Estate Agents .. What is a good Conversion rate?
One of the issues that I am often asked about is how to improve conversion rates. Now, I am not an agency trainer .. so you need to talk to the most excellent Sam Ashdown and Stephen Brown to tell you HOW to improve a conversion rate .. but what I can tell you is in my humble opinion WHY your conversion rate isn’t good enough.
Ask any Lister and Valuer why their conversion rate is not as good as others, and the answers will include…
- “Our fee’s too expensive.”
- “We’ve never sold that type of property before.”
- “I never knew the choice of agent had to be approved by his or her wife/husband / father/ mother/ cousin three times removed.”
- “The landlord / vendor just doesn’t get it. I don’t understand it – he / she really needs our agency.”
- “He never told me that newspaper advertising was important.”
Sometimes the question is asked as ‘What is a good Conversion Rate?’, or “What percentage of free valuations / market appraisals (or whatever they are called this week) that I do should I convert into listings?” Now I have been in estate and lettings agency in one shape of form since 1991 and there is really no ‘one percentage fits all’ to this question – and the reason for that is that it is the wrong question to ask.
Let me tell you why, in my humble, your time, effort and brain power is better spent in determining why you lose take on’s more than worrying about what you did get (ie the standard conversion rate all agents talk about). In fact instead of look at a conversion rate of take-ons to FV’s or MA’s .. the better ratio is ‘take on’s’ to ‘lost to the competitor take on’s’. Let me tell you why.
If you can spot and recognise the recurring reasons of why you lost a take on, you can work to avoid free valuations (or MA’s) where you will encounter such issues (eg the ones that want 0.3% sales fee or the landlords that want fully managed for 1%), or more importantly, focus on how to overcome the Achilles’ heel’s in your presentations that gave rise to losing the take on to a competitor in the first place. If you can sort that out then, by definition, your conversion rate (which ever measure you choose) will improve.
In reality there are really only two reasons why you lose a take on
-
They thought the other Valuer/Lister created more VALUE than YOU
-
They TRUSTED the other Valuer/Lister more than YOU
I will put some meat on the bones of this claim a little later, but first I want to share why this is so important. For an agency, the costs incurred in employing a Valuer / Lister is around £30,000 to £55,000 a year. What is the point of paying a Valuer / Lister £15,000 to £25,000 basic a year + wheels + £10,000 to £25,000 commission if they are going to all these FV’s/ MA’s and lose the ‘take ons’ to the competition?
But that’s my point .. do you (Mr Branch Manager or Mrs Area Manager) know how many properties your Valuers/Listers are losing to the competition? Yes, you might have Freddy doing 55 FV’s/MA’s a month and listing 30 of them .. fab conversion rate of 54% whilst Barbara is also doing 55 FV’s/MA’s a month but only listing 20 of them .. a conversion rate of 36% .. so obviously Freddy is a better agent?
Before you answer that, what if Freddy lost 20 ‘take ons’ to the competitors but Barbara only lost 3 ‘take ons’ to the competition .. now all of a sudden, Barbara is converting 20 out of 23 AVAILABLE take ones (meaning she had a ‘take on’ to ‘lost to the competitors take ons’ conversion rate of 86%) compared to Freddy, who is converting 30 out of 50 AVAILABLE take on’s – 60%). Yes, the issue of FV/MA’s quality and the policing of this ratio are different stories in the themselves .. but why penalise Barbara if she bagging most of the available take on’s?
If your Valuer / Lister is spending more time losing take on’s than converting them, what is that going to do to you hitting your targets? You see if you could fix the issue, what impact would that have on your bottom line?
So what are the reasons?
No matter how you look at the reasons given above, in truth there are really only two reasons why you lost the take on
- Your competitor Valuer/Lister created more VALUE than YOU . Oooh tough words Watkin .. yep, but true. If you don’t prove why you are worth more (ie CREATING VALUE), the only thing they can judge you on is price. If you can’t prove why you are worth 1.5% whilst ‘mateyboy competitor’ is only charging 0.75% , then you need to improve your FV/MA presentation , you need some training because when someone with a dream property (to sell or let) isn’t shown (and more importantly THEY BELIEVE IT) why they should pay more, they will only perceive the lowest fee as the judge of value.
- The second is they TRUST the other Valuer/Lister more than YOU. Ouch Watkin .. that hurt ! Bottom line is this .. you didn’t put to bed your landlord’s or prospective vendors worries and concerns. …and the worst bit is this, if you ask them if they have any, the buggers won’t tell you if they have. Put simply, they (vendor/landlord) don’t trust you enough to deliver the results they need.
Now I was a Valuer/Lister for many years. It’s very difficult to do a free valuation or market appraisal well. But here is the tough bit .. most Valuer’s and Lister’s are not nearly as good as they believe themselves to be. Yes, your FV/MA presentation / pitch might be as smooth as a Mink Cod Piece, your interaction skills maybe second to none, your ability to look at pictures/ certificates on the wall and work out what interests them (so you can talk like David Dimbleby for 30 minutes about that interest proving your connection skills, your ability to talk about their dog and play fetch with it (even though secretly you hate dogs) are world class and your ability to engage with your prospective vendor or landlord, and knock every question they ask out of the Cricket ground .. but doesn’t it create a pain deep in your stomach when you see it as a new listing two days later on Rightmove with the competition .
The only way to get better is to accept that you are responsible for your failures (in this case, lost take ons), and to start doing something different. When you accept responsibility, you also empower yourself to take new actions and succeed in the future.
It’s as simple as that – just two reasons. In my experience, failure is weighted fairly evenly across both.
It’s tough to lose a take on that you should have won.
It is even tougher when you know that you could do a better job than your competitor agent, and when your dream landlord / vendor made a poor decision (like putting fee before everything else), but the question is,
What are you Mr Lister / Mrs Valuer going to do to add VALUE to your free valuation/ market appraisal?
What are you Mr Lister / Mrs Valuer going to do to make people LIKE you more so they TRUST you more? (because as the great Zig Ziglar said” … If people like you they will listen to you, but if they trust you they’ll do business with you.” –
Kind regards
Christopher
PS .. still a few spaces on the COURSE TO GET LANDLORDS FOR YOUR LETTINGS AGENCY at the end of May 2015 .. details here .. www.linkedin.com/pulse/letting-agent-course-attracting-landlords-your-lettings-watkin
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