The “I” News

Happy Monday everyone.  Sean here, with the “I” news team bringing you a few under-reported items from last week.  Stay tuned for the Inspirational, the Inscrutable and the Indefensible.  You decide if any of it is Indispensable.

The Inspirational:
James Krenov died last week.  He was an artist, writer and philosopher who left an indelible mark upon this world.  You may not know him, but you have most likely seen the influences of his work in your work.  He was a creator of sublime furniture and leader of one of the most highly regarded woodworking schools in the nation (if not the world).  Take a moment from your busy day to click here and enjoy a little beauty.

The Inscrutable:
Football season is underway and those wacky kids running the NFL are at it again.  Texas receivers Andre Johnson & Jacoby Jones were fined $7500 & $5000 respectively for their roles in a fight during a game last week.  In related news, Eagles cornerback Sheldon Brown was fined $10,000 for wearing a Halloween mask to pre-game introductions.  Apparently, the NFL feels that a little embarrassing publicity by one player is twice as offensive as the violent offenses of two players… They do say image is everything.

The Indecent, Incredible & Indefensible:
The increasingly authoritarian nature of our Federal government continues unabated.  It is becoming widely understood that the Neo-Progressives bridle under scrutiny and brook no criticism; but this is outrageous even for them.  It seems the U.S. government is now sending threatening letters of warning to private companies who have the temerity to disagree with the administration’s proposals.

Humana Healthcare notified its customers that proposed health care plans before congress could reduce their benefits.  This, according to the non-partisan Congressional Budget Office, is simply a matter of fact.  The Department of Health & Human Services then sent a letter to Humana as well as all the other private insurance providers of the Medicare Advantage programs essentially saying: “Shut-up… or else.”  Click here to read all the gruesome details of central power run amok.

That’s all for now.  While you’re out there today, take the time to admire and appreciate a little beauty in your world.  But if you do come across someone in your way, remember that punching is preferable to wearing a scary mask.  And whatever you do, don’t assume facts alone will protect you from the childish, petulant threats of powerful elitism.

Filed under: "TIN FOIL HAT" Productions, POLITICAL & ECONOMIC FOLLY, Progressives

Real Estate Marketing: Making the Numbers Add Up

In a recent Bloodhound post about Twitter (only Brian Brady could write the third post in just over a week on the same subject and generate so many comments!) there was a comment on marketing numbers that so intrigued me I felt compelled to respond in a post rather than a comment.  It’s been my experience that many of us do not accurately calculate the numbers when it comes to our marketing.  This should really come as no surprise – numbers and especially statistics can be beguiling and even misleading.  But if we’re not tracking and calculating our marketing efforts correctly, we’re just shooting into a dark room hoping we’ll hit the target.

The numbers quoted (or maybe it was just the idea) are credited to Larry Kendall, but they provide an interesting opportunity to work a real world example of marketing in general and Twitter specifically.  For this exercise I am pulling some examples from the actual comment, but just about every one of us has made this type of calculation before.  I follow each with a slightly different view.

I want 50 local people that I can really connect with (on Twitter).  If I have 50 people and they each know 50 people, I have a pool of 2,500 people.  Not quite.  It means you have the potential to reach 2500 people, but it’s unlikely.  For the purpose of calculating marketing numbers… you’re reaching 50.  This is akin to speaking at a seminar filled with 50 people from the neighborhood and assuming you’ve reached all 2500 people in the neighborhood – you haven’t.  If, on the other hand, you send a direct mail piece to all 2500 people in the neighborhood, then we say you’re working from a pool of 2500 potential clients.  Is it realistic to think all 2500 read that mailing?  Of course not.  But our expected conversion numbers take that into account.   The expected conversion numbers are simply based on a pool of 2500.  A pool of 50 will generate no usable statistical model from which to base a marketing campaign.

If the *normal* turnover rate in my local area is every 5 years, that means that 20% of the market is up for grabs. Each house has 2 possible transaction sides and that would mean that 40% of the marketplace has a commission attached to it.  Again, not quite.  Let’s assume for now that the average turnover is once every five years (which I believe has actually expanded to more like once every seven years), that still does not translate to 40% of the marketplace having a commission attached to it.  Twenty percent of the marketplace has a commission attached to it and that commission (for sake of argument) is 6%.  Whether that commission is split between two brokers or (unethically) double-ended by one broker doesn’t matter; for purposes of your marketing campaign twenty percent of the market is available at any one time.  Why is this important?  Again, if you don’t know the actual number of targets in the room, you might as well go back to shooting in the dark.

2500 people in my Twitter network = as many as 1,000 transactions.  Not to put too fine a point on this, but there are 500 transactions (20% of 2500).  If you are calculating your business – and more especially if you are creating your yearly business plan – you need to know the number of potential transactions as well as your expected capture or conversion relative to that number of transactions.

5% of the potential = 50 transactions.  As we now know, 5% would be 25 transactions (5% of 500 transactions).  More importantly though, we have arrived at the most integral question of all: What is my conversion rate? Owning 5% of the transactions in a marketplace, while a laudable and maybe even attainable goal, is quite an achievement.  The aforementioned 5% would most definitely NOT be my starting place.  There are plenty of very successful agents who have never achieved a 5% saturation in their marketplace.  The best way to calculate this would be to look back over at least the last five years and discern your actual conversion rate.  You can take into account whether or not that rate is growing, slowing or erratic when coming up with the final number you use for calculations going forward.  Absent a five year history, or in the case of entering a new marketplace, I would calculate my numbers this way:

From your Title Co. get an accurate count of transactions in your marketplace for the past twelve months.  Through the local board, Department of Real Estate or whatever source you can find, try and ascertain a relatively accurate count of the number of agents located within your marketplace.  (For now, we’ll discount agents from out of the neighborhood who are working a one-off deal in your farm.)  Divide number of deals by number of agents to get an average per agent, then divide that number by total number of transactions to get the average conversion rate per agent.  Now, the 80/20 rule is pretty universal (although my take on real estate is that it’s more like 90/10!).  If you want to be conservative go with 80/20.  Calculate 80% of the total number of transactions and divide that by 20% of the total number of agents.  Finally, take that new number (which is equal to total number of transactions per “top producing” agent) and divide by the total number of transactions in your marketplace.

EX:
500 total transactions
200 total agents
500/200 = 2.5 and 2.5/500 = .005 or .5% avg conversion per agent

400 transactions (80% of total transactions)
40 agents (20% of total agents)
400/40 = 10 and 10/500 = .02 or 2% avg conversion per top-producing agent
(incidentally, these numbers –  if scaled up – are not far off from San Diego’s actual numbers)

Now you know the conversion rate of an experienced, top-producing agent in your area.  Assume you are not one yet and set your conversion rate at somewhere between the average of all agents and that of the 20% who are producing.  From there, go forward with your marketing plan.

The point of this exercise is not to isolate the comment of any one person.  The point is this: if we want success in a commission based career, we must track our numbers and follow an intelligently thought out marketing plan.  Armed in this way, we can achieve our dreams.

Filed under: LENDERS, MARKETING, REALTORS, MARKETING

Twittering Twitts of Twittledom

I have always loved Through the Looking Glass by Lewis Carroll.  It is many things, not least of which is a truly amazing exposition on language.  I bring this up because I recently read Brian Brady’s piece entitled Is Social Media Marketing Worth the Effort and quickly imagined myself on a walk with The Walrus and the Carpenter.  Greg Swan commented on Brian’s piece by publishing a video of himself, talking to us about his lack of interest in Social Media Marketing.  I can only describe this as so eerily representative of what one might find on the other side of Mr. Carroll’s looking glass that it’s borderline derivative! For reasons that will be clear in a moment, I felt compelled to jump into the conversation.

‘Contrariwise,’ continued Tweedledee, ‘if it was so, it might be; and if it were so, it would be; but as it isn’t, it ain’t.  That’s logic.’

That’s logic… You just have to love the confidence of that line.  What’s even more interesting is how well this quote appears to sum up a few of our SMM darlings.  I’m thinking of Twitter here and as a matter of full disclosure: I’ve never used it.  As a matter of fact, I don’t believe I’ve used any Social Media in a way that can be measured for Return on Investment or conversion of prospects into customers.  As a matter of fact, the very idea of measuring return on investment or counting conversions goes a long way in explaining why so few people succeed in our business: they confuse marketing with advertising.  I’m itching to write a piece exploring that malady and will get to it as soon as I can carve out a little extra time.  But meanwhile, we have Twitter.  I know people right here in the Hound who are so old-school when it comes to marketing that they’re actually successful in this business (I’m not directly referring to the Bawldguy here, but if you’re still unsure I will look in his direction and whistle) and yet even HE has a Twitter account!  Go figure…

In Twitter Policies Come to Workplace, the main focus is on the banal problems Twitter engenders for those who choose to trade hours for money (and those who employ them).  But here’s what I found really interesting:

TWITTER BY THE NUMBERS
2.9 million: Unique worldwide visitors to Twitter.com in June 2008.
44.5 million: Unique worldwide visitors to Twitter.com in June 2009.
40.5: Percentage of tweets that fall into the “pointless babble” category
37.5: Percentage of tweets that are conversational comments
21: Percentage of users who have never posted a tweet
5: Percentage of users who account for 75 percent of all tweeting activity

Now that’s eye-opening: 78% of all tweets are pointless babble and comments – which are often “stimulated” by pointless babble and must, by necessity, be babble themselves.  And almost all of that originated by just 5% of the users!  As a means for generating business, I would not call this a “target-rich environment.”  But hey, who am I to comment?  I don’t use the thing myself and maybe I just don’t see the logic behind it.  Maybe the Twitterati are on to something.  Maybe it all makes sense to someone… walking on some distant shore…

“The time has come,” the Walrus said,
To talk of many things:
Of shoes — and ships — and sealing wax –
Of cabbages — and kings –
And why the sea is boiling hot –
And whether pigs have wings.”

Filed under: LENDERS, REALTORS, Twitter