Capacity
What is database capacity? It’s a calculation of the number of referrals you can expect from your database. It’s a little intense but let’s see if we can simplify it and make good use of the data we have.
This presumes you have a database and it’s filled with folks who know you, like you and trust you. If you have 100 A and A+ folks in your database (and maybe a few B’s) you have the potential of 20 – 30 deals from your 100 person database.
The numbers below would reflect an agent who works the system we teach. You have to be consistent in the application of your calls, notes and face to face meetings but I know you don’t want to cold call plus this is a lot easier.
The key thing to remember for a new agent is the number of A and A+ members of your database. We’ll dig into that a lot deeper but for now assume it’s someone who will answer your call when they see your name on caller ID and be happy to talk to you.
For a new agent, that is an A.
Keep in mind this comes from over 20 years of experience with thousands of agents in coaching and I got this directly from my coach. These are not my numbers but they come out of all that experience.
This is not theory.
There are two numbers that are critical to this calculation. They are Contacts to Referral and Referrals to Closing. A new agent will have a Contacts to Referral of 10 and a Referral to Closing of 6 on average. As you get better at the scripts and dialogs, use them more often and consistently your numbers needed will decrease and that makes this more efficient.
If you multiply those 2 numbers you get 60 for a new agent and for a seasoned agent it would be about 50. Some agents get even better as the database matures. Keep that number in mind for the math part in a minute. We’ll call it Contacts to Close (CTC).
We also have two ways of harvesting from your database.
Farming and Hunting.
Farming is the consistent application of your calls, notes and face to face meetings to your 100. This means you make the 5-6 calls a day, write 3 notes a day and see your top clients and referring sources often. Typically it should be 5-7 face to face meetings, lunch, coffee, etc with your best folks. These can be past clients, vendors, past colleagues, etc. but to ought to be the best of the best that get your time like this.
Hunting is when you have active clients and you get referrals from them too. When they are active they are the most aware of real estate needs around them. Teaching them how to give a referral is key and we’ll discuss that but the goal is to get a referral from each of your deals. You won’t get a closing from all of them but you’ll get some. You can expect to get about 80% of your active clients to give you a referral.
| New agent farming calculations Number in the Database 100 Contacts to Close is 60 Divide DB / CTC and you get 1.67 Multiply 1.67 * 12 months and you get 20 closings for the year | Seasoned agent farming calculations Number in the Database 100 Contacts to Close is 50 Divide DB / CTC and you get 2 Multiply 2 * 12 months and you get 24 closings for the year |
| New agent Hunting calculations 20 deals for the year 80% of your current clients will refer you That’s 16 extra referrals for the year If you have 6 referrals to a closing it’s 3 extra deals | Seasoned agent Hunting calculations 24 deals for the year 80% of your current clients will refer you That’s 19 extra referrals for the year If you have 5 referrals to a closing it’s 4 extra deals |
| Total Transactions 20 Farming + 3 Hunting 23 total from a 100 person database | Total Transactions 24 Farming + 4 Hunting 28 total from a 100 person database |
I hope you followed all that. These are real numbers and agents achieve this everyday using the systems and tools. My goal it to show you it’s possible to achieve your goals and do it without wasting time cold calling. 5-6 calls a day to folks you know. 3 thank you notes a day and meeting a favorite client or friend for lunch. This is not a system to call and harass your database for referrals either. I rarely bring up real estate in my calls but I achieve these numbers too. Not a bad way to run a business.
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