Since it’s a new year (Happy New Year!) and it’s been over a year since I sifted through the numbers in Where Do Deals Come From? I decided to take another look at where one brokerage’s deals come from.
As in the previous post, relationships account for the bulk of all transactions both for number and gross commission amount. As you can see in the chart below, the orange “relationships” bar dwarfs all other deal sources.
If you look real close at those shorter bars, you’ll also notice a downward trend over the years for deals from sign calls and traditional marketing methods (newspaper ads, email blasts, etc…) and an uptick for deals from cold calls/market research. Thanks to having this data in the first place, this brokerage has been focusing much of their training efforts on “back to basics” methods. It’s obviously been paying off. Or, it could be that the old methods are losing their effectiveness. More time (and data) will tell.
When it comes to finding tenants/buyers that produce above average revenues, cold calling rules. But good old market research and relationships also result in higher payout deals. The results are similar for acquiring listings. Admittedly, the market research category is kind of fuzzy. You would think that after some research, you’d have to make a call (cold or to someone you know) so I would lump these together making back to basics efforts still a good way to make money in CRE. Overall, online sources produced deals with revenues slightly above average.
Drilling down into the data (but not shown here), social networks and the company website produced above average revenues from owners/landlords, a sign that marketing yourself online is lucrative. On the tenant/buyer side, LoopNet and a local MLS/CIE resulted in the highest paying deals. All other online sources for tenants/buyers or landlords/owners resulted in below average commissions though there were individual highs in any given year.
Biggest surprise was seeing that though signs calls have always been a reliable source for leads, they result in below average commissions per deal. Time to look at the total revenues for deals from signs and compare it with your sign costs. You’d need to at least break even to justify the cost.
As for the number/percentage of deals from online sources, those remain a steady though still small source of transactions (chart above). The real trend is what those online sources are. Just 3 years ago, LoopNet was the dominant source of online leads. As of the end of this year, they’re in the middle of the pack (chart below).
The steady upward trend for deals from the company website is encouraging – and in my opinion, some proof that inbound marketing continues to prove its effectiveness. More users are looking online for CRE listings/information and between social networking and SEO efforts, it’s getting easier for them to find broker web sites – and they don’t have to pay to search either. (LoopNet…are you listening?)