Why Real Estate Agents Should Care About Client Retention

Most people are satisfied with their realtors. Surveys suggest that 73% percent of clients would do business with their realtor again—and most would recommend their realtor to a friend. Yet only 27% of the time do clients use that realtor again.[1] [2]  Of course, some clients are moving away from the area, but you would still expect people to use the realtor who helped them buy when they subsequently sell. Why don’t realtors see more client referrals and repeat business? 

Why Does Client Retention Matter?

Many realtors think that because the average person stays in his home for 16 years client retention is not very important: Even if they don’t know this statistic, they figure they are going to stay in their home for “a long time.” However, a significant 22% of homeowners sell again within 5 years and over 40% will sell in ten—and the higher income the homeowner is, the more likely that person is to sell early. In short, if you have 200 clients you have represented in the past and still live in your area, on average in a typical year, one of those clients should be listing every month. [3] But most likely, you aren’t getting that repeat business. If you are an experienced agent, you should have one previous client coming back to you a month, on average. But do you?[4]  Chances are that you are leaving money on the table. [5] 

Some will object that with volume down, this estimate is overly optimistic; that point is fair enough, but it is precisely in these sorts of markets where you need the extra transactions a proper client retention strategy would get you. Are you currently operating at full capacity? In a low inventory market, more realtors are fighting for the same leads. The lead generation strategy that worked in a hot market simply isn’t enough: Realtors need to stand out, and maintaining a personal relationship is the best way to stand out. 

Why Do Realtors Lose Clients?

Transactional Nature of Real Estate

Real estate transactions are typically infrequent compared to other industries, such as retail or service-based businesses. Clients may only need the services of a realtor when buying or selling a property, which means there may be lengthy periods between transactions. During these long hiatuses, it is easy for realtors to lose touch with their clients.

Highly Competitive Industry

The real estate industry is highly competitive, with many realtors vying for clients. Clients may be tempted to switch to a different realtor for various reasons, such as better marketing strategies, lower commission rates, or a more personalized approach.

Lack of Differentiation

Some clients may perceive realtors as offering similar services, making it difficult for individual realtors to differentiate themselves from competitors. Without a unique value proposition or strong brand identity, it can be challenging to retain clients. A later post will discuss how realtors can stand out from the crowd, but the basics involve identifying and studying a target audience and highlighting talents/experience you have that would be of value to that audience. This does remind me of a line from Game of Thrones, however, where, when asked if she knows anything about Sword Fighting, Arya Stark replies, “You stick them with the pointy end.” Even when the core idea is simple, the execution can be complex.

Lack of Ongoing Engagement

Some realtors may focus solely on transactional interactions with clients, neglecting ongoing engagement and relationship-building efforts. Building strong, long-term relationships with clients requires consistent communication, follow-up, and personalized service beyond the initial transaction. These conversations take time, time realtors don’t feel they have. Furthermore, the “payoff” for this sort of interaction takes time; it takes years for someone to need the services of a realtor again. As I pointed out in an earlier article, no one starts off with client retention as a part of their strategy—and people tend to stick with what works. That said, if someone has been in the industry for a while, it might be time to think about how client retention fits into their plans.

Failure to Demonstrate Broad Expertise

If you represented your client as a buyer, you may not have impressed them with your skills on the sales side—and vice versa. Of course, there is a delicate balance here. It is important to focus on the task at hand. However, whenever you can naturally comment on how the people on the other side of the transaction are thinking, you should do so. Show off your market expertise with comments your client will find helpful and insightful. Prove to them that you are a real estate expert, not just a tour guide or a salesperson.

Client Dissatisfaction

Client dissatisfaction can arise for several reasons, such as ineffective communication, unmet expectations, or perceived lack of professionalism. Unsatisfied clients are more likely to seek out alternative realtors for their future transactions. However, as we noted above, this is not the primary cause: Most clients are quite happy with their realtor.

Conclusion 

Realtors can solve many of these problems by using the right tools. Our Kukun Portal, which provides nurture emails with interesting market updates, a homeowner dashboard, maintenance tips, a home value, an equity estimate, a local market forecast, and more can help make sure your customers return to you. Please check out our demo here:  www.kukun.ai

To improve client retention, realtors can focus on providing exceptional customer service, building strong relationships, staying informed about market trends, and continually adding value to their clients’ experiences. Additionally, maintaining regular communication and staying top-of-mind through newsletters, social media updates, or client appreciation events can help reinforce the relationship between realtors and their clients: Of course, you can take a shortcut and use us.

Franklin Carroll

Franklin Carroll is Kukun's VP of Modelling and Analytics; After finishing his studies at the University of Chicago, he worked at Fannie Mae where he helped build Collateral Underwriter, roll out the Value Verify initiative, and specialized in collateral related and credit related policy.

Published June 25, 2024