Sales and Sales Management Blog

November 11, 2006

Where Do My Referral Statistics Come From?

Filed under: prospecting — Paul McCord @ 3:43 pm

Received an email from Deanna in Kansas wanting to know where the statistics in the book come from. Deanna says that her experience has been that somewhat different than what I appear to have in my book. She is a realtor in a large office. In her office alone there are 7 realtors who work almost exclusively from referrals. Deanna says that seems like an awful lot if only 15% of salespeople are referral-based. How come so many are in her office?

Deanna, there are a couple of reasons. First, according to your company’s website you have about 160 realtors in your office. If about 7 are referral-based out of 160, that is only 4.3% of all the realtors in your company. But that really isn’t a fair statistic since many realtors are retired, part-time, hobby-realtors, etc. But, according your response e-mail, there are about 45 full-time, active realtors in the office, including all full-time, active, irrespective of experiience level. 7 of 45 is 15.5% of your office’s active sales staff. About right. It may “seem” like there are a lot of referral-based salespeople, but that number is right in-line with the average.

I will often get objections to the statistics from salespeople who “feel” there must be more than just 15% of all salespeople who are making most of their living off of referrals. But lets take realtors again. I live in Houston. There are 14,000 realtors who belong to the Houston Association of Realtors. Lets assume that 65% are not full-time, active realtors. That leaves 6,300 that are full-time. 15% of 6,300 is 945 realtors in the greater Houston area that are probably referral-based. Many of these are going to be the better-known realtors in the area. Of course, it “feels” like there is a large number, but based on the total number, it is actually surprisingly small.

Secondly, real estate is one of the best industries in terms of having a larger number of referral-based salespeople. Realtors tend to be pretty aggressive and pretty actively pursue their sales education. Consequently, it isn’t surprising to see that their numbers would be pretty high compared to some other industries. I’m not saying that their numbers are significantly above 15%, but there are many industries whose referral-based sales force is well below 15%.

So, Deanna, that’s why you “seem” to have so many referral-based realtors. You have about the number I’d expect. Your job is to get into their catagory. Learn and apply the lessons in Creating a Million Dollar a Year Sales Income and you’ll get there.

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