Repeat Business: Why Your Clients Really Stick By You
The reason your clients decide to use your services multiple times can run much deeper than just because they thought you did a good job, studies suggest.
July 24, 2014
The key to customer retention: Keep your clients satisfied with your services and they’ll keep using you again and again. But satisfaction isn’t always at the core of why customers return. Some customers may return for other reasons, and in some cases, those reasons can even backfire for your business.
Clients sometimes “lock in” to service relationships over the long term not because they’re necessarily satisfied with the service provided but rather out of a feeling of obligation or even a perceived nuisance of having to find someone else, according to research by Mary P. Harrison, assistant professor of marketing at Birmingham Southern College, and Sharon E. Beatty, professor of marketing at University of Alabama. In the study, Harrison and Beatty conducted in-depth interviews with customers who felt locked in — both in positive and negative ways — to service relationships (real estate was among the industries analyzed).
Becoming aware of why clients may be sticking by you through transactions can help you foster more positive, loyal relationships with your repeat clients. The insight may even make you more competitive, too, by knowing why other clients may be latching onto your competitors and how you may be able to offer your services to those who are being loyal due to the perceived barriers of switching agents, the study suggests.
It’s also important to become aware of those clients who may be locking in to you for the wrong reasons, Harrison says. After all, you may be assuming your repeat clients are among your most loyal and raving fans. But repeat clients who are with you because they feel obligated or because they think finding another real estate professional will be too difficult can be detrimental to your reputation around town.
“We were aware of these obligation factors at the surface, but we often don’t realize how strong those factors are and what role they can play in keeping your client base,” Harrison says. That begs the question: Do you sometimes need to give your clients permission to leave?
How Strong Is Your Repeat Business?
Repeat business can be a big chunk of a salesperson’s customer base. It’s the reason why most salespeople implement customer retention, keep-in-touch marketing systems via marketing newsletters, postcards, and regular personal contact.
Research has long pointed to the benefits of using marketing aimed at boosting customer retention. Repeat clients tend to spend more money over time, offer more customer referrals and word-of-mouth recommendations, make fewer demands on service professionals, and can even lower your business costs since they’re cheaper than acquiring new customers, writes author Frederick F. Reichheld in The Loyalty Effect (Harvard Business School Press, 1996).
But how many customers actually come back? The average real estate professional earned 21 percent of his or her business from repeat clients and customers, according to the 2013 National Association of REALTORS® Member Profile. For REALTORS® who have been in the business 16 years or more, their repeat clients often make up a bigger portion of their business: about 40 percent of their client base, according to the survey.
Why Clients Lock In
Locked-in clients are what most business professionals seek. They are clients who feel bonded to you and are unwilling to go anywhere else for their present and future real estate needs.
In Harrison and Beatty’s research, they found that clients often feel locked in to service providers due to four main reasons:
- Relational benefits and satisfaction (in other words, they’re happy with the job you did thus far);
- Perceived switching costs (they believe it would be too big a nuisance to find anyone else);
- Obligatory factors (possibly a family and friend referred you to them and now they feel obligated to use you);
- Personality factors (they may be resistant to change or even may want to avoid the discomfort in hurting your feelings by using someone else).
Interestingly, Harrison and Beatty’s research notes that customers often feel locked in not just by one of these factors but by a combination. Salespeople may want to take note of what may be the strongest pull for their repeat clients.
In the study, 93 percent of the 44 customers interviewed mentioned being satisfied with core services or the relationship benefits for why they stuck with a service provider. But 82 percent of the time, customers also mentioned obligatory factors for sticking with the provider; similarly, 82 percent also mentioned switching barriers for why they also chose to use the provider again.
When Clients Stick by You for the Wrong Reasons
“You don’t want a relationship that is strictly obligatory,” Harrison says. “You want them to stay because of satisfaction and the positive benefits they perceive with staying with you.”
Dissatisfied clients who stay can lead to both negative emotions in working together as well as negative word-of-mouth about your business. “Clients may feel like hostages and advise others to go elsewhere,” the researchers note in the study.
But how do you know your clients’ motives for returning?
One way to know: Ask them. You can do this by surveying them after closing to gauge their satisfaction. The surveys may cue you in to how they feel post-closing and why they decided to use you in the first place. It may give you more perspective on your relationship. Several companies can help you do this, such as the REALTOR® Excellence Program or RealSatisfied, among others. For example, Quality Service Certification’s REALTOR® Excellence Program sends post-closing surveys to buyers and sellers to ask them to rate their satisfaction with your services in several areas, such as negotiating skills, communication, and thoroughness. It also asks how likely they are to use your services again and whether they’d refer you to their friends. The survey also asks what their primary reason was for selecting you, such as a friend’s recommendation, because they already knew you personally, your reputation, or other factors.
Besides surveying your clients, you can also look for subtle cues that may show you that your clients may not be as into you as you once thought.
“Oftentimes in relationships, it becomes obvious when a person is dissatisfied in some way,” Harrison says. “They start by letting us know subtly by getting really silent or not returning our calls anymore. If you realize a client is dissatisfied with a service and for some reason feel like they can’t leave and you don’t think you can repair the relationship, you may need to allow them to explore other opportunities as their needs change. You have to consider whether this relationship is beneficial to both of you.”
Locking in Clients for the Better
Clients who are returning because they are satisfied with your services are key to building positive locked-in relationships. But never take their repeat business for granted. They could be tempted to go elsewhere, particularly if their real estate needs change. Through subtle gestures, you can instill greater loyalty among your satisfied clients. Harrison and Beatty suggest the following four methods:
Remind them about your history. Draw a client’s attention to the length of time that you’ve been working together, such as recalling successes in your last transaction together. Your history can be a powerful, yet subtle motivator to keep them coming back.
Value reciprocity. The feelings of “I owe you” and “you did something great for me” can be powerful influencers. “You want to stay with someone who helped you in the past,” Harrison says. “There is a strong reciprocity effect, if you’re willing to do something and go out of the way for someone else. Often, people will respond and feel obligated to stay with you and refer you to their friends.” This can be something seemingly small, too, such as recommending a contractor or painter or offering up a small token of appreciation like a gift during the holidays. “After receiving a benefit, people feel a deep-rooted psychological pressure to reciprocate,” according to a 2009 Keller Center study on gratitude by Robert W. Palmatier. “The failure to repay obligations can lead to guilt.”
Thank them. Don’t forget to thank your clients for their business and long-time commitment to you. “People respond to gratefulness,” Harrison says. Some real estate professionals say thanks verbally or with a handwritten card; others host parties to thank their past customers, like holiday gatherings or customer appreciation cookouts. For example, Diane Cardano with Cardano, REALTORS®, in Abington, Pa., hosts a themed holiday party each year at her home for 350 of her “raving fan clients” — her past clients who have introduced her to other people in need of real estate services during the year. It serves as a way to thank her past clients and keep in touch.
Show them you’re already in tune with their needs. Remember their preferences, stories, and important life events. Make notes in your contact management system, and weave them into your interactions. “If an agent understands her clients' personalities and can incorporate this insight into segmentation activities, then she can take steps to encourage her clients to stay,” according to Harrison and Beatty’s research. “For example, an agent could offer support to make changes easier, or avoid introducing new technologies to her clients who are resistant to change.”