One of the most common goals adopted almost universally by real estate brokerages is also the industry’s most elusive one: creating customers for life. For decades, broker-owners have invested millions, if not billions of dollars, in technology and processes designed to help them build a loyal client base.
However, research tells us that the overall success of keeping a customer for life in real estate using traditional methods has been very challenging.
Research by the National Association of Realtors gives us some insight into the dilemma that brokerages face. The just released 2015 version of Profile of Home Buyers and Sellers says that nearly eight in 10 buyers found their real estate agent to be a useful information source.
Moreover, 88 percent of homebuyers said they would use their agent again or recommend their agent to others.
Based on this statistic alone, one would think that the customer for life quest is simple and nearly automatic. But additional research paints a different picture: 59 percent of recent homebuyers were “very satisfied” with their recent homebuying process.
That means that two out of every five homebuyers were less than “very satisfied.” Then there is this, an NAR statistic not included in this year’s profile but reported in last year’s study: Only 22 percent of homebuyers used the agent they worked with previously to buy or sell another home.
That’s a statistic that tells us there is a lot of opportunity for improvement. In fact, something is clearly amiss in attempting to achieve the customer for life goal.
Taking a closer look at the behavior of agents, who are independent contractors, gives us clues as to why this might be the case.
Agents and their client lists
Walk into nearly any real estate agent meeting and ask this question: Raise your hand if you have been in direct contact with every one of your past clients and prospects at least once in the last 30 days.
The likely result is only a few hands will make it in the air. A 2014 customer relationship management (CRM) buyer study by Software Advice shows that a majority of real estate agents used basic methods to stay in touch with their spheres primarily spreadsheets, email clients and paper.
The NAR found similar results. Its 2014 member profile study showed 44 percent of its members “rarely or never use a CRM.” The reality is that many, if not most, agents struggle to maintain ongoing contact with all of their past clients.
Studies also show that two things often get in the way of agents connecting with their clients on a consistent basis: their work cycle and a lack of comfort using a CRM.
A 2015 CRM survey by RealTrends/Boston Logic found that nearly one in three brokerages are unsure which CRM is right for them, and 13 percent did not know where to start.
Regarding the first issue, many agents can get stuck in a work cycle that prevents them from staying in touch with their past clients on a regular and meaningful basis.
Understandably, a typical agent work cycle is to prospect and market to feed one’s pipeline. Once an agent’s business pipeline is active, the agent shifts into their transaction cycle and their prospecting and marketing activities wane.
One in five brokers surveyed by Real Trends/Boston Logic ironically said they were “too busy” or it was “too time consuming” to use a CRM.
This might help explain why monthly newsletters to clients become quarterly or simply never make it in the mail. These agents are focusing on their current transactions — the source of their immediate income — not on future deals and future income.
Another challenge most agents face is the organization and maintenance of their lists of clients and prospects. Again, walk into any real estate office, go around to each agent and ask him or her to show you how they manage their client lists.
Many agents have lists in multiple places and various formats: in their email, on a spreadsheet or even inside a file folder that contains their holiday card labels, as the Software Advice study notes.
Agents struggle with maintaining a basic CRM, even if their broker provides them with a CRM solution. Because agents are independent contractors, they might simply resist entering their complete list of past clients and prospects because they don’t want to lose control over their clients’ contact information.
Solving the customer for life problem
Even when agents have their act together, have a comprehensive CRM that includes all their clients and prospects, are using a stay-in-touch marketing program to reach all of these past clients multiple times a year and have delivered to the vast majority of their customers an exceptional buying or selling experience — most still fail to achieve that customer for life goal among the majority of the folks on their lists. Why?
We believe the real problem with gaining a customer for life is that most agents are failing to provide past clients and prospects with something of real value and that is relevant to their interests after the transaction is done.
Sending out recipe cards or monthly newsletters that have stock articles with little relevance to their daily lives won’t help lock down a customer for life.
The key is to give clients and prospects something relevant they want, can’t get elsewhere and keeps their interest in their agent as the source of this information well after they’ve completed their transaction.
And, most importantly it needs to be easy to use and automatic so that it accommodates the work cycle of busy agents.
Until agents and brokers realize that these are the missing pieces of the formula to gaining customers for life, the industry will be stuck with the conundrum of 88 percent saying they will use an agent again and only 22 percent doing it.
Randall Kaplan is CEO of Listingbook LLC.