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Customer Lifetime Insights and Marketing
Let me ask you a question.
When was the last time you made a big purchase?
Imagine you realize that you need a new car. What would you do next? If you’re like most people, you would probably head over to Google or your preferred search engine.
What would you type in that search bar? What results would you get back?
Most of us would get some ads on top and then some search results with star ratings. You’ll probably see some articles with titles like “The 10 Best Cars of the Year.” And, by the way, if you actually read those articles…none of them will actually agree on what the 10 best are. That’s because everyone defines “the best” as something different.
All these results you see are intentionally driven marketing pieces created by people who want to lead you to their sales funnel.
You might click on articles. You might check out some head-to-head comparisons. After a while, you’ll realize that you’ve collected enough information and that you’re more knowledgeable than you were when you started.
You’re actually ready to buy. But, why? What’s actually going on here?
And, most importantly, what does this have to do with property management?
And that’s what we’re talking about today, on The Property Management Show.
Buying Decisions and Property Management Content
What happens as we move through our buyer’s journey on the internet?
We spend hours and sometimes days doing research and reading articles and consuming data and content. This is all done to make us feel better about the big decision we’re about to make. All the pieces of content we consume during the journey shape our expectations and nudge us closer to making that decision.
All of us are like this, especially when we’re making big decisions such as hiring a property manager.
So if your customer’s buying decisions and expectations are influenced by the content they’re seeing during the exploration phase, then it’s in your best interests as a property management business to have your educational content out there for prospects to consume before they even give you a call.
This makes sense, yet we encounter a lot of property management business owners who don’t believe in content marketing or don’t think it’s worth the hassle or the investment.
The content you create is here to fill information gaps. It also helps when prospects are trying to make a buying decision or looking for a solution to a problem they’re experiencing.
Content creates a relationship between the prospect and the business, and it helps the prospect make a decision.
You can’t expect leads to pour in the moment you publish a piece of content online. The effects are more delayed, and sometimes it can take a year or more for your content to generate a huge increase in business.
But, here’s what’s interesting: Research has shown there’s a positive correlation between content and customer lifetime.
Customer Lifetime Averages
Fourandhalf actually did an industry study on property management marketing last year, and we found some interesting things about customer lifetime.
Before we nerd out on all the data pieces of this study, let’s do a quick poll:
- How many of you listening right now know how long your owners stay with your company?
- If you have a number in mind, how confident are you of that number?
If you couldn’t come up with the number or you hesitated a bit, you’re not alone.
- In the Midwest, 10 percent of property management business owners had no idea how long their owners stayed.
- In the South, 5 percent had no idea about their average customer lifetimes.
- In the Northeast and West, there were even fewer people tracking, and that was interesting to us.
For those who did track or at least try to guess how long their customers were with them, here are the numbers we gathered:
- Property management companies from the West and Midwest keep their owner clients for 1 to 6 years longer than their peers in the Northeast, on average.
- The most common customer lifetime length in the West and Midwest was 4 to 7 years.
- In the Northeast, it was 1 to 3 years.
In the South, the length of customer lifetimes was evenly distributed between 1 and 3 years, 4 and 7 years, and even 10 to 15 years.
Understanding Customer Lifetime Value
Knowing how long your owners stay with your company is key to understanding customer lifetime value.
There’s a lot of discussion in the industry right now about customer retention and the importance of providing the best client experience.
That’s great in concept, but what are you implementing to improve client experience and customer value, especially if you have limited resources? How do you, as a business owner, prioritize efforts and resources related to retention and client experience versus the other needs of your company?
This is where customer lifetime value comes in.
If you only look at the annual contract value when you’re making these decisions, you’ll see that clients staying for one year are just as valuable to your business as those who stay 10 years. Owners who stay for a year versus 10 years are fundamentally different, of course.
Understanding customer lifetime value and the factors affecting it will allow you to make smarter business decisions.
Marketing Decisions and Customer Lifetime Value (CLV)
You might be wondering: What business decisions require you to take customer lifetime value (CLV) into consideration?
If you guessed marketing, you’re spot on.
Marketing is not the only business practice that’s influenced by customer lifetime value, but it’s what we’re exploring on the podcast today.
Some key marketing questions centered around CLV are:
- How much should you spend on owner marketing?
- What channels should you use?
- What is a good ROI for your marketing dollars?
- How much should you spend on retention campaigns?
- Who do you target during those retention campaigns?
Making marketing decisions with CLV in mind prevents you from accidentally ignoring aspects of your marketing that impact your bottom line.
Think about that earlier story about buying a car.
It’s clear that people move through the marketing funnel in a non-linear way. During the exploratory phase, the minds of owner leads are still open to suggestion. No strong opinion has been formed yet. Once they do focus on the opinion, they’ve formed, it stays with them even after they become your client.
Closing the sale is the start of the relationship. It’s important to remember that.
Looking at the Data around Marketing and CLV
What do we know about marketing and CLV based on our research?
- YouTube Videos
According to our research, property management companies who use YouTube videos for marketing are 12 percent more likely to retain their clients for 8 years or more.
This sounds random, but it makes sense. YouTube is the second-largest search engine in the world, only behind Google. People search for consumer content on YouTube, and they expect to find videos and education.
What does this have to do with customer lifetime value?
It goes back to the content that’s consumed as prospects are in their exploratory process. The more informed an owner is before making a decision, the more they’ll have realistic expectations of what property management is and what it isn’t. They’ll understand the true value of professional property management, and they’ll stay with you for longer.
- Brand Recognition
The more you show up when prospects search for answers online, the more familiar they are with your brand. Then, they’ll trust you more. This happens before they reach out to you, so when they do reach out, you have a lot less convincing and selling to do. There’s less friction than what you might encounter with someone who is learning about you for the first time.
- Trust and Reviews
In the context of business. Trust is synonymous with stars. Who doesn’t love stars? In preschool, your teachers handed out gold stars as a reward. It was the thing to have.
Now, we’re still vying for those gold stars.
Our research found that property management companies prioritizing online reviews are 16 percent more likely to beat the industry average when it comes to CLV. You might be wondering if the higher star ratings simply attract higher-quality owners. That would explain the correlation between online reviews and customer lifetime, right?
Actually, taking control of reputation doesn’t mean filtering out negative reviews. It includes a whole system that requires thought and intention. It requires property management companies to identify their touch points and follow-ups, and conduct a full analysis of feedback and reviews.
The most important thing you can do with those online reviews is to help your organization improve.
The key here is that when property managers who prioritize online reviews routinely ask for feedback from their clients, those business owners actually listen. If the feedback is less than ideal, they do something about it.
The goal is to foster trust and then live up to that trust.
Automation, which is a fan favorite when it comes to business priorities, boosts customer lifetime value by just 5 percent.
Remember, prioritizing your online reputation increases CLV by 16 percent. This finding is interesting and tells us that you shouldn’t automate just for the sake of automating. You need a clear strategy and a clear understanding of your current process and systems. Just doing automation in a vacuum is an expensive way to make mistakes faster.
Marketing Spends and CLV
This might surprise you.
It turns out that dollars spent on marketing by themselves do not correlate with higher customer lifetime.
This confused us because it seems so simple: the more money you have, the more you can do to impact customer lifetime and attract better leads.
So, what does this mean for property management?
This finding suggests that where and how you spend your marketing dollars is more important than how much you spend on owner marketing.
As for customer lifetime value, that should serve as the North Star, which can guide you in the right direction.
Spending money on acquiring customers is good, but don’t ignore your existing customers. It’s more expensive to acquire new owners than it is to keep existing owners.
Don’t be blinded by lead volume when you’re thinking about marketing. Remember that not all leads are created equal. If you intend for your business to thrive and survive in the long term, be prepared to do what you can to hold onto your clients for longer.
That’s what we have for today on The Property Management Show. In our next few episodes, we’ll look at real examples of how focusing on customer lifetime value, owner retention, and even employee retention can impact your property management business.
If you have any questions about owner marketing, please contact us at Fourandhalf.