The Good, Bad, & Ugly: Leading with Revenue in Mind

What's up there, Business freedom podcast listeners. Lars Hedinburg here, founder of Real Estate B School, another good, bad, ugly edition of the podcast.

And this is where I dig deep.

Into some of the things I've done right and more importantly, the things that I've done wrong in building a real estate business. A leveraged real estate business that I've scaled successfully on the right economic model.

In such a way where it is systems based. It's not a genius with a thousand.

Helpers like a lot of the teams out there today and super profitable. So today I want to chat about heading into a shifting market. I want to talk about how to lead with revenue and keep score. So that's kind of the title how to, you know, I could throw some sexier title on it like how to, you know, 10x your results. You know, we just did a, for those of you watching versus listening, we just did our team advance yesterday and the theme for Our team for 2019 is Squeeze the lemon. So how to squeeze the lemon your business to drive results and triple your profitability.

Let's title it that. That sounds amazing.

You want to take a next step with us? You know, getbschool.com is the soft sell for next step. You'll get access to every tool, system, resource strategy that Real Estate B School has to offer and so lead with revenue keeping score.

So what does that even mean?

I want to base our conversation on?

This is something that a lot of.

Real estate agents, they don't like it, you know, straight up. They think real estate is, you know, they become a top producer because they're outgoing, they're probably good at marketing themselves, they're probably good at face to face selling, those sorts of things. That's kind of a typical top producing agent. We talk to top producing agents that.

Want to make the shift from producer.

To business owner, you know, and there's this guy, Carl Pearson, and let me see if I can get, get this right. He was an early 20th century British.

Mathematician who's considered the founder of the.

Modern statistics, statistical methods that drive current business reporting. It's credited with a simple but powerful law. And he says that which is measured improves.

And this is something to write down.

That which is measured improves. That which is measured and reported improves exponentially. So even if you're a solo agent, right, you've got to measure critical activities and leading and lagging indicators in your.

Business if you're going to be successful at the highest level.

Okay?

So that which is measured improves that which is measured and reported. Improves exponentially. So I'm going to break this down for the podcast. The game we are playing is probably a little different than you might realize. And if you, if you're watching this podcast, you'll see that there's basically there's a funnel. So the real estate business is a funnel and it's a seven stage funnel. And this doesn't matter if you're a referral only business or you're generating a thousand leads a month, right? So on the one end of the funnel, you know, maybe think of it a funnel with the top to bottom, on the top you have your inputs, your leads, referrals. If you do Craigslist, yard marketing, email marketing, mass media, telemarketing, social media, video marketing, direct mail, I mean there's all these different inputs that we have in our business and we're over a thousand leads probably a month, probably at this point. Those are the inputs, right? And the first stage is to make contact with all of those leads or even if you have 10 leads a month is to make contacts, right. And to have meaningful conversations. And the question we ask ourselves in real estate B school is at that stage there's sort of leads is the precursor and clients for life is the output. We want happy clients and there's five stages in the middle. And the first stage is that contact. It's meaningful conversations. And to ask yourself, will you apply the discipline to do the work necessary to have the amount of meaningful conversations that you need to be successful and scale your business? That's the longer version of that question.

Right.

The second stage of five is what we call set. And so it's appointment set. Are you doing the right things to compel your prospects to take action?

Right.

So can you compel the prospect to take action? Same if it's a yard sign call or if it's a referral lead or if it's a radio call or if it's an expired outbound call or you know, we do a lot of direct response to expires and FSBOs where they get to call us. So can you compel the prospect to take action? So on that, that that conversation is all about getting face to face. You're selling an appointment. The third phase of that five step process is met, right? So so far it's contact set and now met is phase three and it's, it's appointments met. So will they show up pre sold on your services? So first of all, will they show up? And then second of all, will they show up pre sold on your Services, Big difference, big distinction there. There's two points in there. And then after met, we want to do the right thing in the office or at the property, if you're going out for listings, to sign that buyer or seller. So we call that new client signed. Is there enough value to do business with you? So are you showing enough value to your buyer and seller prospects, to those met appointments where they're agreeing to do business with you and be loyal to you? And then number five, it's closed. So it's getting that buyer, that seller, to the point where they're under contract and they go through and they close. So it's called clients closed. Can you get to the finish? Get them to the finish line and they still like you? I think that the biggest competitive disadvantage that agents have against our team is that we've got four folks in our operations, our backstage listing, client care. We've got a transaction coordinator, assistant, a transaction coordinator, got a director of operations, two runners. We're pretty stacked in our backstage of our business. And then ultimately you do those five things at the highest level. You get clients for life, right? Your business will take care of itself. So leads are the input, clients for life are the output. And there's those five stages. Contact set, met, signed, and closed. And so I give you that context because we're talking about leading with revenue and tracking your results, right? The first thing I will say is that in order to know your numbers, you have to know where your leads are coming from. So we call this, in real estate B school, we call this lead sources. And the fact that lead sourcing is critically important. So our lead sources are. We number them. So if you can, if you're watching this, you'll see it. And if you want to watch this, you can go to, if you're listening to it and you want to watch it, you can go to realestatebschool.com and, and you can see the recording of.

This if you're on the podcast.

I'll do my best to explain it, but our lead source codes are numbered. So we have 100 series, 200 series, 3, 4, 5, 6, 7, 8, 8 big marketing pillars. 100 series are home search leads. It's like pay per click, Craigslist, Facebook, social media, those sorts of things. 200 series, that's yard marketing, open houses, door knocking, circle prospecting, those sorts of things. Things we do around our listings. 300 series of mass media, 400 series expires and fizzbos, inbound and outbound. So outbound is telemarketing Inbound is our direct response platform. 500 is our data bank.

Right.

We call it the data bank, not a database.

Right.

This thing has money in it and, and we're going to get after it every year. We have 57 touch program that we utilize and we'll get probably 1.3 million GCI from the data bank this year, which is pretty cool. About 35% of our business. 30 to 35% somewhere in there. And then we have 600 series. This is agent and admin staff. So our team members, when they bring in business from their sphere or if they go for no, 700 is farming. You farm a couple of key neighborhoods. 800 is vendor referrals. So your lenders referring business to you, painters, carpet people, appliance people, your attorney bringing business to you. Then 900 is just when you have it. Unidentified which is very, very rare. We're able to accurately Lead source Probably 99% of our deals. I think we only have one deal this year, which we really couldn't figure out or put it in a proper bucket. I want to talk about using your listings as leverage and keeping score. This is something I developed and I call it the Listing Marketing scorecard. And it is going to be helpful to jump onto the website and I'll explain what it means here. But our goal in marketing is to create a platform that consistently produces high quality listing leads. And then we convert those leads into active listings. Right. So they say list to last.

Right.

But here's the thing. Once we take that listing, we use that listing as leverage to generate up to five income streams. So number one, we have, I think there's 18 different ways that we generate listing leads. But number one is that you take that listing and you sell it. So that's one commission check. The second commission check is that we help that seller buy their next home in or out of the area. So if they're going out of the area, it's a smaller check than if they're staying in the area to make sure that we ask the right question. Well, we're gonna be the ones to help them get situated in their next property, no matter where it is. Number three, chance to earn a check from this one listing is to get a referral from the seller during the listing period that closes.

Right.

So we want to get a referral while we're working with that seller, while they're active. We have a whole system that we do there. That's our third commission check. Our fourth is to generate a buyer closing through listing Marketing, we've given up on the craziness that's going on with these paid lead Sources, Zillow and realtor.com and just the crazy prices they're charging real estate agents to get those leads. So we're generating our own listing leads and we do yard marketing at a pretty high level. We circle prospect as well, which is number five. Get another listing in the area that sells, and that's direct response postcards in the neighborhood and circle prospecting, open houses and door knocking and all that stuff. So as part of this marketing strategy, we actually track the effectiveness of, of this and we actually have a listing marketing scorecard. And so you can see it if you're watching. It's basically just every activated listing. We know the lead source, we know when they went active, and we basically have 1, 2, 3, 4 and 5. And if we sell their home, if we help them buy their next home, we refer, we get a referral from the sellers before closing, we close a buyer from marketing that listing and we get another listing in the neighborhood. There's five out of five opportunities and we actually track that. And so when I talk about leading with revenue, we are maximizing everything we possibly can when we activate a listing. So yeah, here's an example. So if I take the listing marketing scorecard and I talk about it in action, right? For HP rea, we focus on generating enough listing leads to support the rest of the Funnel. So for 2018, push goal is 400 homes. If we do it at a 2 to 1 ratio, we would need to list 200 homes. We have sequences around this 5 out of 5 to be able to push the ratio to 2 to 1. If for 2019 we want to go to 600 homes, right, at a 2 to 1 ratio, we'd have to activate 300 listings or generate cold listing leads. Rather cold listings activated from cold listing leads versus a 3 to 1 ratio would get us to 3 or 200 rather. So it's that ratio that I'm talking about. And then 2020, our goal is to get over 800 homes. And if we get to three to one, we only need to list 267 homes through those listing lead generating activities. And this is all detailed out as part of the toolbox. But it's this concept of, you know, going deeper on your marketing. You know, we have a marketing scorecard that we work through and it covers every bit of every part of our business where we track at all eight of our marketing pillars. And the goal for GCI that we have for the year and we track it as a percentage. So if our goal for is 1.2 million or 1.1 million it was from our database, we're already at 1.2 million. So this is later in the year than what's shown on the screen if you're watching it. But I know because we've been tracking it, it's been an annual goal for us to hit 1.1 million from the database and we're at 1.2 million. And we still have what, look at my watch, we still probably have about six, seven, six, seven weeks of selling that we could still execute contracts and close and even increase that 1.2 even more. So we track everything. And recruiting is marketing. So our marketing, there's only two of them. Well, three, we have a virtual assistant as well. They handle our recruiting marketing and that's a system as well. And we track number of applications we have, we track the funnel there as well. So I talk about that funnel for.

Buyer and seller leads in the five.

Stages and then clients for life. We have a same funnel in recruiting. So we have applicants, we have a, I think it's one, two, it's like a five step process. And then we have a team member at the end. So applicants, five steps and a team member. And we track all of that and the lead generation side of it as well. We track leading indicators. So you want to talk about leading with revenue. We track and you should track to the number of leads and the expense by lead source and the number of appointments you set, the number of appointments or clients you meet, those that sign and those that close. So when you look at your lead sources, you know exactly how many transactions came from what lead source and if that lead source is actually profitable for you or not. And I know I got really heady there in the end of that conversation. Get over to the website and click on the blog link, real estate B school and click on blog. And you can see some of what I was going through. But the point I'm making is that even if you aren't a numbers person, you've got to dig into the numbers. Especially going into a shifting market, the perfect storm of shift, right? Economic shift, the technology shift and the business model shift, the ibuyer business model shift. So this is not something you could take lightly. And I've got older numbers in the numbers I'm showing on the screen if you're watching it. But you can at least get in and see what you need to be looking at. And considering as you're Scaling your business. And this is a quote that is really, I've been considering this and really for myself as well as our members. Right. And for anyone listening, if you want something you never had, you must be willing to do something you've never done before. For many of you, it's being a little bit more responsible, leading with revenue so you can make good choices about spending money or investing your time.

Right.

Return on time is just as important as return on investment. You have to be willing to do something you've never done.

Right.

And so this journey is not an impossible journey. It's not like it's unchartered territory. You just need the right tools, systems, resources and training to get there. So that's all I've got for you. Like I tell our members, you know, I have a lot of love and respect and you're part of our greater community now. A lot of love and respect for fighting this fight, for building a business in an industry doesn't really, it's not the norm, you know, so this is not the status quo. We're going down a path. And even those that have teams don't have them set up in a way where they're sustainable and they're not self managed and they're not profitable for the most part. How many teams have you seen where the team leader is the highest producer? Why do you think that is? It's because they didn't set it up the right way to begin with and.

They have to rely on their own.

Production to make a decent living. And I can give you example after example of top teams in the country that have are set up on a foundation that is shaky at best. And so that's not what we focus on in this podcast. And I'm willing to share the good, the bad, ugly about my journey. And this is not a putting others down, it's just to give you an awareness that the business you're building, once you go down the path of building a real estate team, do it on a sound business foundation. Sound business principles, tracking.

Right.

Learn how to be a tracker, a numbers person. Don't just dismiss it because I'm not a numbers person. So that's the challenge. So much love and respect and we'll talk to you guys soon. Bye.