How to Make Revenue-Generating Business Decisions
In a recent CommissionTrac blog post, Rethink CEO Vijay Mehra and CRE Holdings Chairman Daniel Levison posed the following question:
“Do you really know where your revenue is coming from?”
It’s a simple question, but one many don’t give the attention it deserves.
The article went on to explain that commercial real estate (CRE) professionals too often rely on “gut feel” to evaluate the effectiveness of their firm’s revenue streams.
“You may know you make more money off leasing efforts than sales efforts, or most of your individual or company’s commissions come from tenant representation vs landlord representation. But do you REALLY know the details?”
Without objective data to validate your assumptions, the answer is no.
Fortunately, leveraging the integration between Rethink and CommissionTrac, you can track, analyze, and connect the dots between critical front-office and back-office data, leading to a greater understanding of how your firm generates revenue.
Here’s how it works:
Rethink — the client relationship management (CRM) and PropTech solution purpose-built for CRE — provides insight into your dealmaking processes and performance.
And CommissionTrac’s back-office solution provides intelligence on your accounting transactions.
Together, they give you a full-picture view of your revenue — from prospecting to cash flow.
Get a First-Hand Look at How Rethink and CommissionTrac Can Help Your Firm Make Revenue-Generating Business Decisions
Below, we’ll explain how that combined insight can help your firm make smarter decisions and boost revenue.
Revenue-driven resource allocation
The biggest benefit of the integration between Rethink and CommissionTrac is that it provides users with a better understanding of which activities generate the most revenue.
And that comes from the insight it provides into your revenue streams.
According to Corporate Finance Institute, revenue streams are:
“The various sources from which a business earns money from the sale of goods or provision of services. The types of revenue that a business records on its accounts depend on the types of activities by the business.”
And understanding which revenue streams bring in the most money can help you make strategic decisions that drive growth — as leaders at Northpoint Development can attest.
“We’ve had off-the-charts growth year over year,” said Sara Wergin, Director of Self-Storage Sourcing at Northpoint. “That’s partially because we’re very reflective on what we’ve done in years past.”
Understanding which activities drive revenue allows firms like Northpoint to:
- Invest more resources into proven activities.
- Eliminate investments in activities that don’t impact revenue.
- Or invest resources in activities that don’t currently drive revenue, but have the potential to drive revenue in the future.
We recommend CRE leaders evaluate their firms’ revenue streams by:
- Deal type
Evaluating revenue streams by geography
If your firm operates in multiple markets, it’s important to determine how much revenue each market generates.
Understanding how much revenue you generate in each city, state, or region can help you invest more resources into the locations that are most likely to generate returns.
Alternatively, you can also identify the markets in which your firm is struggling to gain traction and strategically ramp up marketing and business development efforts in those areas.
Evaluating revenue streams by industry
Another critical area to consider is revenue performance by industry.
Do you generate most of your money offering services in retail, industrial, office, multifamily, or mixed use?
Evaluating revenue streams by deal type
You’ll also want to consider how you generate revenue by deal type.
For example, you might close more deals when you offer tenant representation services than you do when you offer landlord representation services.
Or you might close more deals when you offer seller representation services than you do when you offer buyer representation services.
Once you determine which deal types generate the most revenue, you can use that information to make more informed broker hiring decisions.
Evaluating revenue streams by broker
Finally, you’ll want to determine which brokers are generating the most revenue.
This can help you determine which brokers need additional resources or training to help them boost their productivity.
The importance of data integrity
When it comes to analyzing revenue streams, you can’t overestimate the importance of data integrity.
According to Business.com:
“Having precise, reputable data available to examine when making crucial, short or long-term business choices is an important tool.”
And a single incorrect data point can drastically alter your analyses, leading you to base critical business decisions off inaccurate information.
But for many firms, obtaining accurate revenue data is a challenge.
Part of the problem is how CRE firms store information. In most cases, they rely on multiple spreadsheets, emails, and paper notes to document key data.
That opens them up to potential errors.
According to Digital Guardian, “data integrity can be compromised in a variety of ways,” including:
- Human error
- Transfer errors
Fortunately, the integration between Rethink and CommissionTrac greatly reduces the risks of these errors. Here’s how:
First, using these solutions eliminates the need to track information through multiple spreadsheets, emails, and paper notes, where information is easy to lose and hard to keep up to date.
Second, the integration ensures users only need to document critical data once, reducing the chances of unintended human error.
Finally, the data transfer is automated, ensuring information makes it from one system to the next without issue.
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