Sure, leading indicators can help agents with income by clarifying the work needed to achieve. Brokers can benefit from them with recruiting. How many people are you touching in your database?
Over the years, I have heard the reporters on the nightly news mention the economic leading indicators time and again. As most leaders know, leading indicators are trends that you can look at today that give you a glimpse into what is likely to happen in the future. For example, the number of housing permits issued today is a leading indicator of how many new houses will be available in the next several months which then indicates the number of household appliances that will be sold shortly thereafter and so on. One indicator “leads” another indicator.
The challenge is for us to look at our future desired outcome and then back up to the one or two things that we need to do today that will lead to a successful outcome somewhere in the future. As real estate leaders, you can apply this to recruiting as well. The first step is to identify the outcomes you want, then spend some time figuring out the appropriate leading indicators or predictive activities that will lead to those outcomes.
Recruit, retain, find profits
So what are the leading indicators for the things you are trying to achieve? In most businesses, there are one or two clear leading indicators that will predict your future profits. In real estate, recruiting talented agents is one of your most important leading indicators. Let’s say that your net income is typically driven by your revenue, which is driven by the number of units sold, which is driven by the number of clients you have, which is usually driven by the number of people that refer or recommend you to others. The number of people that could refer or recommend you is usually driven by the combination of the number people that know of you combined with your top of mind position with them.
Stated differently, people must know your story, remember your area of expertise and be willing to share it when the time is right (a.k.a. sending you referrals). Repetition and memorability build brand awareness or “top of mind.” People’s ability to recommend you is likely a function of the number of times they interact with you, recognize your value and in turn, relate your story to others.
We have now arrived at two of the primary leading indicators of your future income – the number of people you regularly communicate with and the message you give them that helps them recall your story. These two indicators, the number of people you know and the number of times you remind them of our story, can be combined into a singular measure – the “TOUCH”.
Increasing your touch
A “touch” is defined as one quality contact with one person. This doesn’t mean physical touching although face-to-face interactions should be part of the mix. As an illustration, if we contacted 50 people 10 times each last year with a small item of value such as a neighborhood report of pricing trends, a summary of the mortgage market, or a brief phone call about a new listing, it counts as 50 X 10 = 500 touches. Next year, to grow our business, we might want to have a goal of contacting 100 people 15 times a year, for 1500 touches. Increasing from 500 touches to 1500 touches should result in an increase in referrals.
If your business is not performing at the desired level, try generating more touches. This means sharing a clear, consistent, value-based message through a systematic and repetitive series of interactions with a growing number of people. If we measure, study and increase the effectiveness of our touches over time, it should eventually lead to future improved income. Touches could be a primary leading indicator of hiring high quality agents, and getting more referrals. Increasing touches today should increase referrals later which would increase revenue and profits shortly thereafter. Over time, we understand and improve our ability to predict our income from the leading indicator of the number of touches.
I am constantly amazed at the number of real estate professionals that are dissatisfied with their income yet don’t know how many people are in their database and how often they touch them. This goes for brokers too. Who’s in your recruiting database and how frequently are you reaching out to them to offer them something of value, such as an invite to an education program or company event? I am even more amazed at the people that confess to having no database at all or no system for communicating value to them. These are typically the leading indicators of future income yet they are frequently ignored. Don’t let this leading indicator go unmanaged. Know it, manage it, improve it and grow from the use of it. It’s too important to ignore.
Dr. Steven Tufts, licensed real estate instructor, is a clinical professor at the Warrington College of Business, University of Florida. He teaches sales, marketing, entrepreneurship and real estate classes at both the undergraduate and graduate levels.
