Hey, welcome back to the Think Bigger Real Estate Show. I'm your host, Justin Stoddart. I'm very excited about today. A very good friend of mine a very experienced mortgage loan officer who has been in the business for 17 years. He has been wowing people with value for a long, long time, Mr. Tony Gillard. Tony, thanks for being on the show today.
Happy to be here.
Let's set this up properly. You know, Tony, you run your business like a business and the topic of today is, is really one way in which agents can do that. And I think this term of lead generation is synonymous with real estate agents. More leads, more leads, more leads always seems to be the answer, but maybe it's not the answer. Maybe it's not about more leads, more leads, more leads. Maybe just maybe it's about better converting on the leads you have. We're going to talk some specific strategies around that. Tony, what are your thoughts on this concept of more leads, more leads, more leads?
Well, it's certainly a topic of discussion with every agent. I sit down, every agent, uh, they want more leads and when we start to peel back some of the layers of their business, we find that it's not necessarily more leads that they need, but more conversion on the activities and opportunities that they're already generating. And so, you know, especially when we start talking about like work life balance--can you do more with less? Can you do more things with fewer interactions or really is it a matter of just an equation of pouring in more leads? I don't think that it is based on the conversations that I'm having and specifically I'm just sitting down with the agents and finding out what their track record is and starting to, to ask the questions that are more business related. I know that a lot of agents are in the business because they're really good people.
People's personalities--they're outgoing. They have a servant's heart. And sometimes what is maybe lacking is just the lens, the business lens, looking at their operations and finding out the efficiencies that they could maybe tweak a little bit. And that to me all comes down to what's your longterm client plan because statistically we call this the other 98 because statistically 2% of your database or 2% of the people that you interact with are going to be ready to conduct business right now. And so we always ask, what about the other 98, what kind of client plan do you have in place to incubate these people over time? Just create a relationship of value so that you're the obvious choice when they come back around. And that's in a world of Zillow leads the lead part is really the weakest component of that funnel because the value proposition is being built by Zillow.
You know, they, they come into Zillow's funnel and that funnel provides them a really pretty platform with search tools, a lot of like information and recon, so to speak, for the buyer. And so all the value is being provided by Zillow. And by the time that that buyer wants to make a buying decision, the agent in that equation is the commodity. And so if you're not cheaper, better, faster, if you're not willing to open a door during dinner on a Sunday night, it just gets moved to the next one. And I feel like because of the activities that agents engage in on a really, really regular basis, there's so much opportunity in just those engagements that they're already conducting.
Whether agents are getting their business primarily via referral or via some online lead source, if they're actively growing their business, they're actively in real estate related conversations on a very regular basis, on a daily basis. What would you say Tony, would be the average as you've interviewed agents? What's the average number of real estate related conversations that an agent is in on on maybe an annual basis?
So I have my notes from the last interview that I just did and I'm referring to these because it's fairly common. This is a very kind of common breakdown that I'm coming across in these agent interviews. So this agent I recently sat down with, I asked how many families they helped last year. They said they had closed on 30 transactions last year you know, a mixture of listings and buy side and you know, so it's a decently medium producing type of agent. They were a single operator and I said, how many real estate related conversations of people that are looking to buy or sell do you think you had in order to help those 30 families? And as we started to dig deeper, you know, talking about open houses and barbecues and past client referrals, the networking activities that they engage in, we really kind of identified that they're speaking to about one person a day on a real estate related type of conversation.
Okay. So we're talking about five conversations a week, you know and I'll always kind of lead them down the path of like, well, do you take a couple of weeks off for vacation and so forth. And so in this particular case they had determined that they spoke to about 250 people over the course of that last year to have to help 30 families. Okay.
So about 10%, a little bit higher than that.
But if you look at it, the way that I often like to look at it is there were 220 people that either didn't do anything or did something with somebody else. Right. And so for me, that's where the opportunities are. There's 220 people that showed some level of interest in real estate. These are 220 opportunities that the agent spent time doing and what's in place? What system?
I actually, it was funny because I've watched your podcast and there's a reference that you've made a number of times and I think you and I were both at the same event where, Mr Lou Raja, the keynote speaker at that event said that "Systems beat intentions all day long." And I would take it even a step further where I think you could be the most well-intended human being, but without a system, I think it's just setting up for failure. And so the question for me then becomes what type of system do you have in place to help incubate those 220? For us in our model to help agents with their business is is just looking at the lost opportunity because if we could only, let's say based upon having a system in place, that agent can convert simply 10% of those lost leads, right? So 220 10% that's 22 additional transactions over the course of that 12 month period of time.
That's a massive impact on a medium producer's business.
And so like 10% that's not, that's not some unreasonable number, right? That's not unbelievable to think that somebody could do that and could convert 10% more of those conversations.
Well this was where it became interesting for me in preparation for today. I, this was last night, I just jotted down based on the notes that I'd taken and then I actually went into my own metrics. So we track our metrics. Our branch initiative is to track our daily activities and find out exactly what our conversions are. We've been doing this since October of last year, so this is a little bit of a transparent moment because I'm really hoping that through the efforts of our branch and the things that we're doing on our path to elite is to increase some of these conversion numbers.
But I just wanted to play these out based on this one agent that I spoke with, which seems to be a fairly common among agents I've spoken with, but when you take a look at those 22 deals with an average commission of about $7,000 that's on a, I think a $350,000 house. So average commission would probably be higher for most agents. I just wanted to be conservative. Twenty-two deals would represent about $154,000 in additional income or gross commission earned. And so I took my conversion metrics to apply to that simply as a funnel. Right? So in other words, if those people simply came into my funnel, how would that look? And so I did 20 conversations...
