I strongly encourage leaders in real estate to challenge the traditional concept called “the 80/20 rule”, which states that 80% of the sales are transacted by 20% of the agents. With proper measurement, coaching and support, I believe that a far higher percentage of the sales agent population could become successful and profitable both to themselves and to the company. Below are three key ideas that you may find helpful in accomplishing this goal.
1. Monitor Positive Sales Base (PSB)
PSB simply measures the percentage of the total sales population that closed one transaction or more over a given period of time. This can be measured over the past month, quarter, year-to-date (YTD), and/or trailing twelve-month period (LTM), as well as the corresponding periods for the previous year. This will help management monitor who the consistent performers are and identify coaching opportunities.
2. Segment your sales professionals
Segmenting typically takes the form of ‘quartiling’ sales associates by arranging them in descending order according to some specific measure, such as AGCI. I find this traditional concept of to be limiting, considering the rapidly changing disposition of real estate business.
Here are some ideas about how you might approach segmenting your agent’s productivity;
- Traditional quartiling – Four groups with non-producers at ‘the bottom’
|1st quartile = Top 25% producing agents *|
|2nd quartile = 2nd highest 25% producing agents*|
|3rd quartile = 3rd highest 25% producing agents*|
|4th quartile = Lowest 25% producing agents + *|
|Non-producers – including new licensees|
- Quintiling – The traditional view but with all non-producers as a ‘fifth segment’
- Virtual agents – Analyze how your virtual agents compare to one another as well as to traditional and 100% agents. This will help you coach the agent into the working environment most beneficial for them.
- 100% Agents – Analyze how all of your 100% agents compare to one another as well as against traditional and/or virtual agents
- Years of service – Identify training and coaching needs by viewing production in relationship to ‘years in the business.’ Again, this will help the leader to coach and redirect agents into the right working relationship.
3. Rank all sales agents by Average Broker Commission Rate (ABCR)
Ranking by ABCR will highlight whether your ABCR is driven up or down by certain key agents and will allow you to focus your business coaching appropriately. For those that fall below your expectations, analyze what they have cost themselves and the company by not keeping up with your expectations. Once you understand this, your next one-on-one meeting is already written and ready to go.
In summary, much of this is “all in the delivery.” Most managers actually tell their new hires (new to the business) that it will take 6 months or more for them to become productive. So why then do we seem surprised when these words become a self-fulfilling prophecy? During the interview process, one particular manager told potential agents that people new to the office typically have a closing within 3-4 months (i.e. a transaction within 1 to 2 months!). Not only did 40%-50% of new hires accomplish this goal, but later, many told the manager that his positive attitude about production was a main motivator in their decision to join the company! Take it for what it’s worth.