What is the Lifetime Value of a Lead – provided by Real Trends.

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  • January 9, 2017
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Calculate the lifetime value of your client.

As a real estate sales professional, you likely get paid by commission. This commission is the culmination of hard work, marketing your services, securing your client, promoting the property and negotiating the sale. So it stands to reason that you would put a value on that client equal to the commission you earned on the transaction, right?

Wrong. Your client is worth more to you than that. The value of that client shouldn’t be based on one transaction; it should be based on the relationship you have going forward, over its lifetime.

According to the REAL Trends 2016-17 Online Performance Study, the Lifetime Value of a Real Estate Client (LTV) is a real, calculable figure that takes into consideration several factors:

  • Age of client
  • Average years in a home
  • Repeat business
  • Referrals

Adwerx built a free calculator to figure this out. Try it: http://www.adwerx.com/ltv_calculator

LTV is the total inflow of cash resulting from your relationship with a client over the entirety

of that relationship, not just a single transaction. So, the investment you were prepared to make in one client just changed. And here’s the catch: this calculation can make or break your real estate business.

If you want to grow your real estate business, you can:

  1. Boost your average commission by selling more expensive homes
  2. Increase your chances for repeat business, either doubling the number of your

clients or cutting your average client age in half;

  1. Increase the average number of referrals you get per client. Referrals are the easiest way to boost business.

Staying top of mind, or building brand awareness, is vital to increasing your referrals. You must be familiar in such a way that those who exhibit home-buying or -selling behaviors will think of you when they are ready to call a sales associate. Since 70 percent of people hire the first agent they talk to, being top of mind can mean being top of the market.

 By Paul Salley, REAL Trends manager of marketing strategy and business development: psalley@realtrends.com

Paul Salley is a graduate of Brigham Young University with a bachelor of science in business management and marketing. He is responsible for managing client search engine marketing campaigns, tracking Google Analytics and overseeing overall marketing strategies for several top brokerages in the United States and Canada. He also handles technology consulting as well as brokerage social media strategy and implementation.