A strategic, focused and well-executed marketing plan can carry you through any market.  In a down market, as we are experiencing now, it can be the difference between success and failure.  Here are the key steps to take to ensure success next year:

1. Evaluate Your 2007 Activities.  List all of your 2007 marketing and lead generation activities on a piece of paper.  This list should include every type of marketing you are doing, including  cold calling, contacting past clients, print ads, direct mailings, purchasing leads, targeting FSBOs, walking the neighborhoods, spending time in the office handling call ins and walk ins, and anything else you’ve done to generate business.

Next to each activity, indicate the following: 
 Target audience (your town or niche)
 Size of target market (number of consumers)
 Money spent
 Time spent
 Leads generated
 Relationships established (consumers you are regularly in touch with)
 Clients obtained (someone under contract)
 Deals closed

2. Determine Your Return on Investment (ROI).  The next step is to determine which activities provided you the best return on investment.  First, pick an hourly rate for your time (I suggest $40/hour).  For each activity, multiply the time spent by your hourly rate.  Add this total to all other costs associated with the activity.  Then divide the dollar amount by each of the following outcomes:  Leads, relationships, clients and deals.  This will give you a cost for each outcome.  Rank the activities in order, with the lowest cost per outcome at the top.

For example, you may have spent 200 hours and $20,000 on print ads in the local newspaper in 2007.  The total cost for these ads is $28,000 (200 hours x $40/hour = $8,000 + $20,000 ad cost = $28,000 total). 

Perhaps you generated 5,000 leads, 500 relationships and 20 transactions from this activity.  Your cost per outcome would be: 
 $5.60 per lead ($28,000 ÷ 5,000 leads = $5.60)
 $56 per relationship ($28,000 ÷ 500 relationships = $56)
 $1,400 per transaction ($28,000 ÷ 20 transactions = $1,400)

3. Analyze. Consider each activity on the list in light of the outcomes and costs to generate them.  Was it wise to spend $28,000 to generate 20 transactions?  How valuable will the 500 relationships be to you over the next 3-5 years?  When compared, which activities were most successful?  Were there other reasons you chose a specific activity?  If you change how you execute on a given activity, will it produce a better ROI? 

4. Eliminate the Bottom Half.  Rank all activities by their return on investment.  Eliminate the bottom half of activities you identified.  No sacred cows, no emotional attachments.  Don’t repeat those that had too high of a cost (time and money) for the results they delivered.  Track, analyze, make decisions and move forward.

Well, that is the first step.  Is this how you approach your business planning?  What else should a real estate professional do to analyze their past success and set themselves up for next year?

I have more suggestions regarding building your 2008 plan, but will save those for next week’s blog.

Please share your thoughts and comments.