This is the first post in a series designed to help office managers and brokers understand and use key performance indicators (KPIs) to improve the bottom line.
I paint by numbers. Which is to say I’m no artist with a paint brush. If you want a picture that’s recognizable, find someone with some skill, or give me some numbers. I can’t even pull off a happy little tree freehand.
I’m not suggesting I spend my spare time matching colors to little numbered shapes on a piece of paper, because I don’t color inside the lines very well either. I can usually stay on one wall with a roller. Usually. But beyond that, I like to do things my own way, make my own discoveries.
For the purpose of this post when I say I paint by numbers, I’m talking about telling stories based on numbers. A lot of years ago I found my calling in the real estate business and I’ve been immersing myself in real estate operations ever since. And while math was not my most favorite subject in school, I’ve come to love diving into numbers now. That’s because if I can interpret those figures, I can learn so much of the real story of what’s going on in an office or operation.
If you’re leading an office or a company and still cringe at the mention of math, the good news is that you’re already following some of the stories that your numbers will tell you. You’re just following them with your gut, and if you train your eyes and mind to interpret the numbers that relate to your gut feeling, you can harness their power to improve your business.
This is the first in the “Paint by Numbers” series. The series will, one by one, walk you through some of the Key Performance Indicators (KPI’s) that I look at when working with our Leadership Development Program participants. These are the same measurements that I was watching- with my gut or my numbers- when operating an office.
Starting at the Beginning: Desk Occupancy
We’ll start with the basics: Think about the last time you walked through a real estate office other than your own. If you haven’t done this recently, make it a point to do so. You can always drop in to a Coldwell Banker office when you’re travelling, or jump into the world of espionage by finding a reason to drop in to a competitor’s offices and see what you can learn, just by observing.
If you think about the first snap observation you make when you walk through an office, I’m betting your mind will settle on “full”or “empty.” The quickest tour of an office will give you a gut level impression on whether the desks are full or empty- even after hours! Of course, this is almost universally tracked, and is a fast basis for comparison. This is Desk Occupancy, and is the simplest KPI to calculate:
DO = D/A
Desk Occupancy (DO) equals number of available associate desks (D) divided by number of sales associates (A). The gut instinct here is “are there butts in the seats?” Profitable operations will have a Desk Occupancy greater than 100%- Typically in the 120%+ range, as not every independent sales associate occupies a desk.
By translating that gut instinct into a number, you’re able to harness its power. You can:
- Establish a basis of comparison between offices or operations -“Is this a good number?”
- Identify risks to future profitability and opportunities for growth- “Is there room for improvement? How will that affect revenue?”
- Set realistic and measurable goals that you can work to achieve- “What do I want this number to be?”
- Take action to achieve those goals- “How will I get there?”
- Track progress toward the goal on a monthly basis- “Is what I’m doing to achieve my goal working?”
If a picture is worth 1000 words, numbers are worth a fortune. Tracking your KPI’s, setting goals, and executing on plans to achieve them holds the potential to take an office or brokerage from good to great.
In my next post, I’ll start examining some measurements of agent productivity. Until then, I’ll leave you with another great form of storytelling: music. For those of you who aren’t yet sold on numeric love, I recommend this song by Jimmy Buffett: