Answer:

Your database, while being your key to survival and success, can also become an out of control monster.  I have met some agents that brag about the many thousands of names they have in their database.  It makes me wonder how many of them they even know, let alone have a relationship with.  Contacts are so valuable in this business that we like to hoard them.  The side effect of this is that a database can quickly grow into an unmanageable mess of unfamiliar names, outdated addresses, and a constant reminder of all the people you are NOT doing business with.  Learning to create, manage, and trim your database is vital to your survival.

Years of trial and error have led me to the following system.  There are basically four groups of people you will want to keep track of.  I believe a computer and some good software to be an absolute vital part of this process.  In the appendix of this book you will find additional information and some product recommendations to help. The four categories in your database are:

• People You Know
• People You Do Business With
• Past Clients
• Your Network

People You Know

These are people that are not necessarily business relationships, but are valuable relationships to you none-the-less.  Common in this group are family, friends, fellow church members, community service group members, etc.  These same people may pop up in some of the other categories, but if they are first and foremost personal relationships, they belong here.

People You Do Business With:

This is not the place for current clients that you are helping to buy or sell a property as the name might suggest.  The people that will end up in this category are those people that assist you in your business… other real estate agents, lenders, appraiser, home inspectors, title officers, pest inspectors, etc.  Again, some of these people may end up in other categories as well.

Past Clients:

Just as the name suggests, these are all of the people you have helped buy or sell a home.  In a perfect world, these people will all be part of your Network, but for many reasons, may not be. 

Your Network:

This is where you will eat, sleep, and breathe in your business.  The people in your Network are your unpaid sales team.  They are the ones that are out there referring you to their friends and neighbors, talking you up at social events, and helping you build your business.  In return, these are the people you invest the most time and effort in.  These are the people that you like, and the people that like you.  This should be a very select group of handpicked people.  Experience has taught me that any number over about 200 is simply too big to focus on.  In fact, closer to 100 is optimal.  Do not let this group get too big or you will not be able to serve any of them to the level that you will need to.  As you begin to cull this group and move people out of it, it is entirely appropriate to move them or leave them in one or more of the other categories.  I have had many clients that move in and out of my Network as their situations and our relationship changes over time.