Looking around our office these days is a lesson in deferred gratification. It feels like we are signing clients at a blistering pace so far this year. For that, we are both proud and grateful. However, we won’t reap the rewards of that significant influx of new clients for another 30, 60, 90 or more days. That’s life in the world of residential real estate.
On top of that, closings aren’t happening at the same clip as signings right now. We have spoken ad nauseam about seasonality, so I will spend minimal effort talking further about it. Fewer people were thinking about real estate in November and December, so fewer are closing in January, but now people in January are thinking about making their move in the spring. Again, that’s the world we live in.
Are we scared? Mad? Disappointed? Is the sky falling? Did we drop the ball in the fourth quarter? No. Not at all.
This is nothing more than an important reminder to us that sometimes you go through seasons where you emphasize sowing seeds and others where you celebrate the harvest. We are abundantly confident that the harvest is coming, but for now, we will just keep sowing faithfully.
We can’t always control the output, but you better believe we are going to obsess over the input. The timelines of your clients can vary dramatically at any given time. These people want to close tomorrow while those want to close in six months. You can’t control that, and you shouldn’t be trying to manipulate it either. You put in the work to convert them (input), and then you lead them according to their needs to get to the closing table having achieved their desired outcome (output). Control what you can control.
When gauging the health of our business, we classify our data into two different groups: lead indicators and lag indicators. This helps us to understand the full picture and grasp where we may have inefficiencies.
Lead indicators are measurements that can predict and point towards a future outcome. It’s a measure of our input that will impact our output. A few key lead indicators we are attentive to our calls, contacts, appointments set, appointments held and signed clients. If we know these numbers, we can understand conversion rates and predict how many closings we will have over a certain time period. Outside of your business, you may monitor your diet and caloric intake as a lead indicator to understand where your weight is likely to be in the future.
Lag indicators quantify the outcome. They are the result. They can’t change the output, but they can help us better understand how we got to a given output. They show our progress, but they don’t ultimately affect the future.
The most valuable contribution that a lag indicator can make is to force us to examine our lead indicators if we miss the mark. They can’t change the outcome, but they can help us learn what we need to do to change course in the future.
And this is why flipping out about closing numbers in January when we are signing clients left and right is completely pointless. We want to focus on the lead indicators. Are we making the calls we committed to make right now? Are we executing the campaigns we need to right now? Are we getting in front of the prospects we need to get in front of right now?
Now, if you completely wet the bed in January, your lag indicators are making that clear now. So what do we do with those lag indicators? They should point you to your lead indicators from the previous quarter to find the hole. Did you fail to fulfill your prospecting commitments? Did you make the calls but convert at a lower level? What was the problem, and what needs to be different this quarter? As you dig in, the lag indicators should inform your decision about future lead indicators.
If you, like our team, are happy with your current lead indicators, I invite you to forget the past result. It’s over and done with. Instead, attack your day with a clear focus on doing the things that predict success. Hit your call number, improve your conversion rate and pile up the clients. The lag indicators will come when you nail over the lead indicators.
There is nothing sexy or exciting about tracking. We want the closings and commission checks without getting our hands dirty, but there is just no way around it. Agents who obsess over the minutiae of their business every single day will be the ones who win.
Athletes spend hours on end in the film room, wake up before the sun and torture their bodies in hopes of raising a trophy. No one is paying to watch them do any of that because it’s boring. But it is necessary. They don’t get to raise the trophy if they don’t put in the work. Approach your business with the same diligence and commitment. Lean into the boring and monotonous, and you will get to the exciting outcome you desire.