More Leads Than You Need
If the human body can normally only absorb 3 milligrams of vitamin C why does the average Vitamin C capsules come in 5 milligram portions?
The answer is simple. The cost of manufacturing a 5 milligram capsule is roughly the same as a 3 milligram capsule and the normal waste doesn’t pose a problem. It is just extra that your body couldn’t use at that time. The extra two grams comes out of the body when it isn’t absorbed. But everyone now and then your body is low on vitamin C and in that case the extra two milligrams can be absorbed. When the extra two grams are absorbed into your body it is because your body really needed it. But your body cannot tell you in advance, your body cannot forecast a drop in Vitamin C two weeks or two months from now.
This is the same principle of we should apply to real estate leads.
We know that some people don’t follow up on what they intend to do. They look for a home and then they don’t find what they were looking for. Sometimes they have a change of jobs or family situation that impacts the purchase. Any number of a million things can happen that impact your ability to predict what someone is going to do. Depending on people to do exactly what we think they should do is not a recipe for success. We need to create a little extra to make up for the waste that naturally occurs when we are dealing with people. The numbers are really easy to work out if we sit down with a piece of paper. The following exercise takes 2 minutes and will double your sales.
How many homes do you want to sell in the next twelve months? ______________________ (example 50)
How many homes is that per month?________________________ (example 4.25, rounded up to make up for waste)
What is you closing ratio?______________________________ (if you don’t know use 5%)*
How many leads per month do you need to sell your monthly goal____________________________(4.25 closings divided by 5% closing ration)
In the example above you should have come up with 85 leads needed to generate 4.25 closings per month.
If not take my word for it and let’s move on.
As your closing ratio increases the number of leads can be reduced in order to hit the same goal. However this is what people do when they are trying to do the opposite generally. Wouldn’t it be better to increase your closing ration and generate the same number of leads thereby increasing your number of homes sold and your income?
This is so simple and yet many people are more concerned with reducing the investment rather than accepting a higher return. Everyone is different but I felt compelled to mention this interesting bit of human nature.
In closing if you want to sell 50 homes a month and your closing ratio is 5% (half of what it should be) then you need to generate 85 leads a month but this number is going to be reduced in time to maintain the same result as leads start to compound after three months. Remember the leads that were generated the first month still need to be worked the fourth month and so. We all tell ourselves that this is what we do but the number of real estate professionals that actually follow up on leads that are older than 30 days is minute. Put yourself above the average person and reap the rewards of this lack of follow up. This will also save you advertising dollars because you are maximizing each dollar invested.
*If you don’t know your closing ratio you should start tracking it now. What is inspected is respected and you will increase your closing ratio just by paying attention to it.