I’d be willing to wager that most people buy a bunch of flowers at least once a year.
Even if it’s a sorry, wilted red rose purchased at 5pm on February 14.
I buy flowers online and get them sent – as if by magic – by a florist back in England to my mother.
I’m a wonderful son.
The floristry business got me thinking about the concept of Compound Customers, and how once you embrace this concept, you’ll never fail to keep in touch with your clients again.
Let me explain.
You’re already familiar with compound interest on your savings account. That’s when interest builds up on interest, so that – over the long term – you have a ton more money than you would have had from cash stashed under the mattress.
Same goes with clients.
If you encourage clients to come back again and again, while continuing to attract new clients, your overall income goes up…almost exponentially.
Let’s look at this using the florist as an example.
OK, so a nice bouquet of flowers might sell for $40.
What happens is that someone (imagine the guy at 5pm on February 14) needs flowers – and you’re lucky enough to be the florist he chooses. That’s $40 in the cash register, thank you very much. Off goes the customer to his wife or girlfriend.
Now – will this customer need flowers again? Probably – very likely next February 14, at the very least.
But will he come back to you?
Maybe. Maybe not.
Actually – likely not, especially with all the online competition you’ve got.
So the total income you earned from this client is $40.
Now, imagine if you got this client to come back by sending him a newsletter that will remind him in advance of Valentine’s Day (plus all those other flower sending times, such as Mother’s Day, birthdays, etc, etc).
Do you think he is likely to come back to you more often?
(Our 5pm February 14 guy is very likely to come back – he sure needs a reminder when it’s time to buy flowers and he’s not the kind of guy who has bouquets on his mind 24-7, is he?)
So, imagine you get him back next year for Valentines and Mother’s Day. That’s two transactions – total $80.
Then imagine he comes every year for the next five years (after all, why would he go anywhere else – your flowers are good and you keep reminding him). That’s another $400 in your pocket.
So…you’ve gone from a $40 sale to a $520 sale, just by keeping in touch.
Now, imagine this happens to each of the new clients who came in the door on Valentines.
Say it was a busy day and 50 new people came in.
If you had sold each of them one bouquet of flowers, you would have earned $2000.
But if you get them coming back again and again, like you did in the example above, you would have earned $26,000. That’s an extra $24,000 – 13 times as much.
Now, if that doesn’t get you excited (and a little mad at yourself for not sending a newsletter already), then I don’t know what will.
So how does this apply to real estate?
Well, imagine you earn $6,000 from a transaction. If the client doesn’t come back, that’s all you’ve earned.
But if they come back two more times (not unreasonable, if you are in this business for the long term), you have turned that $6,000 into $18,000. Probably more, considering an overall rise in prices.
(And this doesn’t count all the referrals that your newsletter makes so easy to give.)
I think I’ve made my point.
Every day that you fail to keep in touch with clients represents money that you are leaving on the table.
When you look at it this way, it makes the price we charge for our newsletters so trivial that we’re practically giving them away.