Making sense of client loyalty research for use in real estate can be tricky – so let me save you the effort.
A fundamental difficulty in transferring key learnings from other industries is confusion about what sales actually means. For a bank, a product sale is fairly obvious – it covers everything from a credit card to a home loan.
In real estate, most people equate sales with selling a home. This overlooks the fact that your business sells multiple products, and selling a home is the least important of these:
- You sell yourself every time you win a listing. Most sales training is focused on this sale, not the house sale, and for good reason
- Selling a property creates two outcomes – delivering on the earlier promise you made at listing, and also creating a new client in the purchaser
- Your property management department makes sales when it lists
- And similarly, the property management department makes sales when it rents a property out
- Lastly, the list of ancillary sales across your whole agency might include mortgage broking, insurances, maintenance and safety services, and restaurant recommendations
So why is it that most homebuyers, when asked 12 months after their purchase, cannot name the agent from whom they purchased? It’s a consequence of transaction-selling, and a belief that client loyalty is too fickly for real estate clients.
But What If You Want Client Loyalty?
The benefits of client loyalty are hard to over-emphasise, as they impact you both financially and, via easier-to-win listings and stable long-term managements, culturally. Businesses in general improve loyalty by increasing the average number of products their clients purchase. At Shirlaws, we call that their “loyalty factor”. The more products a client purchases, the higher their loyalty factor.
Research shows that if you can get a new customer to buy from you once, then the probability of them buying from you again increases with each purchase. After the first successful purchase, there is a 50% change of them buying again from you rather than choosing someone else. That’s like tossing a coin – and it’s why so many agents are devastated when they see previous buyers list to sell with a competitor. Sorry folks – that one connection, selling them the house, only entitled you to a coin toss next time.
This increases to 70% with the second purchase; 85% with the third; and if you can supply four separate services you have a “client for life” with a 95% chance they’ll keep buying from you. Think about a client who bought their home from you (1), then an investment property (2) that your broker helped finance (3) and your office manages (4). If you treat them well, who do you think they will call the day they decide to sell and move?
A strategy to increase your loyalty factor begins by identifying two things:
- The number of different products you have available
- The number of products your clients currently buy
What different products do you currently have available? Remember, they need to be distinct products that your clients recognise – buying a house is one product, it doesn’t matter how many houses you have to sell.
Use my list from above if you need some prompts. If you have less than four products, you know right away that you won’t achieve a loyalty factor of 4. Now look at your client base. How many have bought just one product and how many have bought 2, 3, or 4? List them out – either by name, if you have a boutique client base, or by category if you want to generalise a larger client base.
What is your current loyalty factor? Do most customer categories purchase one product or service from your business? Two? More? You are now in a position to design your loyalty strategy. The most common realisation from this exercise is that your sales team and property management department don’t work together enough – investment property purchasers go elsewhere for management, and managed properties get listed by the agency down the road.
You might also now see the benefit in all those extra products – services such as mortgage broking and insurance that you may have ignored or discarded as not worth the effort.
How can you encourage your existing clients to purchase additional products? Here are some tips:
- Awareness: Sometimes your current clients may not be aware of all the products you have on offer. What marketing activities – for example, a rental appraisal from your management team on every listing – can you do to increase awareness of each product and its specific value? What about ongoing marketing activities, so you’re not forgotten?
- Packaging: Perhaps you could combine some of your products in an offer (limited time or ongoing) that encourages your clients to purchase more of them.
- Client Induction: Often the best time to build loyalty with a client is immediately after they make (and appreciate) their first purchase. Do you consistently communicate with your new clients about the range of products you have on offer? After all, if they don’t know, they won’t buy.
- Value your staff: This may not seem immediately linked, but it is. If you value your staff and demonstrate to them how valued they are, then they will be more likely to demonstrate value to your clients. And it’s through feeling values that your clients will make future purchases and increase your overall loyalty factor.
You don’t have to deliver all the products yourself
Here’s a key to fast-tracking loyalty – you don’t necessarily have to deliver all of the products you offer. Forming partnerships, alliances and business relationships – formalised or not – can allow you to build purchasing loyalty without needing to build out your delivery skills.
One of the simplest loyalty-building opportunities is recommending (or even gifting as a thank you) dinner at a great local restaurant. You don’t need to make the meal or wash the dishes, but the client connects with you energetically every time they enjoy that pizza or san choy bow.
If you work out how you can sell these additional products to your existing client base, your loyalty factor will build. And next time they have a real estate need, they will be more likely to buy from you again.