Be the smartest person in the room. Impress your clients, outshine your competition, and be that person who knows everyone. Sign up for the 2022 virtual event bundle to unlock access to fresh content every month. You’ll be able to engage live with experts, listen in to discussions while you’re on the go, and watch the replays. Register now and you’ll also receive virtual access to Inman Connect New York in April – don’t wait!
While many real estate agents and brokers get into the business because they thrive on building relationships, if they want that business to be successful, they cannot ignore the numbers, according to panelists at Inman Connect Now on Thursday.
Numbers are “the language of business” and “really tell a story,” said Dana Cadena, a broker associate and certified real estate trainer with Keller Williams in New Jersey. Cadena spoke in a session called Keeping Your Eye on KPIs, or key performance indicators.
“Without the numbers and these key performance indicators, we can’t improve what we don’t measure,” she said. “So it’s a method to measure and make certain that we’re on the right track. It really informs our decisions moving forward to bulletproof our businesses.”
The KPIs she has her agents focused on lead from one to the other: number of outbound contacts; conversions to appointments; conversions to signed listings, signed buyer contracts or signed leases; conversions to pending listings; conversions to closings; gross commission income; and profits.
Panel moderator Wendy Forsythe, chief strategy officer for Fathom Realty, noted that there are leading and lagging indicators.
“Your contacts is a leading indicator,” she said. “I know that I’m always working today for tomorrow’s business. So how many contacts I make today is going to go down the funnel to turn into those commission checks tomorrow. No contacts today, no commission checks tomorrow.”
Ian Hoover, broker-owner at Deacon & Hoover Real Estate Advisors in Pittsburgh, Pennsylvania, said that as a smaller broker, he focuses on profit margin and transaction numbers.
“[I track] how many transactions we have coming in and how much our actual transaction fees are because at the end of the day, if I’m doing enough deals and I have enough transaction fees, we’ll be able to pay the bills, keep the lights on and give a good quality product to our agents,” he said.
He keeps an eye on net profit per transaction and compares it to the net on his profit and loss statement.
“Does that net number per transaction actually equal to what our net number is on our P &L?” he said. “If not, where are we spending our money so that we can really get a hold on our numbers and know what we’re doing so we can continue to grow and achieve our goals?”
If he doesn’t have enough transactions coming in or isn’t making enough per transaction, then he’ll focus more on income-generating activities, according to Hoover.
“In our particular brokerage, we are focused on company-generated leads because we make a little bit more commission on those,” he said. “What we’re really focused on is driving numbers and giving business to our agents because no. 1 that brings more money in the door, no. 2 that keeps our agents here because we’re giving them business.”
Cadena said her brokerage’s “best secret weapon” is GPS, which stands for goals, priorities, strategies. The goal is a SMART goal, she said, which means it’s specific, measurable, attainable, repeatable, and time-sensitive. The goal guides the firm’s top three priorities, which are then tethered to five action-based strategies.
“It’s the simplest way to put a business plan on one sheet of paper,” she said. “Your strategies really inform the priorities to activate which causes you to just nail that goal at the top of your business plan.”
GPS allows agents and brokers to adapt over time, according to Cadena.
“If you’re not on target for your annual goal, say by the end of the first quarter of the year, you’re permitted to adjust your sales,” she said. “You can pivot purposefully to just insulate your numbers. If you have to catch up on a certain number of appointments for that conversion to translate into the GCI, well, you have to turn up the heat in the kitchen and really get cooking on the end game because, listen, nothing will work unless we do.”
Her brokerage checks their GPS every week on so-called Fantastic Fridays. Then at the end of the month, the brokerage looks at agents’ P & L and pays special attention to the gross commission income, which rising prices and sales mean should be going up.
“If the GCI is flat or even trickled down a little bit, we’re cutting deals and that does not have to be the case,” she said.
Forsythe added, “We know nationally the commission percentage rate is going down. But that’s where we peel back the KPIs and we can see the behaviors that are leading to that outcome.”
Hoover said he also looks at a “pipeline” report weekly to see how many new deals agents are bringing in.
“That helps us forecast what we have coming in so that we can really plan and adjust accordingly for our business,” he said. “And then the most important thing: we have a great accountant, and we get our P & L reports by the 10th of the following month. That really lets us dig deep into our business. Where do we make our money? Where do we spend our money? Are we profitable? How profitable are we? We can really dig deep into that and make sure that we are running our business accordingly and effectively.”
Cadena stressed that it’s not just the business that brokers and agents should be checking on, but themselves as well.
“[Do] a check going inward to make sure you’re whole and you’re happy and you’re fulfilled,” she said. “Frankly, I re-analyze my strengths. As adults, we’ve earned our strengths and [I] strive to business plan around my strengths. So if something is off track, it’s probably a tool, a system, or a key hire that can help us get back on the trajectory that we choose to grow to.”
Hoover said that during the pandemic he decided to “really reinvest myself into this business and really help my agents with their businesses more,” so he meets with his top team leaders and top agents once a month to go over their goals, their pipeline, what they’re working on, their struggles.
“I know if they’re hitting their goals, at the end of the day, we’re hitting our goals because we’re really focused on goal setting and we have our yearly goal meetings that we do every year,” he said.
Frequent review of KPIs and accountability are key, according to Forsythe.
“If you’re an agent, if your broker doesn’t hold those regular meetings with you, find an accountability partner, whether it’s a coach, a peer, a family member, like somebody just in your sphere that you can have that accountability conversation with,” she said. “I’m a big fan of scorecards. What is that scorecard? That is my KPIs [and] the other goals that I may have in my life that contribute to my well-being and all those factors that go into success.”
Cadena said her brokerage has a centralized tool called “the 411” that keeps track of weekly, monthly and annual personal and business goals.
“One of our favorite go-to tools is that: what are we doing every week to impact the month to impact the year,” she said.
The panelists ended with key takeaways from each:
- Forsythe: “My best piece of advice for all of you watching is just sit down and write out every number in your business that’s important. Then figure out how do I track these and set up that scorecard because once you do that, that will give you so much power in your business that you can use.”
- Hoover: “Know your numbers. Be updating them all the time.”
- Cadena: “Hold every dollar accountable. Make sure that it’s an investment in your business versus just a bandaid for that widget that you don’t use. Interrogate every expense in your agent business because you’ll find money. Secondly, get so specific on your strengths and what in your agent business gives you the most energy. Do that. And really use the scorecard and the 411 and the GPS to just hold yourself accountable. Make sure you’re having predictable income in our industry.”