Using Ratios to Understand and Measure Your Real Estate Business

So you've started tracking your ratios, or have been tracking your ratios already, and now you're wondering what the next steps are.

If you haven't already read our article about what ratios are and what metrics you should be measuring, you can take a look here (3 min. read).

In the previous article (linked above) we went over the steps you need to take in order to start collecting data so you can rise to the path of being a super-agent. We used these exact metrics at the fastest growing commercial real estate brokerage in the United States, and it's been proven to be extremely effective.

There's a fine line between working hard and working smart. In the long-run, those that work smart will almost 100% of the time become more successful than those that just simply work hard.

This doesn't mean that you don't need to work hard, far from it actually, but too many times we see people working hard towards the wrong direction, or working hard without changing what's not working.

There's a big difference between consistency and redundancy. You can't repeat the same actions over and over and expect different results. While being persistent, especially in an industry of constant prospecting, is extremely important, it's just as important if not more important to aim for persistent improvement.

So now that we have some data collected (we'd recommend at least 2-3 weeks of data collecting), we can begin to interpret and understand your business metrics. As a refresher, we'll list again the five different key metrics (ratios) you should be collecting as you work.

Check this article if you want to refresh yourself on the definitions of each one.

1. Call to Contact Ratio
2. Contact to Generate Ratio
3. Generate to Present Ratio
4. Present to List Ratio
5. List to Close Ratio

Now we can dive a bit deeper into how to improve... I'll also let you in on some industry secrets on what agents generally accomplish within each metric, which you can use as a benchmark.

Call to Contact Ratio Used to understand how well you've conducted your prospect research. If this area is lagging, it means you need to spend more time getting accurate prospect information. Mark down the clients you've been trying to reach but haven't been able to get in contact with, and work to get new ways of reaching them. The Average: 10:1 Top Agents: 6:1

Contact to Generate Ratio This is used to understand how effective you're actually being on the phone. Are you able to set meetings with every call? This is a direct measurement of your cold calling / prospecting skills, and if this area is falling behind, it's a sign for you to switch up your strategy. The Average: 5:1 Top Agents: 3:1

Generate to Present Ratio This shows your ability to qualify your leads over the phone. After setting a meeting, are you able to get them to come back for a follow-up meeting? This measures how productive you're using your time prospecting. Your time is just as valuable as your clients. The average: 3:1 Top Agents: 2:1

Present to List Ratio I'm sure you can guess what this one means now. Out of all of your presentations (meetings), how many of these lead to listings? The Average: 5:1 Top Agents: 4:1

List to Close Ratio This one is probably the most different from the rest. There's a variety of factors that can affect your list to close ratio. Many agents think that once they get the listing their job is done, and they throw it up on different MLS platforms hoping for the best. Are you presenting buyers with sufficient information and following up diligently? Did you price your listings correctly? This metric probably varies the most, but ideally (obviously) you want this to be a 1:1 ratio.

The sooner you start implementing systems to measure your efforts, the faster you can take actionable steps to improve. The golden rule is 10-5-3-1.

Every day, you want to talk to at least 10 people and have actual conversations with them. Every week, you want to schedule at least 5 meetings. Every week, you should aim to complete at least 3 of these meetings. Every month, you should get at least one promising listing.