Before some bright spark in China invented the compass in 206 BC (the west didn’t get their version until AD 1190) navigators used the North Star to find their way home.
Today, North Star metrics (NSMs for short) are used to guide the growth of many of the fastest growing startups and best known tech giants in Silicon Valley. For Uber, it’s Number Of Trips. For Airbnb, it’s Nights Booked. For Facebook, it’s Daily Active Users.
The idea is simple: improve on your NSM, and all the other important metrics important will follow. Take Uber. If the number of trips are increasing, it means:
- the number of repeat users (users who take more than one trip) is increasing
- the number of new users (new trips) is increasing
- the number of drivers on the platform is increasing
Before you set your NSM, it’s important to understand that the NSM is the means – not the end itself. Once you’ve set an NSM you’ll be able to use it to drive a single-minded focus on measuring and improving all the other variables that affect how much you can grow your NSM – to drive sustainable growth.
Ready to start using a start-up mentality to grow your property business?
The starting point: focus on sustained growth
Running an estate agency is a complex ecosystem of many moving parts. If you add up your monthly sales volume, it gives you a basis to say, ‘I’m not generating enough revenue; I need to get more sales’. But how do you get more sales? The classic approach is simple: make more dials, get more appraisals, list more and sell more!
Or is it?
The thinking behind the NSM is to drive growth that is sustainable rather than surface level. Surface-level growth might look and feel good, but it’s without direction – and, as the name suggests, it really only scratches the surface of what you can achieve. Sustained growth, on the other hand, is the realistically attainable growth you could maintain without running into cash flow problems, or stagnating.
Long-term, sustainable growth is born of action based on data-fuelled insight. Achieving that kind of growth starts with nailing your NSM.
Step 1: Choose your own NSM
Everything important to your estate agency should be accounted for, and directly or indirectly affected by your NSM.
Your NSM must be specific and measurable – and it’s likely to be revenue or volume focused. You’re in the sales game, after all. However, it won’t always stay the same. Your NSM should change as your agency grows and the industry evolves.
Take Facebook. In its infancy, Facebook’s NSM was “# users adding 7 friends in the first 10 days”. Then, as competitors entered the space and the industry changed, Facebook started focusing on its daily active users. As the industry continues to change and competitors like Snapchat begin tracking hourly active users, Facebook’s NSM might change again to reflect that.
So your NSM may be 10 new listings across your estate agency per month. However, if your agency grows and your core area expands to include an area where property prices are significantly higher, your NSM may become revenue based.
Step 2: Growth hacking
Now you need to create a mechanism around your NSM to help drive growth. To do that, you need to map the variables that define your metric. For example, if your NSM is number of listings per month, the first variable will be number of calls and the second will be number of appraisals. These steps are the inputs and your NSM is the output.
So if you know that your conversion ratio from conversation to appraisal is 10% and your appraisal to listing ratio is 50%, then you know you need to make 400 calls to get 10 listings per month.
This is where plenty of estate agents get to and then stop. But it’s not just about making more calls to book more appraisals to win more listings; it’s about refining and improving your processes to do better.
Where is your team falling down – and why?
Are they making plenty of calls, but getting called in for barely any appraisals? Focus on their prospecting. Do you need to workshop some scripts? Learn, train and buy books.
Or are they getting called in for lots of appraisals but winning only a small portion of those as listings? Your efforts would be better spent revising how your agents are presenting to potential sellers. Review your marketing material. Are you offering enough services? Are you clearly communicating the value you’ll deliver? Are you differentiating yourself from competitors with something like digital marketing?
If your NSM is revenue based, your list-to-sell ratio would be a significant variable. If you take 20 buyers through a property and receive zero offers, work out why. Go through your buyers’ feedback. Is it overpriced? Can you set a more realistic market price? Or maybe you’re marketing to the wrong demographic – or across the wrong channels.
It comes down to analysing your data and using it for deeper insight. Work out your conversion ratios and determine whether they’re being influenced by external or internal factors. If it’s because the market is poor, then you may simply need to ramp up the volume of calls. But if it’s internal, then training should be your focus.
Step 3: Measure and experiment like a startup
You’ve likely also heard of the saying, ‘It’s a numbers game’. Well, the difference between traditional sales and start-ups is that tech companies focused on growth are fastidious with measurement.
You know all the variables that control your NSM – so how do you measure those variables? How do you assess staff performance? What about your own actions?
Say the variable impacting your NSM the most is the number of calls your team is making. Your conversion rates are great, but there simply aren’t enough hours in the day.You could tackle the problem directly: Minimise the wasted time between calls. Time how long it takes for your team to go down a call list and manually dial numbers; you’ll be surprised how long it takes. Should you invest in a dialler?
Another approach might be to rethink your starting assumption: Are calls the whole solution?
With the right tech, personalised emails and letters can be sent to thousands of potential sellers.
If you send out information ahead of a call, the people you connect with already know a little about your agency – improving your conversion rates. Less time explaining who you are also minimises call time, giving your staff more time to make calls that convert.
Selfishly, we can point out here that a good real estate CRM can let you send a mail merge email or letter to thousands of people with just a few seconds of work. What’s more, good CRM reporting can be used to track how your ‘experiments’ in driving growth are improving your conversion, volumes and other factors.
Perhaps your agents aren’t winning listings. Review their appraisal notes - you might notice they do well with first home buyers, but not so well with investors. Can you help build their confidence or skills to have those conversations with more experienced sellers?
Then, every six or twelve months, review all the data in your CRM. What was your best month - was it driven by revenue or listing volume? Use that insight to check whether your NSM needs to change.
Step 4: Keep going
Your NSM is not an end solution in and of itself. It’s a key metric that focuses your estate agency’s growth efforts, and drives you to dig deeper into your data and create levers for future growth. It can help unify your agents and admin staff on what success looks like, and lay the path to get there.
Once you start, keep going; try new things and watch as the business rolls in.