The value of measuring estate agency KPIs

Looking back at the Google Analytics reports since I launched this blog last December there's been a steady stream of visitors looking for information on estate agency KPIs.

• What performance indicators agents are using to measure the health of their business.
• What the benefits of monitoring KPIs are.
• How to ensure that monitoring these statistics doesn't become unduly time consuming.

Coincidence perhaps then, that estate agency trainer Julian O'Dell's latest guest blog is on exactly this subject.

"Our management training tends unsurprisingly to focus on 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. Despite this advantage, many managers/owners are unaware of both the information itself and how to assess and use it, 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fee levels, percentage of for sale boards on new instructions, instructions to sold instructions success, properties withdrawn without selling, number of applicants registered to mortgage appointments, number of viewings to offers, agreed sales to exchanges ratio, sales process time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/owners 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 estate agents’ figures elsewhere around the country. We provide these figures without attributing them to any 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 £50,000 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 very healthy indeed.

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. A firm who typically saw 65% of their agreed sales fall through before exchange were surprised to hear that elsewhere 20% and lower was not uncommon, thereby recognising the need for change and we provided the key players with relevant training which has led to a huge reduction in cancelled sales, thus securing extra income and happier staff!

My company has assisted a number of lettings firms to massively increase the percentage of managed properties they handle compared to what they thought was an acceptable level – this work has led to guaranteed regular monthly income and longer-term security.

Market and geographical variables mean that it is important not to get hung up on the detail of the performance of agents elsewhere, but the bigger picture can be useful if analysed objectively.

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. Furthermore, she was securing a higher ratio of for sale boards than the supposedly 'better' valuer. Having identified these issues, the manager was able to tweak the way the office was run accordingly and to provide appropriate coaching and training support to the individuals involved.

Managers 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 invaluable milestones on the road to success."

Julian O'Dell
TM training & development
01480 405583
@agencytrainer
training@tm-royston.co.uk

I'm planning a follow-up blog to this with a list of lots of statistics you could be measuring to understand and improve your business. If you have any suggestions or thoughts you think others would be interested in, please post a comment below.