It's that time of the year again. You have had (or are about to have) your big sit-down with your manager about your goals for this year.
How many sales are you committed to getting?
What is your plan of action for the year?
What are your income goals?
These are all of the usual beginning of the year discussion topics.
While these are all great questions to ask, and while goals are always good, there is one question -- the big elephant in the room -- that nobody talks about at these meetings and which many agents never honestly ask themselves.
It is the question that if answered honestly can mean the difference between reaching your goals for the year and sitting down with your manager next year with the exact same goals as this year.
The question is this: Do you REALLY know how you are going to achieve your goal?
Let’s talk about this . . .
If I asked you how much you would ideally like to earn this year, what would that number be? If you are like a good percentage of the hundreds of agents I've asked this question to before, I would bet a figure of something like $200,000 would not be out of the ballpark.
The big question is…
How are you going to make that happen?
When you have the sit-down meeting with your manager and he/she asks you what your plan is, what do you tell them?
Let's face it, without knowing the answer to this question you might as well tell your manager that your income goal is $100 million. Without an EFFECTIVE plan for how you are going to make it happen, you are just as unlikely to reach the $200,000 goal as you are the $100 million goal.
Well, if you are like most agents you probably have one or more of these lead-getting methods on your list:
So here’s where the problem begins…
For purposes of this article, let's suppose your income goal is $200,000, since that is the number I hear time and time again from agents across the county.
What does it really mean in actual leads to get to this income? How many leads (preferably quality leads) do you have to get every month to make this a reality?
Think about it.... If you don't know what this number is (i.e., how many leads you need each month), how are you ever going to be able to know if you are on track throughout the year?
So let's go all "high tech" on this question and do some reverse-engineering to see exactly what you would need to reach this $200,000 income target.
According to the National Association of REALTORS®, the median home price in the US is $164,200, so let’s round it up and use $165,000 for our math project today.
(Shocking Disclaimer! OF COURSE, these are illustrative numbers only -- your market is going to be unique and you need to know how to come up with YOUR number! :-) ).
So if we assume a 3% buyer side commission rate and that you get to keep 70% after your split with your broker, then that means that to get to your $200,000 income target you would need to make about 5 sales per month. Let's see why:
$165,000 x 0.03=$4,950
$4,950 x 0.7=$3,465
$200,000 income goal/$3,465 commission per sale=57.7 sales per year needed
58 sales (rounded up)/12 months= 5 sales a month needed to reach goal.
Okay, okay, I know that all this math isn't thrilling:-)
BUT....we need to know what the "nitty gritty" is to know how to REALLY make a plan that will work. Right?
So to get these 5 sales a month, what are you going to do?
What is the best strategy?
Well, let's look more closely at our options:
Open Houses: If you are GREAT on the phone, and great with follow-up, you can and will create sales from open houses. Someone who is excellent at these skills can do as well as a 10% conversion rate from this lead-generation method, although the conversion rate for many agents can be as low as 1%. Let's take an intermediate percentage and say you can convert 5% via open houses (when planning my numbers, I like to err on the conservative side). The bugaboo about open houses is that for them to work, you need to be able to capture FULL information from people, i.e., name, phone number and email address, to have the lead be at all worthwhile to you. The average open house has three people who attend, and only about 50% of attendees will provide full and accurate information about themselves.
LET'S DO THE MATH: To hit your income target, you would need 2,320 people to attend your open houses this year, or 46 people per weekend if you choose to take 2 weekends off this year.
Even worse, the average open house has only 3 people in attendance, which means you would need to host 15 open houses each weekend, 50 weeks a year to obtain financial success.
Geographical Farming: The success of this method depends on how you are doing it. If you have a Laser Targeted Super Ultra Ninja Stealth Direct Response Marketing Arsenal TM and awesome value added follow up programs, then conversion rates can be as high as 4-6%, but if you are using standard postcards or even worse – recipe cards - and you have the standard follow-up program, your conversion will be closer to 0.25-0.5%.
LET'S DO THE MATH: Let's again take a conservative figure and say a 0.50% conversion rate. To earn $200,000, you would need to mail 11,600 pieces of mail which breaks down to 967 pieces a month.
With the cost of postage going up this week, your postage budget would be $435.15 per month, plus the cost of producing the mailings, buying a mailing list and the time involved to get the mailer out each month.
Cold Calling/Robo Calling: If you are going to rely on this as your primary lead-getting source, then let's be honest. You are going to want to make sure you have a very comfortable chair in your office, and a very good headset so that you won't need to spend all your commissions visiting the chiropractor. You will be spending a LOT of time on the phone. The conversion rate for this lead-getting method tends to be an abysmal 0.25-0.5%. At this conversion rate, how many calls (and how many hours on the phone) will you have to spend to reach your income goals?
LET'S DO THE MATH: For this calculation, I’ll assume you are great on the phone and have been trained with scripts, have a decent offline follow up system and a time saving robo dialer system.
To accomplish your financial goal you would need to call 14,500 people who are going to be thrilled to receive your call …That’s a joke, and I hope you’re laughing at that statement! This breaks down to 1,209 thrilled callers per month or 60 per day. At an average 3 minutes per call, you will need to spend 3 hours a day, 5 days a week on the phone -- and that does not include the time you will need to spend getting numbers and scrubbing these numbers against the DO NOT CALL LIST.
Door Knocking: This lead getting method is truly a "hit or miss" proposition. It also has a dark side to it that many agents don't consider. A very successful door knocking campaign can yield a 1% conversion rate. The problem is that doing this can also sabotage your future success. Why? Door knocking is one of the fastest ways to do damage to your professional reputation and your Expert Real Estate Authority TM positioning in your market. Door knocking is the real estate agent's equivalent to being a homeless person who stands by the freeway with a sign saying "will work for food."
I know this will upset a few readers, and I am happy to go head-to-head with anyone on this . . . but simply said, you are BEGGING for business!
This is not how you want to position yourself, and it will not serve you well. It is a way to generate leads, though, and if you would choose to use this as one of your lead-getting sources, let's see how much door knocking you would need to do.
LET'S DO THE MATH: Assuming a fairly good conversion rate, expert training and great follow up systems, you would need to knock on 16,571 doors this year, which breaks down to 1,381 per month or 70 per day.
In my neighborhood, it takes 124 seconds (between 2-3 minutes) to walk from my front door to my neighbors front door, and let’s add in 60 seconds of wait time for someone to come to the door before you decide to give up on this home and move to the next. So to hit your income target, you will need to spend nearly 4 hours a day going door-to-door.
Many agents I talk to seem to like going door-to-door. They tell me they love getting to know new people, and they have gotten a lot of leads from it.
…LET ME BE DEAD HONEST HERE!
Getting to know people does not feed your family or pay for that trip to Hawaii …and seriously, how many of those “leads” turned into an actual sale???
Company Referrals: Let me just say, company referrals are AWESOME! They convert like almost nothing else -- often an impressive 60-70%. If we could be flooded with tons of these, we wouldn't need to be wondering about how to reach our income goals. We would be reaching -- and likely exceeding -- them year after year. The one downside of company referrals is that they don't come around very often. Most agents are lucky if they see more than 2 or 3 a year. The difficulty in getting these leads combined with the excellent conversion rate makes the math for this interesting.
LET'S DO THE MATH: To hit your goal, you would need 90 company referrals a year or 8 per month. This is AWESOME! I don’t know any agents, however, who have ever gotten 8 company referrals month-after-month from their brokerage. If you do, all I can say is CONGRATULATIONS!
These are the most common ways that agents spend their time trying to get leads. Looking at what it would take to use these methods to achieve your goals for the year, it can feel like quite an uphill battle to get there -- or like an impossible feat to many people.
It's not impossible to reach your goals using these methods, but it is NOT an easy or EFFICIENT road to get there.
The legendary John Wooden said, "Never mistake activity for achievement." This quote has so much wisdom for so many real estate agents who work really, REALLY hard . . . but at things that yield them little results. Working hard is great, but working SMART is the greater objective.
So if these methods aren't the most efficient road to your goals, then what are your other options?
Well, the option that has worked wonders for me has been to put together an amazing Internet campaign. One of the key pillars to my Internet campaigns has been, and continues to be, to use Craigslist to generate leads.
Yes, really . . . Craigslist.
Since I've perfected my system, I now can predictably count on generating a monthly average of 120 leads -- QUALITY LEADS -- every month without exception on Craigslist. My total time investment to generate and convert these great, quality leads? Less than 1 hour per week!
So why does this work better than some of the methods we've talked about above? Why should you consider Craigslist (or Backpage or Kijiji depending on where you reside)?
Well, you shouldn't . . . if you're going to use it the way most people do. If you want to try and sell directly off of Craigslist, then go back to the other methods you're using. Your results will be about as good.
If you start to think like a marketer and change your focus on what you are trying to do with Craigslist, however, your success on Craigslist can go up FAST and SIGNIFICANTLY.
Remember our original math above . . .
To reach your income goals, you need to close a decent number of sales every single month. This requires you to know how to find consistent, quality leads if you don't want to be on the 90+ hour a week grind indefinitely.
So right now, switch your focus to how to build a list of quality leads, and how to position yourself as an Expert Real Estate Authority TM in your market. Switch your focus away from just looking to move individual properties.
How do you do this? One way is through an effective Craigslist campaign. I emphasize the word effective, because it is easy to sabotage yourself on Craigslist if you do it wrong.
Use Craigslist effectively as part of an overall Internet Campaign, and your income goals are not only reachable, but reachable working a fraction of the time you are likely working now.
I would love to help you get started on reaching your 2012 income target. As my ‘Thank You’ for taking the time to read this article and to welcome the new CrackerJack Agent platform, I am going to give you a gift - one full day's worth of my best-performing Craigslist ads, along with a detailed 32 minute training to show you how to put them to use - - no strings attached!
Go here now and download your preview copy of my $236,757 Craigslist Swipe File: http://www.TotalRealEstateATM.com/giveaway/
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Vince Villegas is an Associate Broker with Keller Williams Realty; he has been licensed since 2002. After 6 straight years of doing business the “old fashioned way” and killing himself working 90+ hours a week, Villegas finally hit the wall in 2008 and went from selling 56 homes in 2007 to just 8 by October 2008. It was than he faced the scariest decision in his life …either get out of the business or find a better way. He of course chose to find a better way; it was then he began his journey to understand the principles of long-term business success. In 2010, after uncovering the secrets of a successful business, Villegas finished #49 in Sales for Coldwell Banker North America and climbed to #27 in Sales by May 2011 (Villegas joined Keller Williams in August 2011) all while working an average 5 hours per week. Agents across North America have been taking note of his success and began seeking his knowledge, today we at CrackerJack Agent are honored to have him sharing his advice and knowledge with our readers. In the spirit of our new platform – CrackerJack Agent - Villegas has offered a complementary gift for our readers, you can claim your gift by going to: http://www.TotalRealEstateATM.com/giveaway/