Let’s say the average commission is $6,000 and people move on average every 7 years.
Client A buys today, you get $6,000. Today’s value of a client is $6,000.
Client A sells in 7 years and they buy. (Let’s forget inflation for this situation.) You get $6,000 on the sale and maybe $8,500 on the upgrade.
Client A sells in 7 years. You get $8,500 on the sell and $10,000 on the upgrade.
Client A sells in 7 years. You get $10,000 on the sell and $7,000 on the downgrade.
You have earned $56,000 (still not adjusted for inflation) from Client A over 21 years.
The Value of a Client Is Much More Than Today’s Commission
When you don’t think it’s worth picking up the phone, sending that text, or following up, think about the total value of that client.
Throughout these lessons I’ve talked about putting the client first, calling them prospects instead of leads, and being relational versus transactional. Why am I talking about this weird reduction of the client into a value?
Look, this career is about money. The world, for better or worse, runs on money. You have to earn it or many things won’t go right. Real estate is an opportunity to help people with one of the biggest financial decisions in their life while making a dream life for you. If you understand what all of this work, tough calls, rejection, and everything else that’s negative is worth to you and your family, it makes it slightly easier.
Thinking about $56,000 makes it slightly easier to put up with a random call. Maybe those follow-up systems are worth implementing. Maybe you won’t let that phone call go to voicemail. I am very much about the people but I, and most people, will respond faster to a call about a home 4X their average price. Sometimes we need the motivation of helping people and sometimes we need to remember the hard value of what we are doing.
Speaking of referrals, how much is client A worth to you if they gave you 3 referrals over that 21 year period? Just removing that last transaction on those referrals to keep it in the window, it’s $203,000.
Finally, forgetting when the referrals come in and how long you are doing real estate, let’s say they gave you one referral every year.
That’s $1,1176,000, from one client, if you treat them so well that they want to refer you. If you are willing to give the best service and stay in touch, you will easily have an amazing career.
This is completely possible as we have clients that are good for one referral a year. One agent had a waitress that never bought that gave him 6-7 referrals a year. I want you to really remember. That person with a 540 score that isn’t today business, is still tomorrow business AND they know people. How big of an advocate will they be about the person who helped them when they couldn’t buy for a year? No prospect is an island. Everyone knows at least 10 other people. Just because they aren’t buying now doesn’t mean they can’t positively impact your business. One of our agents called an expired listing but she didn’t want to relist. Later that day she bumped into a neighbor that mentioned she was thinking about selling. Apparently, we were so good on the phone that she referred us and not her previous agent. We got the listing.
We learned earlier that a loss hurts much more than an equal win. This is the main reason to point out the dollar amount. You are walking away from a lottery ticket every time you don’t pick up the phone, give bad service or don’t follow up.
Exercise: Take your area’s price and figure out what your average buy and sell-side commission are. Decide when you want to retire and do the math. If it helps, write it somewhere to remind you why your prospect, why you follow up and why you give excellent service.
Do the work, get the results.
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