Are you in the 80% or the 20%?

12.18.18 09:30 AM By Karla

You may have heard of the 80/20 rule, also known as the Pareto principle, after the 19th century Italian economist Vilfredo Pareto.


It means 80% of result is achieved through 20% of effort.


You can apply it to real estate too. What we’ve often noticed is that 80% of the deals are closed by 20% of the brokers. So the most successful 20% of brokers control almost the entire market.


Make sure you’re in the 20% too

What does it even mean to be in the 20%?


It means you have a successful business. Not just that, it means that you’ve created a clear competitive advantage for your agency.


A competitive advantage is “a condition or circumstance that puts a company in a favorable or superior business position.”


So how do you get into a superior business position?


Start by looking at your business.


You may have noticed that the 80/20 rule doesn’t just apply to the market as a whole. It applies within your business as well. 80% of your business is probably generated as a result of 20% of your marketing budget.


Likewise, 80% of your business leads are probably generated by 20% of lead generation efforts.

Optimizing your business

Do you see a pattern here?


80/20 thinking is a very powerful way to optimize your business. In part of your company, you should identify the 20% of efforts that’s generating 80% of business.


Here’s some places where you could start:


  • Agents: Figure out which agents are the most successful by production, units sold and commission. You should be able to identify the 20% quite quickly. Ask yourself what you can do to lift the rest of your team up, or whether you’ll need to make people redundant.


  • Marketing: This is not a ‘set and forget’ aspect of your business. Marketing efforts and returns need to be monitored constantly. Track what sources your business is coming from. Do you really need to invest in Facebook ads if they barely bring in business? Do you have a direct mail campaign that’s underperforming? Considering ditching them, and focusing on the 20% that really works.


  • Types of real estate: What kind of sales generate most commission for you? Maybe you’ve been focusing on residential real estate. But, in some places, commercial real estate is actually more profitable. Use the 80/20 principle to identify the most lucrative types and categories of real estate and focus on what is most profitable to your business.


It can be a long and tiring process to uncover all of this, but it’s absolutely worth it. Your business will become leaner and more efficient every day.


You’ll need a robust tracking system. You should collect as much information as possible about your business, so you can assess the returns on your efforts. You can always start with a simple spreadsheet and expand as you go along.


Do you want to look into powerful, automated, tailor-made tracking? Request a demo of Zipi and see how tracking, goal setting and forecasting can help you get to -- and stay in -- the 20%. That’s where the real money is made!