Do you wonder how to benchmark how your company is performing? This article gives pointers on what to look out for when trying to get a handle on your results in relation to others…
A large slice of an estate agency leader’s time should be spent managing people, however it is dangerous to ignore the discipline of managing information which can assist in influencing performance in similar fashion to concentrating on staff.
As an industry, estate agency is fortunate insofar as there are whole rafts of data and statistics at our fingertips. An investment of an hour or two poring over facts and figures relating to office and individual performance may appear superficially to be a waste of a manager’s valuable time, yet those who do so typically find it enlightening and rewarding as it often highlights areas of weakness yet to be identified. This allows appropriate action to be taken before the problems are too great to solve.
Fundamental management information within estate agency includes the valuation appointments to instructions conversion rate, sole agency strike rate, fee levels, percentage of for sale boards on new instructions, instructions to sold instructions success, properties withdrawn without selling, number of applicants registered to mortgage appointments, number of viewings to offers, agreed sales to exchanges ratio, sales process time from offer to exchange and so on.
On my training and consultancy travels, it is alarming how many managers do not know any of the above information – and in some cases don’t actually know where to look to find it!
Those that do know, or seek it out having been made aware of its importance, find it useful to benchmark themselves against other offices within their firm and other estate agents’ figures elsewhere around the country. We provide these figures without attributing them to an identified company, and this information is often useful in helping establish a suitable target for the future.
One Company for whom we have carried out a lot of training over the past few years had a valuation to instruction conversion rate of 33% when we began our work with them. They had never measured this prior to our involvement, and we suggested that with the appropriate training and support, a conversion rate of 50% could be secured given what we had witnessed being achieved elsewhere. Following the figures through, achieving a 50% conversion rate (assuming other ratios such as instructions to sold instructions and agreed sales to exchanges remained broadly the same) would be directly responsible for an increase of approximately £40,000 extra income per calendar month as a result of the extra completions across the company in question. In fact, they are now achieving 52% so the bottom line is looking far healthier than before.
Calculating one’s own performance statistics and benchmarking those against others have proved to be very useful exercises for a vast number of my clients as it allows them to place their own company’s achievements into a broader context, and to readjust their aspirations as appropriate. Examples include an estate agency proprietor who explained with somewhat misplaced pride that his Company sold 20% of the properties they took onto their books – once he knew the context that there are firms comfortably achieving three and four times that success rate, he realised that his expectations needed to be revised. Similarly, a firm who typically saw 70% of their agreed sales fall through before exchange were surprised to hear that elsewhere 25% and lower was not uncommon. We provided the key players with relevant training which led to a huge reduction in cancelled sales, a crucial performance measure in the current climate.
A weekly check on appropriate websites will give you an immediate guide as to your firm’s instruction levels in comparison to other local agents. Land Registry figures broken down into relevant postcode areas also help measure effectiveness.
Another Company who started to monitor and measure the aforementioned range of data discovered an interesting insight into their valuers’ performance. In one particular office, the primary valuer, who carried out the majority of the valuations, and was widely regarded as having an admirable appointment to instruction conversion rate was actually pinpointed as a weak link in the process as his instructions to sold instructions ratio was horrendous. The second valuer whose conversion rate was not as good was adding far more to the bottom line as a much greater percentage of her instructions were selling – data helped paint the real picture and appropriate changes to working practices could be made accordingly.
In short, leaders should measure, monitor and above all manage the information that is available – they may not always like what they see, but the lessons learnt are critical steps on the road to continued survival.
TM training & development