A friend of mine -- who is a real estate agent -- told me a story about an old boss of hers. She told me her boss didn’t care at all about key performance indices (KPIs), setting targets or implementing a strategic vision.
All he cared about was increasing sales.
Focusing on sales is a pretty decent strategy. As long as your agents keep on selling, you have very little to worry about.
But, there will come a point when sales start stalling, and you don’t know what to do about it.
That’s what ended up happening to my friend’s boss… a huge influx of wealthy millennials and startups looking to buy meant his local property market changed drastically. His business was eaten up by the competition, so had to cut his losses and retire early.
In real estate, change can set on very quickly and you might find yourself going from a comfy life with healthy profits to scrambling for houses to sell -- whilst at the same time seeing your competitors win.
To avoid this, use KPIs to understand what’s happening in your business -- and to spot issues before they happen. KPIs give you an objective, measurable and reliable picture of your business, your teams and your individual agents. You can’t make up stories to yourself when things are going well or badly.
KPIs put you back in control of your business, in these three ways:
1. Implementing your business vision and strategy
KPIs give a ‘voice’ to your overall business strategy. They allow you to implement the vision and strategy that you set out at a higher level. Otherwise, you might have a vision and a strategy, but without a way to action on them, they’re just words on paper.
So KPIs help you make sure your agents and teams contribute to your overall strategy. They do this by aligning individual and team goals with the strategic goals of your business as a whole.
2. Measure progress toward goals
Once you’ve identified goals, it’s crucial you keep a close watch on them. If you monitor progress toward goals, you’ll be able to see whether you’re getting closer to your goals and if you need to change your day-to-day actions.
For instance, your goal might be to increase property viewings, but you’re not seeing an actual increase. You can then set goals for your teams to do more things that will help increase property viewings, such as increasing number of calls, increasing efforts on lead generation, etc...
3. Monitor agent’s performance
Especially if you manage a lot of agents, you need a solid system to keep track of what they’re doing and whether their succeeding or not. KPIs will help you set their goals in line with overall business strategy.
They’ll also tell you whether someone is underperforming in any way. That’ll allow you, or a team leader, to step in and coach this agent so they can improve.
This way, you know you have the tools and capabilities to create a vision, set a business strategy and implement it -- keeping complete control over your business.