Putting Numbers into Perspective

Expanding from my previous post about directive vs. creative advertising, this post is all about putting the numbers into perspective. Even though the Dot Com boom is long-over, there are still total misconceptions, or better yet, completely out of line expectations of what Internet numbers mean for local businesses.

Although more and more business owners are seeing the numbers for their real value, I still hear the infamous “well, that’s not a lot” statement.

Take Real Estate Agents for example. Here are the number of searches on both YellowPages.ca and Google for Calgary Real Estate Agents in March 2005.

Google (keywords, realtor Calgary, Calgary realtor)

187 searches

YellowPages.ca (keywords Calgary real estate agents & brokers)

220 searches

While some of the skeptical business owners might say, “well, that’s not a lot”, most likely the top performers within the industry would look at those numbers and be very excited about what they represent.

The first thing to consider is this; the search numbers above represent qualified prospects. These are directive searches; somebody is specifically typing in those keywords or searches. I believe that if somebody logs on YellowPages.ca and does a category search for real estate agent in Calgary, they are most likely seeking a professional to provide those services. The same goes for Google, if a prospect types in Calgary realtor, clearly they are looking for a realtor in Calgary.

Let’s examine the numbers in detail:

According to CREB.com, the number of licensed realtors and brokers in Calgary is 4695. In March 2005, RESIDENTIAL COMBINED (Single Family, Condo, Mobile) there were 4190 listings with 2815 sales.

Most realtors indicate that the majority of their listings come from word-of-mouth, referrals or past clients, which I believe to be true. For the sake of this example, I will assume that 80% of real estate listings will come directly from word-of-mouth, referrals, or past clients. That means of the 4190 listings in March 2005, 3352 listings came from this method.

What about the other 838 listings?

The first question that you need to ask yourself is this, do you believe that every person who lists a house/condo in Calgary knows a realtor to call? I don’t! There are people that search for a realtor in the same way they search for a car, furniture, or a plumber. If we go back to the numbers from YellowPages.ca or Google, these numbers start to mean something different.

838 listings were generated as a result of individuals in Calgary doing a search for a realtor because they don’t have a relationship with an existing realtor.

Google – 187 searches or 22.3% of 838

YellowPages.ca – 220 searches or 26.25% of 838

Combined – 407 searches or 48.57% of 838

What this means for a real estate agent in Calgary is simple. By leveraging 2 directive mediums in Google and YellowPages.ca, you are open to 407 individuals on a monthly basis who are explicitly looking for a real estate agent. This to me represents an incredible opportunity for real estate agents to capture listings.

Even at 1% conversion (typical direct mail piece) that would represent 4 listings. At 0.25% that would represent 1. Over the course of a 12-month period would a realtor end up getting 1, 2, 5, or maybe even more listings from using directive mediums? Based on the investment and calculating return on investment, most realtors would require .25 listings per year as a break-even point. A very realistic return on investment business model.

My caution to businesses, in any sector, is that before making a statement of “well, that’s not a lot”, examine what those numbers really mean to your industry.

I have been told that 90% of all revenues / listings are accomplished by 10% of the realtors in the Calgary Market. That would represent 469 realtors doing 90% of the business. What about the other 4226 realtors?

Of the two groups, which do you believe is more likely to make the statement, “well, that’s not a lot”? My guess, it’s not the top 10%, they know what the numbers mean.