Winning the right to represent a commercial real estate client is challenging and hard work. Typically, through the process, most professionals form a relationship with their clients. However, not all agents work to maintain those relationships and often times find themselves replaced on the next deal. What is the value of maintaining those relationships?
[Tweet “There is great value in maintaining relationships with your brokerage client.”]
Suppose you are performing a tenant representation assignment with a $10,000 commission for a 5-year deal. In five years or sooner, there is a good possibility that there will be a renewal, renegotiation or relocation. If you represent your client during any subsequent event, there may be another $10,000 potential fee, if not more, in your future.
What does it mean to you today and how do you value your efforts to preserve, protect and maintain the right to this future representation and fee? One way to evaluate this is as you would any investment property deal. Use a simple discount rate and determine the net present value of a $10,000 fee in 60 months. Pick whatever discount rate you feel is reasonable. The value will equate to something less than $2,000 per year. Now, ask yourself what steps it will take each year to maintain this?
[Tweet “You can evaluate your client retention efforts as any investment property deal. Here’s how…”]
Let’s assume your current account maintenance strategy includes past client calls quarterly (at 15 min per call 4x per year= 1 hour), monthly digital communications (5 minutes to add to your digital drip campaign) and perhaps one face-to-face meeting (1 hour). If my calculations are correct, that correlates to $2,000 for a little over 2 hours of work.
Now think about the leveraging effect of case studies, referrals, testimonials and relationship bridging that comes from maintaining current positive relationships with your clients and add that to the value equation!
Lastly, what if you valued your business this way on an ongoing basis? Each account not only attributes to an income goal for the year, but adds future value that is calculated on an ongoing basis; thus creating a metric for seeing the compounding growth in your business. Perhaps this overall valuation perceptive would illustrate the impact of a relationship orientation vs. transaction orientation to your business and lead the way to sustainable income and growth.
[Tweet “Having an effective client retention strategy can lead the way to sustainable income and growth.”]
