So, as far as I understand it, this real estate game is about getting customers, servicing them, getting paid, and getting more customers.
I once prowled around to see how much of my time I should spend getting customers (as opposed to servicing them and getting paid) and I was told "8 hours a week." That assumes I work a 40-hour week, which I don’t, but I’m willing to extrapolate it as a rule of thumb that I’m supposed to be spending 20 percent of my work time acquiring customers. I have this sandwiched in my mental guidelines next to "25 percent of your income should be spent on marketing and advertising" — though I am still trying to figure out whether better clothes are allowed to count towards that 25 percent.
Now obviously, one wants to work as efficiently as possible, which is one reason why real estate coaches propound the "circle of influence" theory — you want to troll for clients among people who already know you, because presumably they are people with whom you have already established some credibility.
But another way to do this is simply to retain the customers that you’ve already met. In New York, where two-thirds of the households rent, this has given rise to the phrase, "Your renters grow up to be your buyers, and your buyers grow up to be your sellers."
One of the overarching things I am trying to figure out this year about my business is what my retention percentages are, so I know how to allocate my time as far as picking up new customers versus babying old ones.
Of course, since I’m a relative newbie, my sample sizes are pretty small. Four of my first five deals were renters, so I’ve tried to stay close to those customers. (My first seller, alas, won’t be a repeater because she moved out of state). But it’s hard; three of those customers were connected to the same tech company, and they’re boys-night-out kind of guys. And I never have been. When I was 20, I was willing to go for a pitcher and a pizza for the sake of being social; now that I’m 40, well, I don’t do it nearly often enough.
Of course sometimes you’re just simpatico with one of your clients, and then it’s easy. That’s what happened to me with the fourth of these four renters — the client is actually two clients, an unmarried couple. I think they’ll get married, and in the meantime it’s fun watching them be young and in love. They’re pretty artsy and I’m pretty artsy, so I end up chatting with them about something every few months or so.
But with the techies, I just learned yesterday that I completely struck out. Two of them have served their time in New York and are moving back out of state, which I knew. However, the third — who I recognized as the prospect most likely to sink down roots here — is staying. I had always predicted that he would, and dutifully social-networked to him, and went to his charity events, and sent a little Christmas gift — only to find out that he’s recently moved without using me.
Ray Silverstein, who is the sales columnist at Entrepreneur.com, suggests that the yardstick for retaining a customer is five or six contacts. So maybe it’s possible that I had only four, and fell short of the capture range; it’s also possible that this renter met a Realtor of the go-out-with-the-boys school, who was able to make repeated social contact more effortlessly than I did.
I’m going to work on my — I’m not sure what to call it — lack of gregariousness, I guess, just to keep it from becoming a future problem. Also, as I go forward, I’ll know to account for it, that I shouldn’t expect too high a retention rate among my old customers.
So that raises the question, do you know what your retention rate is for your old customers, or do you just keep them around naturally without thinking about it?
Of course, performance counts for something too. We all like to believe that if we’re good, people will come back to us. And in my first five deals, that happened once in a sidewise way. In the course of doing one of my rental deals I negotiated directly with the owner, and now that it’s up for renewal I’ve got the listing.
So maybe it’s goosing my stats a little, but I’ll call my early customer retention rate 20 percent. I’ll report back to let you know whether experience makes it rise.
Alison Rogers is a licensed salesperson and author of "Diary of a Real Estate Rookie."
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