Do You Know How Much Your New Client is Worth?

When you do the math, the numbers may surprise you.

At Real Estate Ally we love showing brokers and agents how data and numbers can help them better understand what's happening in their business. Inman News had an interesting webinar recently analyzing the value of a new client and how it relates to an agent or broker's overall marketing strategy. The CEO of Adwerx, an online advertising agency for real estate, walks you through how to actually make that calculation (complete with a free downloadable excel calculator) and how to increase the lifetime value of a client through analyzing the referral multiplier. The referral multiplier is a factor of average client age, the average years in a home, probability of repeat clients, and the average referrals you might receive from a single deal. These are values that you input based on your experience. You can download the calculator here

Here is a peek at what the calculator looks like: 

 

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Is the $19k figure in this example surprising? Many agents and brokers underestimate the long-term impact of a client with a high referral multiplier. Try it out for yourself and see how each of these factors affects the client lifetime value.

Clients vs. Transactions

We agree with Adwerx CEO Jed Carlson's theory that in order to boost a client's referral multiplier, real estate professionals must have a client-centric business vs. a transaction-centric business. Quality over quantity actually leads to more quantity. Being able to identify clients that have the important connections and networks that lead to more referrals and therefore a higher lifetime value (despite possibly having a lower comission now) can be invaluable for your business and will guide your strategy for client aquisition and retention. Understanding the client lifetime value or CLV allows you to plan long-term and prioritize where to spend your time and effort for acquiring new clients.

We used the excel calculator to illustrate the mulitplier effect. Say for example the above conditions held true, but the client happened to be the head of the PTA in their community, increasing their referral rate from 2 to 6.

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That simple ability for someone to refer an agent 4 more times can increase their value almost $40,000. That is signficant dollars from efforts that can be easily managed with the right customer service and networking.

If you're interested in watching the free webinar click here. The first twenty minutes focuses on the client value analysis and tips for actually boosting your referral multiplier and then moves on to different marketing strategies (specifically with the Adwerx platform). Inman.com holds webinars just about once a week on a variety of useful topics, all which can be viewed at a later time from their library.

Want to know more?

If this calculator is getting you excited, see what else Real Estate Ally can help you discover about your business with a free personalized business insights report. See how you can be making more money for your brokerage with action items you can start using right away.

Real Estate Ally's mission is to empower brokerages to better understand their business with personalized insights on a convenient cloud-based solution.

 

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