Imagine being an airline pilot. You're flying across the country but unsure where you're headed. How would you know where to land, or if you did, is it where you had planned?
This is the problem many loan officers face. They're generalities - working in business without a clear path. And with 2006 quickly approaching, the hourglass is draining. Going into next year without a plan is like flying into the abyss.
In last week's issue I described how to calculate your income goal for next year. It's more than just guesswork. Click here to read it. This week's article explains how you support your income goal by forecasting next year's production.
What is Forecasting?
Forecasting is a self-assessment tool that takes the pulse of your business to know how healthy it is. It's the process of organizing and analyzing information in a way that makes it possible to estimate what your production will be over a particular period of time. So rather than guessing, you're analyzing data, blending it with future trends and computing an educated approximation.
The true value in making a forecast is that it forces you to look at the future objectively - a future that forecasts a surplus or shortage of business. Either way, you're in a better position to apply the correct marketing strategies based on your circumstance.
Analyze Agent Relationships
Unless you're 100% referral-driven or have more business than you can handle, real estate agents should be the nucleus of next year's forecast. So the first step is to analyze the relationships you have now. If you compile data in four key areas, you can see which relationships are most valuable and deserving of more attention.
Measure performance in these four categories:
- Total Number of Closings - The number of borrowers each agent referred to you in 2005.
- Avg. Loan Amount - The average loan amount of each transaction.
- Commission Earned - The commission you earned per transaction.
- Total Earnings Per Agent - The total amount earned in 2005 by agent.
When you've compiled your data, complete the following sentence for each relationship:
(Insert name of agent) referred (insert number) clients and helped me earn (insert earnings) in 2005.
This puts in proper perspective what an agent meant to your business this past year. Of course, you want to determine what they'll mean to you next year. So to do that you'll need to meet with each one and ask about their forecast.
Are you spotting an incredible opportunity to nurture your relationships? Actually this is something you do a couple times during the year. Think about that for a moment. If you met with each agent a few times during the year to discuss future production, what do you think will happen? That's right, you'll begin to secure more of their business. How? Because it's about accountability and that's what will happen when you meet and share each other's forecast. And if they don't know how to do a forecast, you've created an opportunity to teach them. That's what builds loyalty.
Analyze Other Sources
In addition to agents, include a forecast for other sources of business. For instance, if you produce 5 loans monthly from farming your database or networking with financial planners, it's probably a fair assessment that you'll produce 5 loans each month next year too. Also, consider loans generated from any planned promotions next year.
If you've determined how many loans to expect from agents and other sources, add the two categories together. The total sum is your forecast.
Now you need to calculate how many loans you need based on your income goal, so you can conclude if you have a shortage or surplus. Simply divide your income goal by your average commission (your gross earnings per closed transaction).
Next, compare this number to your forecast. If it's more than your forecast, you have a shortage and if it's less than your forecast, you have a surplus.
Surplus vs. Shortage
Knowing if you have a shortage or surplus determines the marketing strategies to implement. If you have a shortage, this means that you need to create more relationships. So you want to implement lead generation campaigns. If you have a surplus, this means that you have plenty of relationships and need to focus on retention and loyalty strategies.
As you can see, it's important to know the direction of your business, which comes from data. Otherwise you could make a critical mistake in planning and lose income that you've worked so hard to create.
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Getting Deeper into Mastering Your Marketing
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Each week I try to give as much information as I can given the space available. But if you're serious about taking your marketing to the next level, you need to take the next step. If you want to...
- develop a powerful marketing message,
- create a perception of expertise that agents clamor for,
- develop campaigns that keep your pipeline overflowing,
- build relationships that are loyal for a lifetime,
- establish yourself as a guru in your community,
- get more referrals consistently,
- make marketing less of a struggle and burden...
Then the Become an Agent Magnet Program has what you're looking for - detailed, how-to action plans on growing your business with successful relationships with agents.
Learn more about both here:
