That means…
If you make $40 per hour right now (about $80,000 a year), that would go to $80 per hour ($160,000 per year)…or even $120 per hour ($320,000 per year).
If you make $200 per hour right now (about $400,000 per year), that would go to $400 per hour – or $800,000 per year.
Does this sound like an impossible task for you? It’s not once you understand how to maximize the efficiency of your marketing and service delivery.
See…the amount of money you make is directly related to how efficiently you can attract new prospects…capture them as clients…and close a transaction – thereby getting paid your commission.
I call this process “THROUGHPUT.”
How does throughput work?
Picture the revenue of your real estate practice as water flowing through a pipe. To maximize the flow of water (i.e. your commission revenue) you can do TWO things:
First, you can increase the WIDTH of the pipe, thus allowing more VOLUME of water flowing through, and…
Second, you can increase the SPEED in which the water flows through the pipe.
Volume and Speed – that’s the secret. Make sense?
The larger the volume and the greater the speed – the more money you make.
So how do we maximize revenue throughput in your practice?
FIRST, to increase the VOLUME of revenue you need to have MORE quality marketing “systems” working to bring you clients.
Marketing “systems” are proven, predictable ways of bringing you prospects and clients without you having to spend your valuable time finding, sorting and sifting them.
Remember…your job is to do the highest paying tasks: Working with clients, closing deals, and making money.
Hence, the more marketing “systems” working for you, the more client flow…and the more money you make.
Problem is…most agents’ marketing doesn’t work – because they don’t understand how to create marketing “systems” that helps them leverage their success:
- Selection of a motivated market, powerful message, and efficient medium, AND creating automated systems to sort and sift leads so they’re pre-qualified before you speak with them,
- Establishing a depth of relationship whereby you become the automatic choice whenever they think real estate, and,
- Creating self-serving, motivating reasons (irresistible offers) to act on your behalf in ALL of your marketing.
Which brings me to…
SECOND, to increase the SPEED of revenue, you need marketing systems that work efficiently.
I’ll bet you spend a lot of time and money marketing your services. And I’ll also bet a good portion of that time and money is wasted. So anything new that requires you to spend money on your business is met with a skeptical eye.
But the problem you’re facing is NOT that you are spending too much money or time…
It’s That You’re Getting NO RESULTS!
If you knew for every dollar you spent in marketing you got back $3 dollars…or $5 dollars…or even $20 dollars, you’d spend marketing money hand-over-fist, wouldn’t you?
You’d spend as much as possible because it’s multiplying your investment.
So the real problem you’re facing is not the amount of money or time you’re spending…it’s the return you’re NOT getting on your hard-earned investment (time and money).
This is what I mean by efficiency.
An efficient marketing system will produce a strong, fast return on your time or money (like water flowing fast through a pipe)…and a poor marketing system will produce a lousy return.
The problem with most agents:
- They have TOO FEW systems (poor volume)
- producing TOO LITTLE business (poor efficiency)
The reason? Agents simply don’t know the difference between an effective marketing system and an ineffective marketing system. They blindly follow the advice their trainer or broker or “coach” tells them…
And the worst advice you will ever get…is BAD advice.
Well, that won’t be you any longer…
How to Evaluate and Select ONLY the MOST Efficient Marketing Systems in Your Real Estate Practice…Thereby Maximizing Your Throughput of Revenue and Profits…
Let’s look at 2 examples of marketing efficiency.
The first is what I call “The Dumbest Strategic Mistake” (so you know what to avoid), and the second is “Smart, Effective Marketing.”
The Dumbest Strategic Mistake:
The other day one of our new Service For Life!® agents (www.serviceforlife.com) called me out of frustration. She was really upset because she was in the process of creating her “house list” and relationship marketing system when her broker laid into her saying…
“Quit messing with gimmicks. The ONLY way to build your business is to walk neighborhoods and cold call. Everything else is a waste of time and money…”
Hey…I understand the idea of not wanting to spend any money to get clients – especially if you have no money!
But this ‘dinosaur’ wanted her to sort through the no-call lists for any poor slob who hasn’t registered yet, and start cold calling and walking neighborhoods hat-in-hand looking for business.
Listen…thinking that there is “no cost” to cold prospecting is about the dumbest thing I’ve ever heard. In fact, cold prospecting is one of the MOST EXPENSIVE (least efficient!) way to generate clients – not just from the emotional drain, but financially too!
Want proof? OK, let’s do the math.
If you want to be an “above average” agent, your time should be worth at least $100 per hour (and there’s no better time to begin valuing your time than NOW, don’t you think?).
And if you’re an “average” cold-prospecting agent, you’ll get ONE client for about every 100 calls you make (not to mention the mind-numbing humiliation and rejection you’ll endure in the process).
And don’t forget the “no-call” lists you’ll have to sort through in the process – more time and aggravation.
OK…let’s see…if you spend an average of 4 minutes per call (many will be longer), then it will take you, statistically, about 400 minutes to call 100 people to get ONE client (that’s if you close 100% of them – which we all know won’t happen).
Divide 400 minutes by 60 minutes per hour, and it took you 6.67 hours of direct-abusive cold prospecting to get ONE client.
Multiply 6.67 hours by what your time SHOULD be worth ($100 per hour at least), and it cost you $667 to generate ONE client – not including the emotional drain.
Did You Know You’re Paying $667 For Every
Client You Generate Cold Prospecting?
At first glance you don’t think you’re paying anything because there’s no money flowing out of your pocket, right?
No so. Just because you’re not spending money doesn’t mean it’s not costing you a bundle.
You’re paying through the nose in LOST BUSINESS – what you could be making with an EFFECTIVE marketing system…a system that attracts clients automatically while you spend your time doing the most productive things: working with clients, closing deals, and getting paid.
We all get paid by the hour. And the question is: How much money do you make with your time?
But wait. You may be paying much more than $667 per client cold prospecting. For example, one of our Service For Life!® agents (a subscriber for more than 8 years now), Linda Fogarty from Tinley Park, IL now makes nearly $300 per hour.
This means…if she wanted to subject herself to such torture…cold prospecting would cost her over $2,000 per sale!
And if you walk neighborhoods, it’s gets much worse, because it’ll take you almost 8 minutes per “call.”
The moral of the story?
The More You Value Your Time,
the More UN-Profitable Manual Prospecting Becomes!
Let’s take a look at how to generate clients for a fraction of that cost – more money in your pocket – by using…
Smart, Effective Marketing:
Do you remember the simple “Critical Mass™” calculation I covered in this past real estate marketing article?
We learned, for example, that a “house list” of 280 people who own their home 7 years on average, will produce 42 transactions each and every year (280/7=42). The % of those YOU receive depends on how well you’ve nurtured these folks.
A house list of 500 produces 71 transactions per year on average.
Are you following me?
So let’s test the efficiency of marketing to a “house list” with a proven prospecting, stay-in-contact, and referral producing marketing system like Service For Life!®.
Let’s Look At Your CLIENT GENERATION COST…
The less you spend (in time and money – and hassle!) to generate a client, the more commission you put into your pocket, right?
Let’s try an easy analysis…
You’ll spend about $.85 per month per issue of Service For Life!® you’ll send to these 280 people. That means you’ll spend $238.00 printing and mailing each issue each month.
So how do you calculate your COST PER CLIENT GENERATED?
Well, first and foremost, it DEPENDS on your Personal Market Share™ percentage. Personal Market Share™ is: How predisposed are your prospects or clients to doing business with you? In other words, how good is the quality of your list?
Let’s work some easy numbers.
If you harvest a measly 20% Market Share of these folks each year, that means…
- You’ll spend $2,856 for the entire year sending 280 issues per month (to make 3,360 impressions)…
- If you harvest 20% of the 42 transactions, that means you’ll get 8 deals from the list.
- DO THE MATH: $2,856 divided by 8 transactions means you’ll spend $357 per client (NOT $667 to $2,000! as you would from cold prospecting – not to mention the torture and rejection you’d save yourself in the process!). You’ll also make between $32,000 and $96,000 in commissions, depending on the price of homes you sell – not a bad return on $2,856, don’t you think?
But wait!
WHAT IF…because of your relationship marketing systems (i.e. Service For Life!®), you harvest 40% of these folks? Then your cost to generate the client just dropped to $178 per client ($2,856 divided by 16 transactions).
And if you harvest 50% of these folks, then your cost of sale just dropped to $136 per client.
And that’s against a commission of $4,000…$8,000…$12,000 or more!
Do the math yourself and see. Have fun with it. This is why I say you can make your success in real estate a Mathematical Certainty!
But hold your horses…
There are 2 more important points you need to know about all this…
ONE…the numbers I mentioned here DO NOT include the referrals these folks could be sending you. Our Service For Life!® clients report getting as much as 30% referrals from their house lists – which means you’d get up to 12 additional transactions per year from these folks…
the LONGER you make contact, bring value, deepen the relationship over time…the MORE RESPONSIVE your list becomes. This means your Personal Market Share™ may start out at 10 or 20%…but over time it grows and grows.
That’s how our agents go from harvesting almost none of their house list (when they start)…to getting 20%…40%…even 80% or more of these deals.
It’s how you carve out your own Personal Market Share™ to build a consistent, ever-growing income in real estate.
So, the bigger your House List grows…and the more responsive they become, the more your income grows and grows (like the snowball rolling downhill I talked about in this past real estate marketing article).
And yet there’s another way to look at your marketing efficiency:
Let’s look at your BREAK EVEN…
Take your monthly investment to send a monthly direct-response newsletter like Service For Life!® and multiply it by 12 to get your annual investment.
Next, divide that amount by your average commission.
In our example, your annual cost to send 280 issues each month is $2,856. And if your average net commission is $5,000, then you need just .57 of ONE transaction to pay for your contact program ALL YEAR!
Your break-even is about ½ of one transaction!
Think about that. You need only ONE transaction out of 42 (that will occur) to double your investment. Try to get that, in the stock market. Heck…try to get that with any other form of prospecting or marketing!
Does all this make sense to you?
Ask any long-term top producer where they get their business, and they’ll tell you it’s from: referral, word of mouth and repeat business.
Ask any “coach” worth his or her salt what’s the best way to grow your business – and they’ll tell you: referrals, word of mouth, and repeat business.
Not having a regular contact system to your clients, farm, sphere of influence and nurturing new business from referrals, word of mouth and repeat business (especially in a tough market!) is like playing baseball without using your arms!
So the next time you strategize your prospecting and client-generating systems for the year, don’t forget to think about the marketing efficiency of the systems you choose.
It can mean the difference between making $7 per hour…or $700!
