Why Relationship Building is so Important Copy
According to many research documents, consumers today are less loyal than in the past due to six main factors:-
- The abundance of choice. There are many real estate agents in the same local area with various commission rates ranging from 1% to 3%, and higher.
- The availability of information. The digital revolution of the market place allows consumers to have access to more information than ever before, including other agent in your local area.
- Consumers often ask ‘What have you done for me lately?’ or ‘What will you do for me that’s different from all the other agents I could do business with?’
- Most products and services appear similar – nothing stands out. They will be asking ‘how is your service different from any other agent?’
- Financial problems experienced by a consumer will reduce their loyalty as they revert to buying low cost services.
- Time scarcity. That is, not enough time to be loyal.
Relationship marketing programs or loyalty programs are strategies that can be used to foster a commitment to an agency’s services. At its heart, relationship marketing is all about building trust and keeping promises.
The aim of relationship marketing is to create strong, lasting relationships with the emphasis being on developing long-term bonds with consumers.
This is achieved by ensuring consumers feel good about how the company interacts and does business with them and by giving clients some kind of personal connection to the business.
There are several key elements that make up an effective relationship marketing program:
- Fostering on-going communication with clients.
- Developing loyalty by building in extras like upgrades and other perks. In property management for example, this could be a report on the history of the landlord’s property – when it was first built, who the builder was, who has purchased it since and when and for how much, when (if) it was renovated etc.; or landlord insurance for the first year of bringing their management over to you (landlord insurance is $250 – $300 per annum).
- Alternatively, it might be a reduction in management fees when it’s more than one property, or when they refer another property for management that signs up with you.
- Establishing a sense of belonging by providing a ‘club membership’ program. In real estate this could be belonging to an ‘investor club’ where once a month a speaker is invited to present information on the property investment market. The advantage to the speakers is that it’s ‘free marketing’. The advantage to the agency is multiple, e.g.
- Opportunity to sell properties for investment purposes to your data base of tenants, prospective clients, and existing clients.
- Develop relationships with other industry specialists, e.g. finance brokers, accountants, and solicitors, who are invited to present at your information evenings and from whom clients can be referred to you.
- Achievement of on-going communication and relationship building with your clients and tenants, who, after all, are prospective purchasers.
A real relationship marketing program is more than the use of database marketing strategies to better target clients and consumers. Your client must feel that he / she has received something for being part of the relationship.
The internet has proven to be an inexpensive, efficient and more effective way to extend consumer services. However, this is only true if you gain permission to send clients targeted emails (known as permission marketing).
This strategy loses its effectiveness, and in fact annoys clients, if they are sent emails with the option to ‘click here to opt out’ without first asking their permission.
Although direct marketing, sales promotions, and general advertising may be used as part of a relationship marketing strategy, they do not provide a point of difference between the services you provide and the services provided by every other real estate agent.
Your success in business will be your ‘Value Proposition’ or point of difference from every other business owner / agency, particularly in your local area.
Client Value, Satisfaction, and Retention
Savvy marketers realise that in order to outperform competitors they must achieve the full profit potential from every client. They make the client the core of the company’s culture, across all departments and functions, and ensure that each employee views any exchange with a client as part of a client relationship, not a transaction.
The three drivers of successful relationships between an agent marketing a property and the client (landlord or vendor) and customer (tenant or purchaser) are:-
- Client / customer value
- High levels of client / customer satisfaction
- And developing a structure for customer retention.
Providing value
An important component of every agency’s business plan should be developing a value proposition (point of difference or Unique Selling Point (USP)) as it is the core of successful positioning.
For example, Dell’s value proposition for personal computers consist of customised systems quickly assembled and sold at economical prices.
What is your point of difference? How do you stand out above the crowd of agents in the marketplace?
Client / Customer satisfaction
Client / customer satisfaction is the individual’s perception of the performance of the service provided by the agent in relation to his / her expectations. It follows that client dissatisfaction occurs when the experience and service provided falls below expectations.
It is therefore very important that an agent establishes client / customer expectations and ensures that those expectations can be and are met. If they cannot be met, an agent needs to re-align expectations to ensure the risk of dissatisfaction is minimised.
Client / Customer Retention
Providing value to customers and clients on a continual and more effective basis than competitors is to achieve an overall objective of client satisfaction and retention.
In almost all businesses, including real estate, it is more expensive to acquire new clients / customers than to keep existing ones. Therefore the strategy of customer / client retention needs to ensure it is in the best interest of clients and customers to stay with the agency rather than switch to another agency.
It goes without saying that even small reductions in customer defections produce significant increases in profits for a number of reasons:
- Loyal customers will use more of your services e.g. a purchaser can also become a landlord.
- Loyal clients / customers are less price sensitive and pay less attention to competitors’ advertising.
- Servicing existing customers who are familiar and comfortable with the agency’s offerings and processes is cheaper. For example, a tenant is a prospective future purchaser.
- Loyal clients / customers spread positive word of mouth and refer other clients / customers.
As an agency grows it becomes increasingly more difficult to retain clients and customers by developing on-going relationships with an increasing database.
Today the internet is an ideal tool for tailoring products and services to the specific needs of consumers, offering them more value through increased client intimacy.
Another strategy is to divide the database according to the likelihood of the relationship eventuating in business:
A-grade clients: e.g. clients who are ready to sell their property now or are looking to purchase now.
B-grade clients: e.g. clients who want to sell their property in the next 6 months to a year, and
C-grade clients: e.g. clients who are thinking about selling but are unsure if or when they will do it.
Obviously, more ‘relationship building’ time would be spent with the A – grade and B-grade clients than C-grade clients.