Properties are moving fast in many markets across Australia as demand outstrips supply and the competition for buying is immense. Very few property experts predicted the way the last two years have panned out, and it has led to many agents recording record years. For many, the market is moving too fast to reconsider what fundamentals have actually changed in the market and, therefore, how they need to adjust their approach.
When speed is of the essence, so is the precision of execution. This is no more evident than in motorsport, where the Formula 1 teams are measuring hundreds of data points simultaneously in order to continually adjust and execute their strategy.
The question that agents need to challenge themselves on is whether their marketing approach has adjusted with the new market conditions or are they simply cutting corners and condensing their existing methods into a shorter time frame.
“You can’t manage what you don’t measure.” – Peter Drucker
Take back control of your business by implementing and optimising these three metrics in your agency.
Cost per listing (CPLi)
This can be calculated on any period but is most useful if measured over a long and short-term period.
CPL = A/B
A = Total marketing spend in a period
B = Number of new listings in that period
Total marketing spend should include any costs related to building a brand, such as bus shelters, letter drops and local sponsorships. It should also include direct marketing spend, such as paying for listing leads or any advertising not directly related to the sale of a property.
This metric helps to remove the “noise” of trying to compare the impression numbers of one campaign with the anecdotes of another. It encompasses some of the metrics that you may already be tracking, like the win rate of listing presentations, followers, database numbers and so on. It pulls all of that together and gives it a number.
Calculating it over a six-month period and comparing that to the last 30 days will immediately give agents insight into how their listing acquisition efforts are currently performing. So what is a good number? $2,000? $1,000? $200? Well, obviously, $200 is better than $2,000, but it’s going to depend on your downstream revenue, namely, your commission cheque. Ultimately though, you’re in control and measuring it will help you optimise it across your business.
Eyeball to buyer lead rate (E2BL)
Most newbies to digital marketing post big impressions, eyeball or pageview numbers and start making room for the digital marketing trophy on the shelf. Vanity metrics like these are great for the ego but do little to build profile or sell houses.
E2BL = A/B
A = Total impressions on property advertising across portals, socials, EDM (opens) and so on
B = Total leads on property
You can measure leads however you want, but it’s worth having some level of qualification in there so as not to perpetuate the vanity metrics. Perhaps start with new contacts added to your buyer database with at least a first name, last name, mobile number and email address.
This metric is the ultimate channel killer, and it will soon show you where the most efficient spend of marketing money is in your standard campaign. In saying that, it doesn’t mean that the whole game is optimising campaign spend; however, it does enable you to quantify the “strategic” or “profile” value of some channels.
Local buyer ratio (LBR)
Perhaps the biggest adjustment that has happened in the property market over the past 12 months has been the velocity and veracity of interstate buyers. Little Hinges data shows that some capital cities have up to 40 per cent of their prospective buyers coming from interstate, meaning that having a heavy bias to local advertising and targeting is shutting off almost half of the potential market.
LBR = A/B
A = Offers made by buyers currently living within 100 kilometres of the property
B = Total offers made on the property
Before calculating it, what do you think your LBR is currently? 70 per cent? 20 per cent? The answer will vary depending on your location, the types of properties you’re selling and so on, but one thing is for sure, if your LBR is close to 100 per cent, then you’re doing a massive disservice to your vendors.
There is a megatrend in consumer buying behaviour that has been accelerated during COVID, buying online. We’re all well accustomed to buying sight unseen for all sorts of purchases online, but 2021 saw the “sight unseen” buyer wave finally start to break in the Australian property market.
This ratio is critically important for the future of your business as it will help you understand how you need to adapt your selling practices to accommodate non-local buyers through tools like 3D virtual inspections, online bidding platforms, online auctions and different advertising targeting and messaging.
The property market continues to evolve, buyer expectations continue to rise, and there are new competitors entering our markets all the time. Keep your edge by continually updating what metrics you’re looking at and optimising to. Despite all of the external changes, business is still business, sales are still sales, and these three metrics will ensure you’re still running the sharpest agency in town.
Josh Callaghan is the chief executive of Little Hinges and Virtual Tours Australia.