Adam Hergenrother is the founder and CEO of Livian. He believes that business is nothing but a conduit for personal growth and embraces the company’s vision to Love How You Live. When he’s not leading and growing his organizations, you can find Adam either in the mountains or out in nature with his wife and three children.

If you’ve been in business or real estate for longer than three minutes, you’ve heard someone mention the Pareto Principle. However, in case you are brand new to the scene, here’s a refresher.

The Pareto Principle specifies that 80 percent of consequences come from 20 percent of the causes. Business translation? Eighty percent of your results come from 20 percent of your efforts. 

What does that mean for real estate professionals? That you must choose your 20 percent effort (where you spend your time, money, and energy) wisely. And if you run a brokerage or lead a team, then you must be extra aware of where you are leading your team or agents to spend their 20 percent. Your output will be dictated by your input. Choose that 20 percent carefully! 

The energy of the shift

For real estate agents, your 20 percent usually falls into the category of lead generation and closing deals. For team leaders, your 20 percent looks like recruiting new agents or employees and leading them by casting the vision, providing clarity and direction, and making high-quality decisions each day. 

Focusing on your 20 percent may not be enough with the shifting market ahead. Time to take the Pareto Principle to the next level.

Enter the Extreme Pareto Principle.

The Extreme Pareto Principle is focusing on the 20 percent of your 20 percent (in other words, focusing on the top 4 percent of your most important activities). In this shifting market, 4 percent of your activities will produce 96 percent of your results. 

Laser focus

What would your business look like if you had this level of focus and action each day? First, you must clearly identify which activities or lead generation sources are giving you the best ROI.

Then you will need to double-down or quadruple down on your efforts on that particular piece of your business. In the past, if it took you 1 hour of calls to make an appointment or five client appointments for every four closed deals, you may need to increase the time you’re spending to achieve the same result.

It may require two hours of calls for the same one appointment or seven client appointments to close four deals. That’s okay. Make peace with the fact that the market is going to require more effort (and yes, more time) from you over the next several years. 

Personal growth

The Extreme Pareto Principle doesn’t just apply to lead generation. You can apply this concept to your financial systems and expenses, personal growth, and accountability for yourself and your team.

For example, take a look at your budget, projected sales and expenses. Which expenses are truly giving you a return? Do you need to cut extraneous expenses, even for a short period to ensure a healthy profit margin for the next six months? Make it a game. How much can you trim from your budget and still get 96 percent of the results you want?

Keeping track

The same goes for accountability. Are you clear on exactly what you and your team members need to be held accountable to to keep everyone on track?

Over the years, you may have developed a complex reporting structure that tracked everything from calls made, appointments set, contracts signed, sales volume, average sales price, number of house showings, what you had for lunch, the speed you drove to your listing appointment, etc. You get the point.

You may simply have too many numbers for the current market. What actually matters that will be leading indicators for you and your real estate agent’s success?

At my brokerage, we focus on four key metrics: Did you sign something, sell something, set an appointment today? And did you add five contacts this week? That’s it. That’s the 4 percent that matters that will dictate 96 percent of the results for our agents and team in the future. 

The flex

As a real estate professional, you know you must flex and adapt when the market changes. And if you want to be in real estate for many years to come, you’ll have to get extreme with your focus and time.

Remember, everything matters, but not everything matters equally. Get laser-focused on the habits and activities to survive and thrive as a highly successful real estate leader and then let go of the outcome. 

Adam Hergenrother is the founder and CEO of Livian, the author of The Founder & The Force Multiplier, and the host of the podcast, Business Meets Spirituality. Learn more about Adam’s companies and culture here.