The business management expert Peter Drucker famously said, “The purpose of a business is to create a customer.” It’s certainly hard to argue with that, but what Drucker neglected to mention is that keeping the customers you have is critical to long-term business success. In fact, it costs 7x more to obtain a new customer than it costs to keep an existing one. The lesson? Keep your customers happy and maintain your client relationships.
So, while you’re out trying to acquire quality leads and build relationships with new potential clients, remember the value of establishing relationships with your existing clients. Also, remember that a relationship is built on more than just an annual holiday greeting card. It requires work, but it also should be among the more enjoyable aspects of your work. After all, ours is a relationship business and getting joy from connecting with people and treating them well is one of our greatest side benefits.
The value of repeat customers
In our world, customer relationships and the services we provide are a bit different than, say, Amazon or Zappos. We are not in a high volume transaction business, but important dynamics begin to appear when we have happy customers and maintain client relationships.
A great experience will likely reward us with repeat business, and even if we only get a customer to buy or sell a home with us twice, it ultimately delivers to us additional revenue for a far lower cost than finding a new customer. Note that 25% of real estate agents generate more than 50% of their business from repeat clients; across all real estate transactions, which accounts for 12% of all residential real estate volume, or $56 billion. Considering your commission on a home, this is a significant statistic. It also reinforces the fact that you had to spend far less to actually acquire the lead and nurture it through the customer journey, so in reality, the commission is even more valuable.
It’s also important to recognize that as buyers age, their purchase price increases, so you almost automatically are looking at higher commissions with repeat customers. The NAR points out that the price increase of 15% for buyers from 37 to 51 years of age, and 21% for those 71 to 91.
The NAR also ran a survey and discovered that a whopping 89% of buyers would use their agent again. This is important for you to note because it tells us that customers want to engage and maintain relationships. That same survey also found that 42% of buyers were referred to their Realtor® through an existing client relationship. The lesson is, if you DON’T make the effort to have that kind of relationship, a customer is almost invariably going to seek it elsewhere.
How to nurture your relationships
Certainly, there are tactics to being effective at relationship maintenance, but the first step is to ensure you are genuine with your intentions. There’s nothing worse than a phony email or call where the client knows you’re just checking them off a to-do list.
Then again, it’s not scalable to have lunch or coffee regularly with each and every client. There are, however, a variety of ways you can keep yourself front-and-center with your clients, and maintain open lines of communication:
There are business benefits to staying connected with your clients. In fact, because it’s easier and cheaper to work with existing customers than to create new ones, doing this should be a key part of your marketing strategy. But don’t lose sight of the fact that the real test of a solid, trusted Realtor is someone who actually cares about the people he or she works with, and finds ways to demonstrate that continuously.