Dunbar's Database

How many people are you friends with? I bet when you got into real estate someone gave you the advice of getting a list of people together to start your database. And I bet you put together a list of around 150 people.

This is the Dunbar principle. It is “the number of people you would not feel embarrassed about joining uninvited for a drink if you happened to bump into them in a bar.” (Thanks for the definition Wikipedia). For most of us, if we would not feel embarrassed joining someone uninvited that means they are in our database.

Gary Keller talks about getting a 10% conversation ratio from your database. So your 150 people turn into 15 closings. How do you compare? How many are in your database and how many did you close? Do the math, did you get a 10% conversion ratio last year?

There is a lot you can do to improve that ratio. I don’t want to talk about that, yet. I want to talk about the other side of the equation: could you add more to the database and keep that same ratio?

Check out these ratios:

• 1% database to close means you need to add 100 people for 1 more closing

• 2% is 50 people for 1 closing

• 3% is about 33 people per closing

• 4% is 25 people per closing

• 5% is 20

• 6% is 17

• 7% is 14ish

• 8% is 12.5

• 9% is 11ish

So if you figure you were at a 5% ratio last year, for example. That means if you can go add 20 people to your database to 1 more closing. Then we can work on also moving that 5% to 10% which would mean that you added 2 closings.

(By the way, if you are below 4%, reply to this email, and let’s quickly build a plan to get above that. Your business will thank you.)

The below chart is from the book Friends (nothing to do with the TV show) and it shows, numerically, how most agents run their database and why they hit a ceiling.

This gives me some questions…

How good of friends do you need to be with someone to help them buy/sell or get a referral? Can they be Acquaintances?

Could I be seen as a Friend, Good Friend, or Best Friend by someone but not have them the same on my list? (My 4-year-old’s best friend is our 60-year-old neighbor. I am pretty sure my 4-year-old is not his best friend but don’t tell him that )

I think you don’t need to be friends, but you should have a relationship.

For example, how is your relationship with your CPA? I bet you talk a few times a year and it’s all business. How about your dentist? You probably talk twice a year (or, really, your dentist talks while you grunt answers while he pokes around your teeth).

I have referred my CPA to multiple people but I don’t know much about his personal life. I am ok with that because we have a professional relationship.

Here are some categories that are professional relationships that might not be in your database (listed from best to worst):

• VIP Clients (bought/sold multiple times and/or referred you)

• Past Clients (bought/sold with you)

• Referrers (send you referrals but don’t do business with you)

• Potential clients (met with you but didn’t end up buying/selling yet)

• M.I.A. Clients (you met them and then they went missing)

• Lost Clients (you met them and they bought/sold with someone else)

• Leads (you have a name but you don’t even know if they are a real person or not)

How many people could you add to your database if you made sure everyone on this above list was in your database as well? Then can you run your same marketing plan on them to get the same conversion ratio you got last year?

Go and bulk up that database to add more closings to your business this year.