Monday, November 2, 2009

Close Ratio

As of today's writing, my close ratio on renting my apartment is 0. I have had 16 showings and 0 closes.

My contractor is amazed. He says that all his apartments rent on the first showing. I believe he thinks I am at fault in some way. That somehow I'm less enthusiastic than he is or I'm not pointing out selling features. Although this hurts my ego a bit, it could be true. What also could be true is that this is a tougher economy. He currently does not have any apartments for rent, so he's not experiencing what I'm experiencing. Renters seem to either 1) want to stay where they are or 2) get a very low rent even though the apartment has many upgrades they can't easily find. and 3) There are many apartments available for rent in this market. Some are comparable and some are not.

My Realtor seems to think it's because she does not have an exclusive listing on the apartment. Could be true. She sent me a very thoughtful email on all the benefits of an exclusive listing. I'll be open to next time but this time I had done so much marketing on my own I can't forgo it in anticipation that an exclusive listing will bring me a renter.

At this point, we don't know because we don't have any closes. Our marketing analysis to this point only shows us cost per lead.

My Realtor - 5 leads - $0 (no cost is incurred until there is a close)

ChicagoReader - 5 leads over a 3 week period. $171 ($57 a week) + $70 1 rental application (minus $70 rental application fee was charged back to potential renter) Cost per lead = $34.20.

CraigsList - 0 leads/$0

CraigsList Garage - 3 leads/$0

FreePress - 0 leads/$64 (ran the ad for 1 week. We are $64 in the hole here.)

Posted Flyers- 0 leads/$0

Apt Ppl - 2 leads/$0 (you only pay when they close)

Chgo Apt Finders - 1 lead/$0 (you only pay when you close)

Apt Exchange - 0 leads/$0

At this point, we cannot analyze the close ratio. Our cost per lead analysis says - keep trying creative things with Craigslist, the Realtor is doing great, we need to learn more here about why that is the case, the Chicago Reader seems to produce results, the apartment agencies don't seem to produce as much as you think they would, we need to ask more questions here, the FreePress doesn't seem to be worth the investment, so that's been dropped and lastly posting flyers doesn't seem to produce a thing.

In sales, leads are important but sales are more important. Sure you wants lots of leads but if your close ratio is down, who cares? Getting 10 leads and closing 5 is a 50% close ratio, getting 100 leads and closing 5 is a 5% close ratio. What you want to do is look at the 50% close ratio and increase it. In addition, you want to look at the 5% close ratio and increase it.

It's tempting to confuse activity with productivity. Don't fall into the trap.

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