Your single most important asset in real estate is your contact database. Without people, all of the scripts, websites, inventory knowledge and negotiating skills are meaningless. In its most basic sense, the real estate business isn't about selling houses, it's about people.
In The Millionaire Real Estate Agent, Gary Keller talks about the importance of building and consistently feeding a database. He divides the database into two groups - 'Met' and 'Haven't Met'.
Your Met group consists of:
- Network Group - People who have met you in person. This includes your family, friends, doctor, accountant, mechanic, hairdresser, teachers, neighbors, etc.
- Allied Resources - People you know in real estate related fields such as loan officers, title reps, virtual assistants, stagers, auctioneers, builders, and social networking site developers.
- Advocates - People who you have an ongoing business relationship with. They will provide future business for you and send you referrals as well.
- Core Advocates - 'Well placed' advocates such as a major executive, builder, or business owner who send you a steady stream of business.
The Haven't Met group has two components:
- Target Group - People you would like to do business with, generally a farm.
- General Public - People you don't know and who don't know you.
Research has shown that for each 12 people in your Met database that you market to 33 times a year you can expect two pieces of business - one repeat sale and one referral. In the Haven't Met portion, every 50 people that you market to 12 times a year will generate one sale.
Let's run some numbers. If your goal is 100 transactions in 2007, you can market to 600 Mets or 5000 Haven't Mets. Most agents will probably use a combination of both databases. All of these examples will statistically lead to 100 transactions:
- 120 Mets and 4000 Haven't Mets
- 240 Mets and 3000 Haven't Mets
- 360 Mets and 2000 Haven't Mets
By using a combination of email, direct mail, postcards, phone calls and personal visits, you should be able to keep your average cost per contact in the $0.50-0.75 range. So your projected cost (using $0.75 each) to market to 600 Mets is $14,850 (600 people x 33 contacts x $0.75 per contact). For 5000 Haven't Mets the projected cost is $45,000 (5000 people x 12 contact x $0.75 per contact).
Wow! This clearly shows how important it is to meet people!! Now that you know these numbers, get out and lead generate. Keep moving people from the Haven't Met to the Met database, and your business will grow dramatically in 2007.
See also:
Lead Generation - FAST Track your leads
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