Good commercial real estate brokers are relationship-building experts. Great commercial real estate brokers know how to bolster those relationships with data to close more deals, faster.
Unfortunately, some of us just aren’t numbers people. But in the era of big data, not being “a numbers guy” really isn’t an option anymore.
Luckily, technology has gotten more powerful and easy to use than ever. But with all that data available to you, you still need to know what to analyze and how to use it to achieve your goals.
This is where KPIs come in.
What are KPIs?
KPIs, or Key Performance Indicators, are measurable values that indicate progress toward a set goal. If you’re like most brokers, your goal is to close more deals and ultimately make more money.
But as you know, there’s a ton of work that goes into closing a commercial real estate deal. Smart brokers break that work up into much smaller activities and measure the conversion rates on those.
What’s more, using KPIs to measure your success can add a degree of predictability to your business so you reach your goals without so many sleepless nights.
Which KPIs are right for you?
The KPIs you choose will depend on the type of work you do. Choose a few powerful metrics that will truly indicate your success in achieving your ultimate goal—looking at too many metrics will get overwhelming and dilute the power of your activities.
So, which KPIs should you look at?
We’ve mapped out common KPIs brokers choose at all 3 stages of the sales funnel:
- Top of funnel: Awareness
- Middle of funnel: Evaluation
- Bottom of funnel: Decision
Top of funnel KPIs
Sadly, you can’t just snap your fingers and find yourself with more assignments ready to close. First, you need to meet people, get your name out there, and build relationships. Your top of funnel KPIs will indicate how well you are doing this.
Common top of funnel KPIs, or indicators that you are building awareness of your services and bringing in new opportunities include:
- Phone calls
Once you’ve selected your top of funnel KPIs, you can measure your successful next steps, i.e., listings, assignments, and closed deals. Then you can calculate your conversion rates and compare metrics over a given time period. With this information, you can work backwards to determine exactly how many calls you must make to generate enough leads to achieve your sales goals.
Middle of funnel KPIs
At the middle of the funnel, your prospects are likely deciding whether to assign a property to you or, maybe your client is evaluating spaces and deciding whether or not to sign a lease.
No matter your specialty, this phase of the funnel is all about evaluation. Your work is being evaluated so you need to measure how well you are moving people from the evaluation phase to the closed phase.
One of the metrics most critical to a commercial real estate broker’s success is also one of the most overlooked: Proposals. This KPI directly correlates with closed deals, and by understanding how many proposals you have out, you can forecast more effectively and determine how much more prospecting you have to do.
Bottom of funnel KPIs
Once you’ve landed the assignment or won over a new client, you need to track your efforts to convert that assignment into a deal.
These KPIs include:
- Lease proposals
By tracking this for each listing, you’ll stay organized and understand how close every listing is to converting to commission.
You can also determine your closing ratio, i.e., the percentage of your assignments that convert to closed deals, and track how long that process takes.
Measuring KPIs is all about gaining greater insight into the health and efficacy of your business. Not only will it help you sift out and solve issues, it will help you accelerate your close rate. The more you understand your business, the better you can adjust and improve your tactics and processes and ultimately, become a better broker.