Metrics are an important component of business success. Remember: you can’t improve something that you can’t measure. You also can’t make informed decisions without the complete picture, which you can’t get without looking at metrics.
The problem is that in industries like real estate, there are a lot of metrics to look at from all angles. You need to look at agent performance, market performance, and even back-office operations. The good thing is that there are plenty of tools that you can use to help monitor broker metrics and other aspects of real estate performance.
That said, here are some of the most important metrics that real estate professionals need to monitor to ensure productivity and business success:
Market Share (and Market Growth)
To understand your brokerage’s needs and what things you need to expect from agents, you first need to understand the market. Some of the most important things to look at include market share, which includes totals and trends. This way, you know how your brokerage is doing and you can then implement better strategies when it comes to recruitment, marketing, and more.
You also need to monitor market growth, since this metric will clue you in on what you need to do to build your business. Keeping track of market growth will not only show you high-potential target areas, but also where the most talented candidates are. More importantly, understanding market growth can also help you understand how the market changes and how you can adapt.
Finally, you should also look at the number of properties sold based on the available inventory or total listings in a given location. You can use this to gauge the health of the market, not to mention its desirability.
For real estate agents, one of the most crucial responsibilities is to respond to leads and to respond to them on time. The problem is that there are some agents who, for various reasons, take too long to get back to their leads. Worse still is that there’s a significant number of buyer inquiries that are left unanswered.
For brokers, it’s important to keep track of agent response time to ensure that the leads don’t dry up. Figure out the pain points if things are taking too long. Fixing these issues can help bolster your brokerage’s growth, not to mention a positive reputation among potential clients.
Follow Up Rate
Aside from lead generation and lead response time, real estate professionals also need to pay attention to the follow up rate. Even if your agents respond to leads on time, they won’t be able to convert successfully if they don’t follow up. This is simply because only a handful of clients make a purchase immediately after the first meeting. Follow ups can help establish trust, and therefore convince clients to push through with the transaction.
Follow ups also improve the customer experience. It can help you nip problems in the bud, solving them for your clients before they become bigger issues.
Cost Per Lead or CPL
Computing the cost per lead or CPL is as simple as dividing the total ad spend by the number of leads generated in one period (usually one month). The resulting figure can help you and your agents modify tactics in order to drive down the cost without losing leads.
Do note, however, that a lower cost per lead doesn’t immediately mean your marketing and advertising strategies are effective. You also have to look at the quality of leads being generated. Moreover, there’s no single “right” figure for CPL. Different agents have different targets, so it’s only logical to have different ideal CPLs for them.
How do you know when your marketing and sales campaigns are actually working? When you are able to convert your leads into your clients.
If the conversion rate is not as high as you expected or if you aren’t generating enough leads, you need to take stock of various aspects. Aside from marketing and sales efforts, you may also want to check your website and social media platforms if they’re fully optimized. You should also check your current email blasts and blogs (if you have one). Finally, talk to your agents and figure out why they’re having difficulties with closing.
Time to Close
In relation to the closing rate, you should also look at how long it takes for leads to get converted into clients. If things are taking too long, you may lose other, more valuable clients along the way. You may also be pouring resources into a lead that may or may not give you your desired results.
One way to improve your time to close is to find a market where properties have historically been selling faster. You can also talk to your clients regarding their decision-making process. Ask them about things that influence their choices and see if you can address those. If not, weigh your options if it’s worth waiting for them or if you can turn your attention to other opportunities.
As earlier mentioned, the real estate industry has many more metrics and facets that you should keep your eye on and analyze. Prioritization is key if you truly want to succeed in the business, and these six are definitely among those you need to put on top of the list.