Here's a go-to guide on real estate agent recruitment and key performance indicators that impact the hiring process.
What drives growth in a business is its people, and if the people are ambitious and successful the business will also thrive. This sounds like an easy equation but, finding the right people has been and always will be the toughest aspect in any industry, especially real estate.
This is why looking at important KPIs is essential because they indicate the recruitment flow of the business! Recruiting capable and talented real estate agents and then building a team from there is an important duty that all team leaders and brokers must indulge in when they want to see their business grow.
Of course, the first couple of hires will always be highly significant for team leaders and brokers since they will eventually build the base of the entire team - Not only in terms of capital but also in terms of team culture. But then again, you will never know if your recruits are good enough until you actually put them to work. Hence, this hit and trial undertone hiring has can only be tackled with years of experience in recruitment and knowing exactly the KPI of when to recruit and what to recruit for.
That is why even before you start hiring real estate agents, there are some fundamental questions you need to answer -
Do I really need to start Agent recruiting?
Is this the right time to recruit?
And finally, what key performance indicators do I need to look at that indicate a hiring process?
5 KPIs You Should Look Out For Before You Recruit More Real Estate Agents
KPI 1. It’s Time to Delegate
A broker/owner should only do everything by himself till he has no work to delegate. Michael Hellickson, Founder, and CEO of Club Wealth took a webinar at Uplift’2020, a Real Estate Summit that is hosted by Auctm, where he explains that scaling at the right time is very important.
- In Tier 1: A Broker/ Owner makes around 0-25 transactions a year. Here the focus should only be on personal business and growth, and less on recruitment. Why? Because there is a chance that you are not selling or making enough to support new talent and if you are not selling or making enough to support new talent, this new talent will not come to you. And even if it does, it will be a waste of time, money, and effort.
- Tier 2: Is where a broker or a team leader begins to make more than 40 transactions a year. Your focus should shift to recruitment, new agents, and upcoming industry talent. Now is the time to expand your business, and delegate listings.
- Tier 3: You as a team leader are still the top producing agent of your realty. Your focus should be on lead generation and delegation, hiring talent who can produce higher outcomes, top grading the team and letting go of the bottom 20%.
- When you reach Tier 4, where your recruited team’s production starts to match your production, you can then start hiring team managers and team leaders who can now handle micro-aspects of your business. And while they work in the business, you can spend your time working on the business.
KPI 2. Get Over Your Plateau
Even if agents give their 100% for every listing and every deal they get, there will come a point where their productivity will halt. Every team has a ceiling, and once this point is touched their sales will start to plateau.
In real estate, there are several KPI metrics that help indicate a plateau. Some of them are:
- Lesser than average GCI.
- Lack of talented agents in the team.
- Outdated marketing strategies.
- Improper tooling
But, this does not mean that there is something wrong with the team, it just means that another component needs to be added to accelerate growth, and usually, this component is a new team member.
It is important to recognize this plateau and start recruiting and delegating leads so that your team does not reach a burnout.
KPI 3. Lead Connectivity
Lead connectivity is a very simple metric to understand, but a very difficult metric to keep track of. It indicates the amount of effort made by an agent in pushing a client towards a closing, or keeping them in the loop. Key Performance metrics here include, number of leads called/ texted/ emailed, speed-to-lead, attempts-per-lead and more.
There can be various reasons why an agents lead connectivity is lesser than the team’s average. Some of these reasons are,
- Slacking in speed to lead
- Lesser than average outreach levels
- Overpacked with leads in the pool
- Lesser than average outreach attempts per lead
These reasons are important to understand since they can affect your hiring process. If your agents have more leads than they can handle, you as a team leader can boost recruitment. On the other hand, you need to coach the non-performers and give marching orders to the ones who show no improvement in their performance.
The question then is, how can we easily track Lead Connectivity metric? Auctm, the ultimate business platform for modern real estate teams, provides you with a 1:1 meetings dashboard that has an agent-wise Performance Report. Not only does it show you ‘’Current New Leads’, ‘Current Old Leads’ and ‘Current Total Leads’, you can also analyze their deals and compare them with other agents in your team.
Auctm’s 1:1 meetings dashboard also provides you with a Lead Connectivity report where you can not only see leads called, texted or emailed but you can also analyze speed-to-lead, attempts per lead, connected, untouched and not connected leads.
KPI 4. Agent ROI
There is some amount of capital an agent invests into a client when they are nurturing them to close the deal.
ROI then becomes - Money earned divided by Money invested. If the ratio is more than 1 that means the agent is profitable, and if not there is something wrong with how the agent is trying to close their deal.
Hence this KPI becomes very important when it comes to hiring. If your ROI is less than the money invested, it’s a direct loss in the entire income you’re getting from a sale.
Through tracking and understanding your ROI you can determine which agents are performing well, and which ones are not. Obviously, if your average ROI is lesser than your average investment, there needs to be a performance-related discussion with the team.
One of the solutions can be hiring new talents who are capable enough to give you a higher ROI.
KPI 5. Conversion Rate
Numbers are very important when it comes to real estate and agent recruiting in real estate. Numbers are also scary because they never lie. Hence understanding your conversion rate i.e. “the rate at which your real estate leads eventually turn into clients” is essential for your business. You as a team leader should always want your agent to aim for high conversion rates while moving through the funnel.
Not only will an average to high conversion rate KPI help you when you are trying to expand into new locations, get more technology, try new lead sources, but it will heavily help you in your own recruitment process.
Auctm’s Conversion Quadrant helps a team leader or a broker/ owner to easily identify their top performing agents and their lowest-performing agents. It gives you 4 sections where your top and average performing agents are listed based on leads provided and leads converted. Just a glance of this quadrant will help a team leader or broker to determine which agents to coach, give more leads to or have 1:1s with.
If a broker/ owner or team leader decides to deeply understand why some of their agents are struggling, they can easily scroll down and inspect their pipelines for a more in depth overview.
Are you wondering where this cool Quadrant came from? Check out Auctm!
- Even though it is important to constantly keep looking for new talent, it is also important to understand when you can actually expand and onboard this talent.
- Problems always arise when you are constantly spending more than what you earn.
- Sales in real estate can reach a plateau, just like any other business. It is important to identify this plateau and add force for growth.
- It is always crucial to fix bad fits - Do not be afraid to let go of underperforming agents.
- Look at your numbers before you hire so you can make data-driven recruitment decisions.