Many agents love their jobs so much that they forget they’re operating a fully-fledged business, complete with tax obligations, accounting concerns, and, most importantly, analytics they can use to help guide future decisions. One of the least-analyzed, but most important, metrics you have at your disposal is access to data about how successful (or unsuccessful) your marketing efforts are.
You have a lot of touch points that fall under the marketing umbrella. You’ve probably done both paid marketing like signage and business cards and “soft” marketing like communicating with prospects.
One of the most basic ways to analyze the success of your marketing is to determine your conversion rate for the last year, which equates to the number of clients or potential clients you had a touch point with who turned into paying clients. One way to compile this information is to go through your e-mails and calendar appointments and count up how many meetings you had with different potential clients. Take the total number of clients who closed in the past year, and divide that number by the total number of potential clients you communicated with. If your conversion rate is above 10%, this is a great number!
If you are still looking for more clients, you need to focus on filling the top of the sales funnel. That means doing more advertising to promote your business. If you are disappointed with your conversion rate, you might be spending too much money or effort on the wrong kinds of clients.
Another way to analyze the success of your marketing efforts is to add up the total amount of money you’ve spent on paid marketing over the year. If you divide this number by the total number of clients who closed in the past year, you will determine the amount of money you spent to attract each client. If you then further compare this to the total amount of revenue you made per client (the same calculation as before; just look at your total revenue for the year, instead of expenses), you can determine your margin (subtract expenses per client from revenue per client): the amount of profit made per client. Again, if you think this number is too low, consider scaling back your marketing, or choosing more efficient means of marketing.
Comparing the money you’ve spent to the money you’ve made can yield unexpected cost savings and revenue sources.
Written by Rick Witeka
ReeceNichols Real Estate, Springfield