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This is the first of a two-part series appearing in Broker Edge.
In quite possibly the most competitive brokerage environment we’ve ever seen, retention is a hot topic. And rightfully so. In fact, retention has long been a hot topic, specifically for brokerage owners, because we offer blood, sweat and tears to the agents who join us, and these agents just so happen to be the primary revenue source for a real estate brokerage.
Not to mention, many business owners across many industries would tell you it’s easier (and cheaper) to keep a current customer than to find a new one. Basic fundamentals of business. You get it.
So what’s the dirty little secret? There is nothing you can do to retain everyone. There. I said it.
Nothing you can do.
Now before you trash that comment and the rest of this content, or take too big a sigh of relief as if you are “off the hook” from the retention responsibility, let’s rewind. I specifically said there is nothing you can do to retain everyone. You need to understand this before you take meaningful action to retain as many people as possible, which you absolutely should do.
Why is this the dirty little secret? The math behind retention and attrition. The beautiful thing about math is, you can’t argue with it.
To be clear, retention and attrition are not the same. Let’s take a minute to unpack the differences and similarities between the two.
Retention
Research from the National Association of Realtors (NAR) tells us that the average real estate agent stays at a brokerage for five years. As independent contractors, agents are free to roam about the industry as they choose.
I’ve never seen an independent contractor agreement that had “lifetime” written into the terms, nor have I seen an agent sign one in blood. You can fight back against the average of course (and you should); however, over time and with the Law of Large Numbers, you cannot avoid it entirely.
Let’s be honest: when people leave, it hurts. We may feel as if we’ve failed them, we may feel betrayed, we may feel a lack of loyalty. These are real emotions. Understanding you can’t keep every agent may help you move through some of these emotions in a healthy way.
My experience tells me that 99 percent of the time, people leave for reasons much more personal to them than anything you can control, so part ways on a high note. Check your ego at the door, take the high road, learn what you can to improve and wish them well.
After all, you might still be cooperating with them from across the street, and you will be surprised how many decide to come back when they are treated with respect upon their exit. I’ve seen it happen more times than I can count.
You may own your brokerage, but you do not own your agents — so don’t act like it.
Attrition
Attrition is retention’s ugly twin. They are similar but not the same. In the real estate industry, we operate on commission-based sales, therefore the rate at which people fail or quit is automatically higher than other industries.
This can be for a number of reasons: Retirement, a change in career path, life change, or they simply didn’t find the success or fulfillment they were looking for and ultimately decide to surrender their license.
NAR stats also tell us that a mind-numbing 87 percent of Realtors get out of the business within five years. That means only 13 percent survive longer. As an owner, keep this in mind when you’re beating your head against a wall working to help agents succeed.
Don’t stop doing that, just understand that often you will want it for them more than they do. You’ve probably heard the saying that you can lead a horse to water but you can’t make it drink. I’ve heard a better one: Find thirsty horses.
As leaders, we typically want everyone to succeed and genuinely believe they can. That’s what makes us leaders. However, as business owners, we need to understand and plan for the math around the industry we operate in. That’s just good business savvy.
Ready to fight back against these averages? Good. Let’s get to work next week in part two.
To find out how to fight back, check out part two of this series, appearing in next week’s Broker Edge.