Each year I get more data to crunch and one of my favorite data sets is deal sources. For each deal entered into the pipeline, agents are asked to indicate how the tenant/buyer and landlord/owner were acquired. About 90% of agents comply (or the office manager chases after them…). “Derelicts” are tallied in the “Not Provided” category.
Just a reminder that these are subjective selections and some of the categories they have to choose from are fuzzy. So plenty of agents defer to the “relationship” category. And the “research” category often involves making a cold call at some point. But as we collect more data each year, even with a certain degree of error, we can see viable trends. Here are the latest.
OVERALL BROKERAGE REVENUE
- As usual, deals from existing relationships provide the most revenue. But each year, approximately 30% – 35% new clients are acquired through a variety of other sources.
- Revenue from online sources is holding at around 5%.
- Traditional marketing methods continue to decrease as a revenue source.
- Though a lower percentage of revenue, sign calls account for the highest number of deals after relationships on the tenant/buyer acquisition side. Cold calling/research accounts for the second most frequent way to acquire landlords/owners.
- LoopNet still provides a large number of deals and thus more revenue but other online sources combined equal or surpass LoopNet in every year since 2010.
- For the current year, transactions from online sources are fewer than in past years. However the value of these deals is relatively high performing better than several other deal sources.
- The data above is based on total brokerage revenue. What can individual agents expect? For that, we need to look at median deal commission.
- Landlords/owners using online sources to find a representing broker can result in highly profitable deal. Not so much for online tenants/buyers but there were over twice as means deals on the tenant/buyer side. The values above and below the median were distributed in a pattern similar to other deal sources with a standard deviation a bit lower than the standard deviation for deals from all sources.
- Cold calling/research still works especially for finding buyers and tenants. But online sources provide above median revenue for either side.
- What’s interesting is the low median value for landlord/owner deals involving relationships. One can only think that many agents know a lot of people with small buildings/spaces.
- Traditional sources, primarily from inbound calls within that category, almost met the median on the landlord/owner side. Note that inbound calls are from prospects making contact that’s not a result of a sign or referral.
- While the bulk of transactions are relationship based there’s possibly an untapped group of owners and landlords looking for reputable brokers online – or who could be convinced to list via a cold call.
- While this particular brokerage isn’t very active online, the value of the transactions from deals acquired online is good. That said, cold calling is also a high value activity and should not be ignored.
- If individual agents aren’t involved in self-promotional activities, the brokerage certainly should be. Whether online or off, name recognition is still important and being active in all channels just supports the brokerage brand.