If you are like most property managers, you will invest continuously in various marketing strategies in order to get new clients. Sometimes you might get referral based business by surprise. But usually, you have to chase leads.
Whether it’s sending direct mails, managing your Facebook and Google ads, keeping your sales team on the roster, or doing something different, most marketing efforts eat into your profits without giving you a sense of control over a defined strategy, goals or an action plan. More importantly, you can never really take your foot off the gas pedal because you don’t have a formalised process in place to acquire clients in any other way.
When you think about it, it’s only natural that you are in this situation. Why? Because the marketing industry wants you to keep spending money and time on their services.
Online and print ad agencies will tell you that having a constant ad budget is necessary for consistent results. Phone sales experts will advise you to hire them so that they get added to your monthly payroll.
Now, what if I told you that there is a way to start generating quality leads without chasing for them? What if the lead generation process could be taken care of by your clients, leaving you free to focus on what you excel at – delivering brilliant customer service?
There is a proven business model where you can get top-quality leads, you don’t have to work from scratch, and you can grow your property management business year on year. Your main task is no longer to convert strangers into clients but to convert clients into advocates who will bring you highly qualified leads that will easily convert into new clients.
This business model drives growth through referrals. It’s called a referral-based business. Let me explain and illustrate how it can help your property management business grow.
What is a referral based business?
A referral based business model involves a major part of your new business coming from existing clients referring your services to their friends, family, co-workers and business partners.
Basically, a referral based business uses proven strategies and processes to systemise the quality, number, and frequency of referrals you are getting, turning it into a reliable and effective, yet low-cost and low-maintenance marketing strategy.
But I’m already getting referrals. How is this any different?
If you have a base of happy customers, that’s great! There’s no reason why you shouldn’t already be getting referred to their friends and colleagues.
But are you converting them into clients? If yes, are they the clients you want to build a long-term relationship with? In fact, are they the right clients for your business? Are these new property portfolios making a strategic addition to your existing portfolio or are they stretching it too far?
Without a proper strategy in place, your referral based business will not be effective. The leads generated are likely to be:
- Of varying quality: Having referrals coming from the wrong clients can ruin your business.
- Coming in irregularly: Without a referral strategy, you have no control over the number and timeliness of the leads generated. When you don’t control your growth, you’re taking operational risks.
- Poorly analysed: Yes, you are getting referrals, but do you actually know why you’re getting them? Which referral strategies work best for you and for your clients, and which don’t? Analysing and measuring your referral-based strategies and tactics is an essential discipline when it comes to turning referrals into a main source of profit.
In other words, without a strategy, clear goals and an action plan, you will never get the results you want from your referral based business.
Don’t be an opportunist with your referrals. Instead, take your referrals seriously and think strategically about how this model actually fits in with your company’s aims and client-centric culture.
Having a well-structured strategy makes your referral-based business more effective. It allows you to play the game of business to your strength: nurturing relationships.
Are You Getting the Most Out of Your Property Management Business?
While I’m mostly focusing on the lead-generating benefits of the referral-based business model in this article, the value of implementing a sound referral-based strategy goes far beyond just generating new clients. Ask yourself the following questions:
- How long does it take you to convert a cold lead into a customer? Property-related decisions are not taken lightly. Since client referred leads already know you can be trusted, the average conversion rate is much higher, in a much shorter time frame.
- Is every single one of your clients equally profitable to your business? When approaching people you have no previous connection with, you can never be sure whether they’re going to profit your business or become a liability. When you only have your top clients referring leads to you, all of your new leads already qualify as A-grade.
- How much does reputation mean to you as a property manager? For many property management businesses, reputation is everything. To build a reputation, you need to continuously improve your service and nurture your relationships with existing clients. However, you can’t do that if most of your time is being spent on chasing new ones.
- Are you focusing on the 20% of your business that generates 80% of the value? By taking continuous care of your existing customers, you engineer growth in your business. Think of it this way – if each one of your clients refers two new quality clients to you, and then those new clients each refer another two new clients, how fast could your business grow?
- Can you say with certainty that your service is better than everyone else’s? There are no shortcuts in customer service, and the core value of every business comes down to the quality of its offers and services. Employing a referral-based strategy not only gives you a kick in the butt to satisfy your customers, it also motivates you to delight them. For that you often need to customise your services, which should be a source of additional revenues.
Why Is the Referral-Based Model So Effective for Property Managers?
There are several reasons why the referral-based lead generation model is extremely effective for property management businesses:
- Property management contracts are meant to be renewed endlessly. Consider one of your clients giving you three leads per year forever provided you keep delivering an excellent customer service.
- Property managers have incredible people skills that give them an edge in delivering wow-factor customer service. They are caretakers and property value maximizer over time, more-so than the short term hunters who are more excited about signing deals and moving on to the next.
- You don’t need to market your business anymore. When you cross a certain threshold of referrals from your clients on a consistent basis, the market knows you.
- Switching to a referral-based model is just like sweating the assets for established property management professionals. It’s about working their existing client database, upselling their services, and continuously strengthening the appeal for further referrals.
In short, a referral-based business makes sense for property management businesses that want to grow.
What Should You Expect?
In terms of profits, you might want to be cautious and target a 20% increase in the six months following the implementation of your model. The implementation process can take three to six months depending upon your readiness to make changes to your existing business model.
Within a year, you could expect a 50% profit increase. You might want to think of it this way: if you get one referral per client, you will double your business size each year. You will carry forward better profit margins because you are dealing with the right clients and because your marketing investments are being built into the new client acquisition process.
Not to mention what could happen if you start to discipline the company into streamlining the delivery of your customer services. When you take a 360-degree look at the impact of referral-based marketing strategies, you will quickly see that it works like a positive feedback loop. The more you enhance your services, the more referrals you will get and therefore the better your systems for delivering these services need to be.
This referral based business model pushes you to future-proof your business because it forces you to improve all its aspects over time. The business becomes invincible.
Your biggest challenge might not be in the design and execution of a referral based business. It might be in your mind. Your mindset dictates what you value.
If your mindset prompts you to see your business as an engine to deliver meaningful experiences and contribute to a property’s wealth game, you will never look at your business relationships in the same way.
Just imagine what could happen if you and your team started to deliberately envision each relationship as an intangible asset that you build over time, and what could happen if you had a system to convert these relationships into your best advocates.