This is the first article in a multi-part series on growing your sales pipeline. In this article we will dive into conversion rates for real estate. You will learn what it is, why it’s important and which ones you need to track.
In the beginning…
If you’ve been a Realtor for any length of time you’ve likely learned that you need to be a master of not one but two jobs, Real Estate and Lead Generation. Yet the real estate licence course teaches you about Real Estate and almost nothing about lead generation. It’s inevitable that so many Realtors find themselves scrambling for business when they lack a fresh supply of leads in their sales pipeline.
There’s good news. Lead generation is easy once you know how to do it. And it all starts with understanding conversion rates. Improving your conversion rates can have a big impact on your sales volume and revenue.
There are two categories of conversions rates that Real Estate Agents need to care about.
1. Online conversion rates.
This is the number of prospects and appointments you generate from web traffic. Such as from your website, landing pages, listing advertisements, etc.
2. Offline conversion rates
These are your referral and sales closing rates, etc.
What are conversion rates?
Conversion Rates are the percentage of your prospective clients who take an action that you want. The following are conversion rates that you may be tracking already.
- The percentage of website visitors who fill out a form, call your company, or email you directly
- The percentage inquirers who turn into appointments
- The percentage of appointments you close
Increase conversion rates to increase your profits
No matter how good your current conversion rates are, you can always get better.
Let’s say you spend $1000 per month on traditional and online advertising. Depending on where you are spending your money your results will vary. In this example we’ll say you are getting 10 new prospect inquiries per month from your advertising. Now if you converted 1 of your 10 prospects to a client this month your conversion rate would be 10%.
If you know that every time you spend $1000/mo you can get 10 prospects and 1 client there are two ways to grow your sales volume.
1. Increase your advertisement budget to increase your lead flow (check out Lead Magnet here).
2. Increase your conversion rate on your existing lead flow.
How to increase conversion rates
There are 3 easy ways of increasing your closing rate on your current opportunities. This is an exciting topic because agents who learn to do this really well become the leaders in their marketplace.
1. Reduce the amount of time it takes to respond. (Part 2 – How to make an introduction quickly)
2. Get potential clients to invest time. (Part 3 – coming soon)
3. Automate your follow-up system (Part 4 – coming soon)
Tracking conversion rates
Why is tracking your conversion rates critical to your future success in real estate? It’s simple, it’s hard to improve what isn’t measured. Think of an athlete whose dream is to compete in the Olympics as a runner. If they don’t measure or record their speed and time they won’t know if they are getting closer to their goal. In the same way measuring your conversion rates helps you know if you are achieving your dream.
Conversion Rates are helpful when tracked daily because they give you a clear idea of both the amount of leads you are generating and how well you are doing at turning them into clients.
You can use a spreadsheet in MS Excel or Google Docs to track your daily closing rates. Keeping a regular log of your conversion rates will give you a baseline to improve on.
Top producing Realtors using our tools have gotten into the habit of tracking their behaviours. They know all their closing rates and are able to quickly judge the quality of lead-flow by observing how their averages change. At first it might feel hard to get into the habit of tracking conversion rates. But as soon as you see the increase in the number of clients you are working with it gets really fun.
For all companies, effective marketing accountability requires a mix of art and science: it requires transformation of culture, of process and of the methods used to measure marketing effects, and to act on the insights from those measures.
~Frank Harrison, Strategic Resources Director, ZenithOptimedia
3 conversion rates every Real Estate Agent needs to track
1. The percentage of inbound prospects you convert to appointments
2. The percentage of referrals you convert to appointments
3. The percentage of appointments you convert to clients
1. Write down 2 conversion rates you want to start tracking
2. Setup a spreadsheet to record your conversion rates every day. (If you don’t have any activity some days, it’s really self-motivating to hunt down some new prospects)
Passionate about helping leaders grow their business, Jonathan Whiting is co-founder of StreetText. In addition to StreetText Hub, Jonathan has written for TechVibes and REM Magazine.