By now you’ve heard repeatedly – you can’t stop marketing your services if you want a steady income flow.
But how much prospecting/marketing/self-promotion is enough?
To answer that question, you first need to determine the income that you want. Just for the sake of picking a number, let’s say it’s $100,000 per year.
Next, go look at your statistics and calculate your average commission per transaction. For the sake of using simple round numbers, let’s say it’s $5,000.
Divide your desired income by your average commission to see how many transactions you need to complete each year. In this case, you need 20.
However, look at your accounting figures again and pull out your actual real estate expenses. You might want to add however many transactions it takes to cover those. For now we’ll stick with 20.
How much prospecting must you do to get 20 clients?
People who track statistics for direct marketing say that if you “touch” your prospects at least 4 times, you should get a 17% response. If you keep going, you’ll get 80% of possible responses between the 5th and 12th contact.
However, these reflect possible responses. If you’re developing a geographic territory or a specialized niche that doesn’t exist because of an actual need to sell, a good percentage of those people aren’t interested and may not ever be interested – or at least won’t be interested in the next several years.
According to Inman News, 1 in 7 homeowners moves each year – that’s 14%.
Note that for our purposes at the moment, I’m not including those homeowners who don’t have much choice in the matter or who have already made the decision. If you’re prospecting Notice of Default listings, Short Sales, Divorcing couples, homes in probate, military and corporate relocations, Expired Listings, and FSBO’s, then more than 1 in 7 is a valid prospect. In those instances, it may be 1 in 2, or 1 in 3.
What do the numbers mean in terms of prospecting?
Sticking with 1 in 7 … Let’s say you plan to “touch” these homeowners often enough to reach that 80% mark. 20 is 80% of 25. Then, if 1 in 7 is a likely prospect, you need to reach 7 X 25 , or 175 homeowners in order to get 20 responses to your marketing.
After that, success depends upon how well you follow up and convert those prospects. If your conversion rate is 50%, then you need to consistently market to the same 350 homeowners. It it’s only 25%, you’ll need to reach 700.
Be careful about the territory you choose…
Some neighborhoods have higher turnover than others, so do your research. You may be farming a neighborhood of starter homes, where upwardly mobile residents or residents with growing families move on after only 4 or 5 years. Or, the area you’re considering could be an older, more settled neighborhood where most of the residents have lived for 20 years and don’t intend to move. You might want to look elsewhere.
Go through the past couple of years of MLS statistics and look at the average turnover before you settle on your territory.
Should you prospect selectively within your territory or niche?
You can purchase software, such as Smart Zip Analytics, that will predict which of the homeowners in your territory are the most likely prospects in a given year. But – it’s expensive. About $500 per month, according to the article I read.
And… I’m not so sure prospecting only to those who are most likely to move right away is a smart idea.
If you’re farming a geographic territory, you’re building a long term relationship that will only grow and strengthen over time. Those who aren’t ready now may be ready next year or the year after, and if you’ve been diligent, they’ll think first of you.
In addition, after they’ve gotten to know you and become convinced that you are a true professional, they’ll encourage others to use you. As a source of referrals, they could become just as valuable as your past clients and those in your sphere of influence.
Can you handle more business than you need to reach your income goals?
Good – then you’ll appreciate everything that comes in through referrals because you’ve continued to nurture your past clients and your sphere of influence. You have continued to nurture them, haven’t you?
So how – and how often – do you reach out?
The primary way to reach out to a specific group of people is through postal mail – unless or until your prospect gives you permission to use email. (Of course any Internet leads you gather will have volunteered their email addresses, so go ahead and use them.)
If you have time and like to write, you can write your own letters or postcard copy. This blog post offers guidelines to help you write appealing letters.
You may also have letters that come with a CRM package or from your franchise. Before you use them, check to see that they don’t violate any of the rules listed in the guidelines. (Unfortunately, some do violate those rules.)
To successfully develop a geographic territory it would be wise to reach out at least monthly – perhaps for years. So what do you do when you get to the end of a letter set?
Send market reports and/or create a newsletter to inform homeowners about coming events and news that affects the real estate market. Invite neighbors to open houses and send those all-important “Just listed,” “Under contract,” and “Just sold” cards. These show that you’re the agent who is making things happen! Send greetings for minor holidays – just to stand out. Have YOU ever received a Happy Groundhog Day card?
You can also use the letters designed for past clients and members of your sphere of influence: The event-themed keeping in touch letters.
Decide that making yourself visible is a valuable component in your prospecting mix.
- Go for walks and talk to people. Many agents find that walking their dogs is a ticket to conversations.
- Attend their yard sales. Stop for lunch at a nearby café.
- Sit in on meetings.
- Get yourself invited to housewares parties.
- Join neighborhood social organizations.
- Frequent the specialty shops that serve your niche.
All of these, and more, are places and situations where you can chat and get acquainted in a relaxed atmosphere.
QUOTES OF THE WEEK
“The best marketing doesn’t feel like marketing.” – Tom Fishburne
“Our job is to connect to people, to interact with them in a way that leaves them better than we found them, more able to get where they’d like to go.” – Seth Godin
If this is to be your territory, become the expert.
When you want to establish yourself as “the” agent in your neighborhood, one of your first (and ongoing) steps should be to become a true expert. Learn everything you can about the taxes, the utilities, the school boundaries, the public transportation, the nearby amenities, the HOA’s, and any future development plans.
If you serve a niche such as historic homes, waterfront properties, equestrian properties, golfing communities, homes in probate, etc., then learn more about the topics that matter to those people and properties. What specialized questions will (or should) buyers have? Learn the answers.
Research past sales and learn whether the market is moving up or down, or staying steady. Stay current on what’s for sale, what has recently sold, and for how much. Visit other agent’s listings so you know how other homes compare to the homes you’ll be listing.
One last thought – how much marketing is too much marketing?
When you’re using postal mail you probably won’t give in to a temptation to market too much, but many who use email certainly do overdo it.
In my opinion – writing every day is too much. More than once a day is way beyond too much. If you have that much to say, do it on your blog, where it will be appreciated.
Think about how you react to marketers who make pests of themselves – then follow the Golden Rule.
With wishes for your prosperity,
P.S. I’d love to hear your opinions, so leave a comment!
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