I don’t know about the rest of you, but I love marketing. I love figuring out a theme and creating the copy and running a campaign. What I have a lot more difficulty with is prospecting. The daily grind of converting people who haven’t met me into people who want to elect me mayor. I read posts by Jeff Brown and Chris Johnson and I get all fired up like when I was a stock broker: 200 calls a day and all the throat lozengers you can swallow. Then I’ll read something by Greg Swann or Brian Brady and I’m speeding down the 2.0 path toward Social Media Marketing Mecca. But at the end of the day (actually the beginning of the day for me), I still need to do the basics: phone calls, emails, letters and so on. I’ve got HEAP running some of that for me and I use Facebook and I’m usually bleeding somewhere from all my efforts to skin cats! It’s a whole lot to digest on the salary we’re paid… Oh yeah, we’re not paid a salary. We’ve got to keep all those balls in the air AND wait for the big pay days when an escrow finally does close. Come on… admit it: sometimes a little daily motivation would help.
Lately, I’ve been monetizing my efforts. Nothing ground breaking here; just some good old fashioned methods for spicing up the day. If you’re looking for a little more excitement, give this a try. (Warning: involves a little bit of math. If you don’t DO math, or you’re already sufficiently motivated by the repo guy outside the door… skip this post now and save yourself the headache.)
One for the Money
Know your dollar figures. There are two dollar figures I care about: What is my average Gross Commission Income (GCI) per transaction? and What monthly income do I expect? (This can be found in the business plan you create and update each year… right?) I live in San Diego and work with lots of investors, so my expected GCI is $7500 per transaction. I live in San Diego and pay a hefty “sun tax” so my income expectation is $75,000 per month. (Go Big or Go Home!)
Two for the Show
Know your basic numbers. What do I mean by that? I mean, on average, how many clients lead to a transaction and what type of prospecting campaign is going to yield those numbers. Personally, I subscribe to the basic numbers in Gary Keller’s tremendous book: The Millionaire Real Estate Agent. That means my data base is divided into two groups:
- the people I’ve met (called, surprisingly, METs) are dripped on 33 times annually with an expectation of 1 repeat piece of business and 1 referral piece of business for every 12 METs in the database (#METs / 12 x 2)
- and those I am prospecting to blindly (often called a Farm), with 1 monthly contact each and an expectation of 1 transaction a year for every 50 people in the database (#Farm / 50 x 1)
Three to Get Ready
Know your average percentages. Let’s make it easy on ourselves and say that your NET – meaning after your split, any splits you pay out, market expenses are covered and you’ve paid your business expenses – is 50%. For every dollar of GCI, you put 2 quarters in your pocket. Not bad.
Four to Go! (look out… here comes the math)
To earn $75,000 I must gross $150,000. I’ve decide the appropriate mix for me is 600 METs and a 7000 person farm. The METs lead to 100 transactions (600/12 x 2) at $7500 each for a total of $750,000. The farm leads to 140 transactions (7000/50 x 1) at $7500 each for a total of $1,050,000. Combined that is $1.8 million in GCI. Divided by 12 months equals a gross of $150,000. So far, so good.
My 600 METs require 33 touches each or 19,800 activities in one year. The 7000 in my Farm require 12 touches each or 84,000 activities in one year. Dividing the METs GCI of $750,000 by 19,800 activities yields $38 per activity. On the Farm side, the GCI of $1,050,000 divided by 84,000 pays me $12.50 per activity.
Rock & Roll
First of all, it’s interesting to note that the METs return three times as much per activity; they also cost more in mailings and time. You’ll have to check your own ROI and decide what mixture is best for you. Once I have these numbers, I can use them to motivate myself financially; here’s how:
Go to whatever accounting software you are using right now. Create a new account called Future Earnings. At the end of each day total up all the activities you tracked (you do track all your activities… right?) and deposit $38 for every MET activity and $12.50 for every Farm activity. Emailed 200 Mets? That’s 200 x $38 which means you made $7600. Not a bad day. Watch your Future Earnings account grow. Every time you get an actual commission check, deduct your average (in this case $7500) from the account.
Voila, you can now watch your “bank account” grow EVERY DAY. More importantly, you can see at a glance how your business is doing. What’s in the Future Earning account this month? You can be fairly sure that’s what will be in your real account in 60 – 90 days. Did I make any money today? Well let’s see: wrote two blog posts… don’t get paid for those, read lots of interesting stories about real estate marketing… don’t get paid for those, called 10 of my METs… Yes! Made $380 today. Hmmm, that’s a long way from $75,000 in a month. Better get my arse in gear.
It’s not that all those other activities aren’t important. It’s just that now we can prioritize our day a little better (e.g. no reading until I’ve made $2000 in deposits). Plus, it keeps us focused on what’s important (you get paid for that which makes you money – everything else is secondary). Best of all: you get “paid” daily to help keep you motivated! (Now, if I could just find the checkbook that goes with my Future Earnings account…)3 comments