I spend plenty of time on this site talking about how important prospecting is – and with good reason! In the “people business” of real estate, your ability to find and cultivate new prospects plays the pivotal role in your ability to succeed as a Realtor.
But all of that aside, do you actually know what “prospecting” is? Can you identify the ways in which prospecting is different than marketing? Even if you can make the distinction, are you using this knowledge to measure your business results and improve your prospecting efficiency?
If you can’t define the term “prospecting” yet, don’t worry! In this article, I’m going to clarify the difference between prospecting and marketing – in addition to showing you how you can put important prospecting measurement systems in place to determine how effective a prospector you currently are.
Let’s get started…
Prospecting, as a business strategy, involves direct conversation with potential clients. As a result, prospecting is active – while marketing techniques are almost always passive.
Actually speaking to a potential client on the phone in order to set up a listing appointment is an example of prospecting. Looking up phone numbers or setting up lead generation forms on your website, on the other hand, don’t qualify as prospecting activities under this definition, as they don’t involve active contact with potential clients. That’s a “getting ready to get started” activity.
If this seems like a trivial distinction to make, hang on a second! There’s actually a legitimate business reason for separating out lead generation activities in this way…
As a Realtor, what you want to get to is a place in your business where you can say, “I average one closed deal for every 100 prospects I talk to.” Doing so is a powerful way of both predicting your future income and helping you to identify the strategies that can be used most effectively to grow your income by identifying more prospects.
Think about it for a second… If you knew that you converted an average of one out of every 100 prospects into closed deals, you’d have two options for increasing your income. You could either reach out to more prospects – increasing the number of times you hit that “100 prospects” multiplier – or you could work on improving your sales skills until you’re able to convert 1 out of every 50 prospects. Either way, though, you can’t adopt any of these strategies if you don’t know your baseline prospect conversion rates.
That’s why it’s so important to filter out prospecting activities from other marketing activities. If you think about everything from phoning new contacts to sending out print newsletters to meeting with other agents to be “prospecting” activities, you won’t have a good understanding of your current performance and how it can be improved.
To start gathering this information, begin by keeping track of the number of actual prospects you reach out to on a day-to-day basis. Remember, prospecting is a person-to-person activity – so only take note of things like calling potential clients, meeting with prospects or engaging in some other active behavior. While other lead generation activities are important, track them separate from your prospecting logs in order to complete the calculations described above.
Also keep track detailing which of the prospects you’ve contacted have turned into listings and ultimately closed deals. Compare the two over a period of time – for example, a month, 3 months, or even better 6 months or more – and you’ll have a baseline understanding of how your current prospecting activities are converting into actual income.
Over time, you should start to see trends emerge in terms of the types of prospects that tend to convert best for you, as well as the contact methods that wind up being the most effective. Use the results of these measurements to guide your future prospecting activities and business decisions – you’ll be amazed at the results you’re able to achieve!