There are metrics that you should always monitor in your business, and KPIs are one of the most important of them. You need to track enough numbers so you have data to work with. By understanding your KPIs, your sales will improve, you’ll become more efficient, and your business will grow exponentially.
In this episode, Lauren will give you the 4 KPIs that are most important to track for your business, as well as tips on what you should be doing in order to track them so you have a better understanding of how the KPIs will help you to increase profit in your business and how tracking them will help you make better decisions in the future.
4 KPI’s Every Wholesaler Should be Obsessed with in Their Business
In this episode, I am going to talk about what KPIs are most important to track for your business. You’re probably wondering, “How many and what KPIs should I track?” It’s up to you whether you want to track more KPIs, but I highly recommend that you don’t overload yourself by tracking too many KPIs. You’re going to see a theme that I love to keep KPI tracking very simple. The reason is from personal experience. When I got started with real estate investing, I didn’t track KPIs. I didn’t even know what KPIs were until a couple of years into the business. Once I learned what they were, I started tracking everything. I was tracking how many times I took a breath before I gave an offer to a seller. It was ridiculous.
What I found was that the more that I tracked, the less likely I was going to sit down and fill the Excel spreadsheet of all the KPIs because I made it too complicated and time-intensive. Over the years, I scaled it down. I developed some key KPIs that I knew I could hold myself accountable to. They are not too hard to track, and I can do it on a very regular basis. I’m going to share with you what is the most important where you can get a lot of data from.
The first KPI that I recommend that you need to keep track of is the leads that come in from your marketing campaigns. It’s very important that not only are you tracking how many leads but what campaign did the lead come from because campaign attribution is very important. You need to know what campaigns are performing better in getting you more qualified leads. Start with what is the definition of a lead. You want to make sure that you are defining your KPIs in a very clear-cut way, where there is no gray area. Where I find that a lot of people make mistakes is that there is a gray area in their definition.
If you want to double your numbers, you need to double your leads and your marketing.
If you are defining a lead in a subjective way, it means that I might consider this person a lead, but Bob might not consider the person a lead based on my opinions. That is going to mess up your KPIs, especially if you have employees. If you have four employees, they might define a lead differently. You want to avoid that. The way I avoided that for myself and all of my students in my coaching program is I made the definition of a lead very easy and black and white. It’s anybody who said yes to thinking about or considering selling their home or wants an offer for their home.
If anybody considering selling say yes, they’re a lead. All they have to do is raise their hand and say they’re interested in selling. I don’t care if they’re motivated or what their timeline is for selling. At this point, anybody interested in selling is a lead. To me, that’s about as black and white as it can get. There is no gray area in that definition. We’re looking apples to apples with what a lead is in the data that comes from counting our leads. What can leads tell you? A very important metric that leads can tell you is leads per deal. Once you have a good deal flow, you can count and see how many leads it takes to get one deal.
From there, you can forecast how successful your marketing campaigns are going to be because you can adjust the number of what you’re putting into your marketing campaign. If you want to do more deals and you’re spending $4,000 in direct mail, sending 8,000 mail pieces a month. You know that if you want to double your numbers, you need to double the leads, so you need to double your marketing. That’s a very important number. At the very least, make sure you are tracking your leads.
The next KPI is offers made. This is my definition of an offer. I define an offer as any time that we give pricing to a seller. That’s not just in writing. That’s anytime we verbally give pricing to a seller. That could be a price range if you prefer that discussion with the seller where you first start them with a range or just a straight price for their home. If you give a verbal offer, I count that as an offer. You get a point. What’s an interesting metric for me to know is how many leads does it takes for me to make an offer.
If you are somebody who has employees doing this for you and you’re seeing that it takes more than two leads to get an offer out, that’s an indication that your employee is burning through leads. If you are doing that, that’s an indication you’re burning through leads. It is my firm advice that every lead gets an offer. I don’t care if they are not expressing some motivation or they sound intimidating and mean, or you’re scared of the seller, or the seller said that they want market price. I don’t care what price the seller said they want for the home, they are still going to get an offer from you.
If I’m seeing that 50% of the leads come in and never get an offer, 50% is about normal because a lot of the leads, depending on your marketing source if you are doing cold calling or texting, were not that interested anyway. They are tire kickers and will never answer their phones again. That’s fine. That’s not your fault that you couldn’t make an offer because they didn’t pick up the phone. I found that about 50% that come from outbound sale methods like cold calling or texting won’t get back to you. That’s understandable.
If it’s more than 50%, that’s telling me that you or your employee is being picky and choosy about who they give offers to. They are looking for either more motivation, low-hanging fruit, people that express that they are willing to take a discount, and you’re going about it all wrong. Every seller should get an offer because you never know. They could be poker facing you at that point. They might be giving you some response because they’re not going to lay their cards out for you. Make sure that you’re making as many offers as possible and that the leads per offer number are not getting too high.
The next KPI is contract. What I want to know is how many contracts you are getting per deal you’re closing. I have heard average numbers that 50% of real estate transactions don’t close because of title issues or issues with the inspection. You’re always going to try to improve that. It should be better than 50%, but if you are looking even lower than 50%, that is telling me that you are tying properties under contract that don’t have a pulse and you don’t understand pricing very well. You’re probably tying up too many contracts and tying them up too high. Once they go into escrow and you’re trying to sell them, they’re not selling. That’s because you have them at too high of a price. You don’t have a deal in front of you.
If you are interested in learning more, you need a good coach on your side.
If you are getting 4 contracts to 1 deal, you need to go back to the drawing board, learn the pricing in that area and improve upon your offer pricing structure. If you are 1 to 1 or for every one contract, you close that deal, that’s not that great either. Contracts fall out from time to time, and it’s not your fault. That’s understandable. To me, that means that you’re not taking enough shots. It’s so obvious a deal. It’s banging you in the head, but there is a lot that falls in this middle gray area where you’re not sure if it’s a deal, but it might be for somebody. In that situation, my team would lock it up because we know our area pretty well and what that gray area could be for us.
It’s important to understand pricing in the area. You want to take a fair amount of shots and take some risks, but you also don’t want to take too much. Those are the four KPIs that I recommend. The last one is deals. How many deals did you close? It is easy but that is everything. You got your leads and contracts per deal.
Return Of Investment And Conversion Timelines
Those are the four important KPIs, leads, offers, contracts and deals. If you want to keep going with it, another KPI I love is ROI on marketing campaigns. That’s Return On Investment. I also love the return on investment on employees. I compare employees against each other with their ROIs.
Another good one is conversion timelines. How long does it take for a lead to be a customer? It means you got them under contract, then how long does it take to close a deal and profit from them. Conversion is a good number to track. If you’re just getting started, keep it simple. Start with the four and then go from there. Wholesaling can get technical. If you are interested in learning more, you need a good coach on your side. If you want to get started on your wholesaling journey, I want to help you. Go to www.VirtualInvestingMastery.com and fill out an application. Somebody will reach out to you. I cannot wait to have you a part of our tribe. Thank you so much.
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About Lauren Hardy
Lauren Hardy is a Virtual Investing expert and Real Estate influencer who owns multiple companies in the real estate industry including real estate investment, coaching, and software companies. She is also a Wholesaling Inc coach and co-host of the Wholesaling Inc Podcast.
Her experience in the last decade has been focused on real estate investing and creating products and services to serve the real estate investing community. If you are interested in investing in real estate virtually, house flipping, or virtual landlording, Lauren’s your girl.