rate of those appointments, and show rate of those appointments. Everything we do is the same stuff that agents need to be doing.
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 real estate agents. And then other lead gen platforms and products, like we dove into their marketing yesterday, 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.
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.
I've said this before, but I'll say it a bunch of times, and determine what percentage of your income goes to you and what percentage of your income goes to your business. Those two need to be treated as 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.
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's Uncle Sam's, and then a portion of it needs to go back into your business. Imagine if a burger joint just took all the cash every day and then 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 or 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, like half goes to you, half goes back into the business, half goes to you, half goes back to 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 in the real estate business. It felt really good. I didn't have to worry about both in the same way that I used to.
I don't care if you're a buyer's agent, if you're on a team. I mean, you need to be putting these practices into place regardless. Because at the end of the day … there's a saying my dad always told me, "Who looks out for number one? You. Who's 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 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. Right?
I think 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 referral. And I usually, whenever I'm unpacking a conversation with somebody on, "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 referrals. So we can count on at least 10 or maybe 12. We can count on one 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. So one every two months. But it's, understanding each pillar and siloing each pillar and source of where your deals come from.
Let's unpack that a little more too. Like, what other sources? So we talk about digital marketing and 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. You just need to have these metrics and know that you can count on X, because just guessing is horrible. Guessing causes all the anxiety.
Also, 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 rejection, high rejection scenarios because you're leaking the information of how needy you are. It's a small percentage of the amount of information that comes out of our mouth. The rest is all body and everything else, tonality and what have you. It's like 80% is non-verbal 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.
I can't imagine not turning advertising dollars into commissions because the things that are required in order to not be in that position are those high rejection scenarios, which suck. They're also very disheartening when you have somebody you've showed a million houses to, go buy from someone else when you call them or you missed the listing when you were in a multiple interviews scenario situation, and you were counting on that. But if every no leads to a yes type of a scenario, which I hate that, I hate … you know what I mean? Like embracing rejection and embracing the suck. There's better ways. Market Maker is one of them. Shameless plug. But being clear on where your business is going to come from and what it takes to get there is paramount to having a business instead of a job. Not even a job, more like a hopeful hobby.
So for us, we have two main pillars that we track separately. Internal kind of 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. 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 don't want to do 30 million in production. I talked to somebody the other day who was like … he was super clear, 15 million is the goal this year and then next year it's going to be 30 million. Trying to scale his team, all this fun stuff.
Everybody wants to double. And double is not … 10 to 20, a lot easier to do that versus 150 to 300. But it can be done. So when you silo it and you're looking at each one … overall, just as simple as possible, like key metrics. 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's 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."
Anytime we're off, I go back and I'm recapping the month and I already know because I saw what we were pacing off. I know what the problem was. 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, that's not right… we tweak something here and something changed in, 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, that's why I didn't hit the goal. You know what I mean?
I think that's kind of step two also; write down the goal. What's the goal? I wouldn't do it necessarily from a transaction standpoint. I would do it from a gross commission standpoint, like in your pocket. And make it realistic. I think the biggest problem that people have with setting goals is they set these wild crazy goals and they know in their heart they're not going to be able to hit it. But they're like, I don't want to think small. And I think there is a balance between the two. But then what they've done is they've just given their self subconscious permission to not move mountains to achieve that goal. And I'm guilty … I've been guilty of that. I think everybody's been guilty of that. And so what we try to do is incremental increases as far as the annual goal is concerned.
And I think importantly too, if the goal is, let's say first time 100 grand, like it was for me at one point, annually in commissions, look at half of that going into your pocket and then look at your bills and make sure that your budget's on track for that personally as well. Like can my personal budget sustain this? Or if it's 250 in GCI, same scenario, because you might have to increase it just based on your personal overhead or desires.
I think too, something that's super helpful, I try to break down, whenever someone tells me what their goal is, I try to break it down to, "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.
If you're tracking 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, like welcome to the real estate rollercoaster of the up and down. Because the activity that you did not do for the next two months, is 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.
And this is the trap, see. Because what happens is, you then … I mean, 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 and 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. 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 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 like so many … it was digital marketing on Facebook and things of that nature. It was like so many views. Like this amount, a thousand dollars per view of the ad. And I was like, "Bro, try it, test it." You don't know until you test something. That's the secret. Because you're so confident in your ability to still, at this point in your life, be dropped into any market and turn on marketing and be able to sell real estate. Right?
So many marketers, 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, and a good testing budget is what you would make off of one sale because you 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. It's just most people don't think like that. It's like your average sales price is $500,000, so you have a $15,000 commission. And I might be willing to invest $1,000 or $2,000 to see if this is going to work. It's just a little bit of a paradigm shift of running your business like a business right side, siphoning off to different accounts to where you have something that you've got in here that's based on a goal that you're really trying to accomplish.
Then from there, you start to develop this strategy based on the goal as far as the income level for 2021. I always talk about looking at it every day, looking at it every night, just like the book I read taught me, which helps a lot. And then you have to have those metrics. For us, it's real simple. How many leads? How many of those leads turn into appointments? How many of those appointments turn into actual shows? How many of those people that showed turned into for real estate face-to-face? How many turned into a commission? And once you have that watermark, 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.
There are challenges to turning it up. Don't let me oversimplify it for you. There's always going to be challenges. 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 so that you can have the luxury of turning it up, for example, or hire an assistant so you don't have to do lower dollar amount of activity tasks. There's always a new problem at each level, but the thing is you're never going to get there unless you have business intelligence to help you track and guide you on what it is you're trying to accomplish so you know if you're on track or off track and how far off track or where you're off track.
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. Or if you're working with a buyer, maybe you're not really clear on how to knock them over. You know what I mean? There's a lot of good training out there. And that's when you would take some of that money from your business account and invest it into the training, for example. Or you would start to look to whatever resources that were available. YouTube, there's so much training. It's crazy. I wish I had YouTube when I was younger, 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?
It's situational, and it's based on where you're at right now and what you need to be learning. So you know what I mean? I forget the specific term, but it's learning on demand I think is what Stephen 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 whether or not it was a benefit, it's not interesting to me. And that's 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, check out how we help you with all of this, including the lead generation, the business.
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.
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. You know what I mean? If it'd just started smoking, I wouldn't know where to start. You know what I mean? But that's the beauty of having a dashboard that tells you what's going on and where to focus. And because 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.
"See it as it is, not worse than it is," as Tony Robbins says. And then go to work fixing it. It's a fun process. The saying is who you are now is not who you'll need to be or who you'll need to become in order to achieve what it is you're trying to achieve. That's how you become that person, is through that process. And you just continually learn and acquire those skills.
As we always say here at Market Maker, you are always just one preposition appointment away.
If you want us to generate, nurture and deliver appointments directly to your calendar, I want you to go to marketmakercall.com right now and check if your area's available.