You’ve built or are building your client list and now I’d like to introduce you to the “WHY” a client list is so important. It really is the boundary between a real estate hobby and a real estate business.
Successful brokers realize that their job over the life of their brokerage career is to “Collect and Compound” relationships. What that means is that they know that the key to their success is finding and taking good care of their clients and identifying influencers that will act as advocates for their business. As you build a strong database, you are building salespeople for your business. A strong database of happy clients is the only thing that has equity, the only thing that has value that you can sell at some point. Building a relationship-based business is not for the faint of heart. It takes vision. It takes time. It takes patience. But the future results are well worth the time.
So, why should we focus on building a relationship-based business vs. a transactional business? Let’s look at the numbers.
Most agents are talented and provide a good experience for clients and, in fact, based on a recent NAR survey, 85% of buyers and 88% of sellers would recommend or use their agent again. Those are impressive numbers but only 9% of agents take the time to stay in touch with their clients post closing. 91% surveyed never heard from their broker again after the closing. This resulted in only 25% using a broker more than 1 time. So, what this says to me is that most brokers provide good service just so they can get the transaction across the finish line and get paid. They don’t realize that the relationship with the client really needs to “start” at the closing table. Because there is no follow up post closing, 60-65% of happy clients go a different direction, to a different agent after the initial transaction. This is such a waste of talent and hard work.
Here’s some more data:
Per NAR 2019 survey, 67% of all home seller used a broker that was referred to them or used an agent they had used in the past. This percentage has not moved much at all over the last 10 years. 5% or less use technology to search, locate and vet a broker which is part of the other 33% who met their agent through some form of direct response marketing like open house, direct mail, contact via phone, referred by another agent, called off sign or walked into a brokerage, etc. (We’ll get to lead generation in another call). This 67% is an average of all age groups. Most age groups spanning those in their 20s, 30s, 40s, etc. are at 70% or higher. The 55%-65% age group is 61%, pulling the average down to 67%. All categories below age 54 are higher than 70%. These stats prove, year in and year out, that the best use of a broker’s time is to create and cultivate relationships consistently over the long haul.
So, why is it that only 9% of brokers stay in touch? I think it is for a couple of reasons:
- They just have never been taught the importance of building a relationship-based business. That was me pre-2008.
- They have never been shown the “How” or have taken the time to learn and build processes.
- They are lazy. They want the quick money, not understanding that the most enjoyable and profitable business is a relationship-based business.
My motivation with Take Flight is to make sure that you’ve got #1 and #2 covered. #3 is all you. So, what is a referral? A referral is when you are connected with a potential new client by someone (referral source) and they say that the potential new client expressed a need (problem, pain point) they know that you can help them solve. Every month that you do not “touch” your client list, you lose 10% "TOP OF MIND” marketing position. Top of Mind awareness is defined as "The first brand that comes to mind when a customer is asked an unprompted question about a category. ... At the market level, top-of-mind awareness is more often defined as the "most remembered" or "most recalled" brand names.
I think it is important for me show you the numbers and just how drastic they are in the differences in how agents manage their businesses. I can tell you for a fact, that the top producers you see in the market, 90% of their business is coming from those that “KNOW THEM, LIKE THEM and TRUST THEM” and normally are those that have done business with them.
Next week, we’ll cover the importance of creating systems, processes and reminders built to stay “Top of Mind” with your past clients. We’ll discuss different ways you can CONTACT your TOP 100 while still staying authentic.
Your homework for the week is that I want you to download a book I just discovered on the Ninja Selling Podcast called “Generating Business Referrals without Asking” written by Stacey Brown Randall. It’s a quick listen. I listened to it yesterday morning in less than 3 hours. It 100% sums up the mindset needed to build a relationship-based business.
