Traffic, New Contracts and Cancellations Are Leading Indicators
Written by Jonathan Smoke   
03.19.2008
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I recently had the pleasure of meeting Michael Malloy and Rob Benware, the founders of ShareYourTraffic.com. Besides being involved with startups based in Atlanta and focused on housing and homebuilding, we had many other common philosophies and ideas based on our experiences in homebuilding.

Since my aim is to produce the best available intelligence to help professionals make good decisions about housing, I love what Michael and Rob are doing with ShareYourTraffic.

ShareYourTraffic enables home builders and developers to share some simple and commonly tracked stats on a weekly basis which in turn, enables subscribers to get critical leading indicators of what’s actually happening in the market. It also helps with market comparisons.

For example, Michael passed along some key observations they are seeing in the Atlanta market as of this Monday:

  • There was a significant increase in traffic and sales from February 24 to March 2nd.
  • Traffic has remained steady, but sales have declined each week since March 2nd.
  • Cancellations continue to decline every month since December.
  • Conversion ratio (sales divided by traffic) for the last 3 months is at 7.8%, which is very positive.
  • The highest conversion ratio (11.32%) is in the $180k-$199k price range.
  • The most volume of traffic is in the $200k-$299 price range.
  • Gwinnett County has the highest overall conversion ratio.

Traffic, sales and cancellations are great leading indicators of what we will be seeing in closings, home prices, and future permits and starts months down the road.

I encourage everyone who is responsible for sales at one or more communities to check out ShareYourTraffic.com and join their network. This is intelligence and benchmarking at its best.

From my experience of gathering and analyzing intelligence for a national builder, reporting your traffic and having a context to judge your community against others will make your own weekly sales stats more realistic. Business processes that are measured and reported improve over time—it’s simple human psychology.

Yet if you are only reporting up to a sales manager, what benchmark does the sales manager have of knowing how truthful the numbers that they hear on Monday are actually what happened? When you have solid benchmarks to compare against, exceptions tend to stick out and diminish—no more sandbagging traffic in order to look great at conversions.

And since the biggest issue that healthy markets like Atlanta have now is in attracting and converting demand, this is exactly the dashboard that builders and developers need.

Give me some feedback on sharing your traffic stats by either posting comments or sending me a separate inquiry. I’d love to help Michael and Rob make this grow faster so that we all can have better visibility of sales.
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