That’s a question we ask a lot.
I was baking a cake yesterday for a small gathering and I had to check on several things. How many eggs, how much flour, how much sugar and butter. All those things go into a cake and it’d been a while since I had made one so I had to check and make sure I had enough but that is easy to do. Just check the recipe and you’ll have a shopping list.
It’s harder in this business. How many folks do you need in your database. It’s not a simple answer but there are some things to think about.
80% of all real estate deals involve agents that are referred from family and friends. Remember, that’s what makes this working by referral as productive as it is. We can talk about the 20% some other time but I want you to focus on the 80% for now.
Statistically, everyone knows 2 people who will be doing a real estate deal in the next 12 months. That’s just numbers and you can calculate it based on the number of folks we know, how long we stay in our homes we own and the number of new households forming up right now. It’s just math (and I did the math) but there is more to it when you are working by referral.
If you have 100 folks in your database then that’s 200 deals or 400 sides in potential. The key word is ‘potential’. You will not get them all. The folks don’t always know what their friends are doing and they might give the referral to someone else. It happens.
Another stat I’ve heard lately is everyone knows 12 real estate agents so they are your competition, in a way. You’re competing with 11 agents for mind share of your database. The good news is most agents won’t use the same effort to stay in touch as you will. They won’t build the relationship in the same way you can. You will be the person your folks think of because of the contribution you make to them on a regular basis.
My goal and I believe yours should be to connect with 100 people and connect so well you get referrals from them. Out of the 400 sides that exist as potential I can show you how to get 20-30 or more and develop a great business in the process. One number I’ve heard recently is called Dunbar’s number. It says we can only maintain 150 stable social relationships and I suspect that’s pretty accurate. I’ve heard other number of 228, 231 and 290 but let’s be conservative and stick with the 150. If your goal is to care for your database at the highest level and dig deeper into the relationships so they know, like and trust you, then focus on the 150.
People move into and out of your life. Relationships change and get warmer or colder for lots of reasons but if you focus on building your database to 150 warm relationships and work to serve them, I’d say you’ll have a great business and enjoy the journey you go on with them.
If you tell me you have a database of 5000 or 10,000 I’m going to say it’s not a database but it’s a mailing list and if you are emailing or texting all of them you’re spamming. That used to work in our business and some say it still does but then so does cold calling and door knocking. The danger is it works but it’s like a slot machine. It pays just enough to keep you engaged while it empties your wallet and burns through the relationships at an unsustainable rate.
Focus on your 150 and I’ll do the same. It will pay off.
Thanks for listening,
PS – if this was helpful to you, please share it with your friends and agents you know that would benefit from being a part of this gang. We’d love to connect with more folks. If you sign up we’ll send you a checklist to get you started on the right path and then send you a few more things that will be helpful. It’s all free and you can unsubscribe anytime. Give it a try and see if we can help.