Building Lifetime Value VS. Transaction Value

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Air Date:
December 9, 2021

Episode Description: 

In this episode, Andrew Smallwood asks how YOU think about property management. Do you consider it a profit-based business or is it something more? Listen as Andrew talks about what it means to build lifetime value versus treating everything like a transaction, and learn the inspiration for the saying, “what’s the most we can do?” on this episode of The Triple Win podcast.

 

Follow the conversation PMs are having about this and more in our Facebook group.

 

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Episode Transcript:

[00:00:00] Andrew Smallwood: And I'll never forget that because it's, it's made me look for more opportunities to say, what's not the least we can do what's the most we can do. Where's an opportunity to be generous and listen to your company has to be profitable. You have to be profit. In order to be generous, you can't give something you don't have, but consistently willing to make those investments and take chances to get something back versus taking no risks and no chance.

[00:00:40] All right. Professional property managers, Andrew Smallwood here. And. Listen, I'm going to record something quick here, because I saw something on Facebook in one of the groups, somebody posting about how they been in business for 50 years. That is incredible. That is admirable. But here's what caught my attention.

[00:01:00] Got me feeling a little triggered. It, it was 50 years and in 50 years I have never given a rent credit or a gift card or financial recompense of any kind. In specifically said this admitting that they had made mistakes that had affected other people, residents, investors, maybe their team. I'm not sure.

[00:01:25] But certainly certainly residents and investors based on what else was in the post and ended with property management is a profit based business and that's. The lens through which this person, and I will tell you from personal experience, many other people view the world and not just in property management, but certainly those are the people we're interacting with on a daily basis.

[00:01:53] And some of them really hold this philosophical alignment to the way to win the way to make decisions is through a lens that. Maximizing transaction value. It's about how do I win in this moment? It's about, you know, how do I get the bigger slice of the pie in protect anyone from cutting further into my slice.

[00:02:25] Of the pie and protecting oneself and, you know, coming back to business in a minute, but like thinking about building personal relationships, like a marriage, you know, our great marriage is built by protecting oneself and saying, I'm not going to risk being generous. I'm not going to risk being over accountable.

[00:02:50] I'm not going to risk. Investing into this relationship long term and helping this person get where they want to go. Unless at this moment in time, it benefits me, you know, more than what I'm putting in at this very moment. And if it doesn't, then I'm not going to do it. And if that's the case, then. You're going to get locked into the kind of activities that make it very hard to build a long lasting relationship that make it very hard to build a really enjoyable, fulfilling relationship.

[00:03:27] Maybe that's just my experience, not true for other people interested to hear what you guys think. You know, but Hey, you could. Have a profitable business coming back to the business side, treating clients this way in relationships this way. Again, there, it sounds like there's people who've been in business for 50 plus years, so it's not that there isn't a way to be profitable while doing this, but I, I think it's a false premise.

[00:03:53] That's my opinion that this is the lens through which we need to look to. And I would trade that microscope. For a telescope, you know, different lens, the triple win lens, if you will, that says, how do we ask different questions? Instead of what's the least we can do what's the most we can do, as opposed to when a mistake happens, saying, you know, what's fair or less and, and risk on the side of less.

[00:04:24] And say, how could we build the courage to risk more? What's the most we could do? How in the face of this mistake, could I do something outside the norm that actually makes this person happy that it happened? Could I go that far? That I respond to it so well, so generous. They're happy that it happened and listen you could go above and beyond and it may not land on everybody.

[00:04:54] It won't be appreciated. But my experience with this, there's really a turning point. Actually. I think I should share this cause I think this is why it hits me. So personally is 13 years ago. That's right. 13 years ago, different company, different contexts working in sales and service with customers.

[00:05:13] It had made a sale was following up later on. I think this was a year after the original sale and company had a great guarantee, great service program, everything else. And I was just there to facilitate that and continue to build that relationship and, you know, potentially potentially sell more products, expand the company's relationship with the client and.

[00:05:36] And what happened was guarantees. Everything was great, but I took it out of the normal company process, which would have require the customer to ship it. Themselves. Anyway, long story short, I took on the responsibility and the liability and I D I made a mistake. This is me owning up to that publicly. I didn't do it as promptly as I should have.

[00:05:55] And, and while I didn't promise per se, when I was going to do it, I mean, it's just more than a reasonable expectation of when that should have been done. And I was a week past the reasonable. At which it should have been done. And I got the text from the customer saying I got a, I got an event coming up at our house dinner, coming up, people over.

[00:06:15] And I really would like to have this product stuff back. Is it, is it coming back soon from the service center? And the answer was no because of when I'd sent it off. And she was very. Rightfully so, and there's, I mean, nobody nobody's fault, but mine in this scenario at not even 1%. And I remember feeling a little sick to my stomach and like the, I remember.

[00:06:40] Heart beating and my face, just feeling pale and just kind of sick with what was going on and really not sure about what to do. I'm like, I am going to see this person at the green Hills mall and Nashville. I'm going to have to hide behind escalators. This is maybe I was inflating it cause I was a younger person at the time, but I was really feeling a lot of guilt and shame and not sure what to do.

[00:07:03] And fortunately, I had a great manager and mentor. Who asked me those questions that I referenced earlier of Andrew, most people would kind of hide from this. You know, they do, they kind of avoid it, it's uncomfortable and they do the least they could do and move on. You know, and you're welcome to do that.

[00:07:21] And you're not at risk of losing your, your job or opportunity with us, if that's the choice that you make. But I'd like to invite you to think about. What could you do to make this customer happy that this happened? And that was hard to imagine given her reaction and what was going on and how I was feeling, but he was a pretty inspiring guy and, and, and was able to get through to me to at least get me to start thinking about.

[00:07:49] As I thought about it, I came up with a couple of ideas and I shared one or two ideas with him and he's like, come up with a couple more. He's like, you know, it's really push yourself on this, like really go for it. And I started to feel myself getting a little more excited about what I was going to do, and also very nervous at being flat out rejected with what I was about to do.

[00:08:10] So here's what happened. I tracked down the service package that was coming back to me anyway. And I mean, within minutes of it hitting my doorstep, I was tracking that thing, like a Hawk waiting for it. And as soon as it was on my doorstep, I was throwing that thing in the car on my way. And I was going to hand deliver it back to the customer and, and personally deliver it.

[00:08:33] Show that personal investment in taking care of it, which I didn't have to do. At for a moment, I didn't, wasn't sure if I wanted to do was afraid to do that and did that, but more, I had to call a buddy because I was 20 years old and couldn't purchase alcohol, but he was, and he was 21. I said, Hey, this customer last year, I remember them mentioning, they went to this winery.

[00:08:52] Here's the name of it? Can you here's here's like 90 bucks. Can you go buy this $80 bottle of wine? You know, and anything that they have in there by this winery. And he did. And so I had that ready to go showed up. It was a little awkward at first handed the package. Then I showed the bottle of wine that started to change the Moodle.

[00:09:14] And because the wine was, you know, basically more than I'd even made on the sale personally, right? So I was in the red at that point from one point of view and perspective. But anyway, I hung around actually they invited me inside. I ended up playing guitar hero with their kids for 20 minutes.

[00:09:31] And Tonya Ford, the customer, I remember. Just like a whole different feeling. I felt different walking out of the house. She felt different when I walked out. And I'm like, man, all that took was an hour of my time or to a couple of hours in total with the drive time, some gas, et cetera, and you know, 90 bucks for this wine, that's all it took and I feel great.

[00:09:52] She feels great. Like there's really some trust that got restored here. I think. But again, my manager had pushed me to do one or two more things. So on the way out, I jumped in my car at the end of the driveway, and I had some stationary in there and I wrote a handwritten note and I explained what it meant to me, how gracious she was, how understanding she was despite having every right not to be.

[00:10:15] And that, you know, I hoped we could play more guitar hero and things like that. And and I dropped it in the mailbox, no postage, cause I was right there at the end of the driveway. I had heard of another rep doing that for totally different reason. Like that's a cool idea. Did that the next day she got the letter, it made another positive impression on her and that was all it took.

[00:10:37] She didn't cancel her order. She ended up purchasing more. Which got me closer to black, but then she referred me to 12 of her friends, all 12 met with me all 12 purchased which is rare in sales. And a few of them purchased a lot and she told every single one of them that story, the bad, the ugly and, and the happy ending.

[00:10:59] And and anyway, it was just so interesting that that that's the way it turned out and And I'll never forget that because it's, it's made me look for more opportunities to say, what's not the least we can do what's the most we can do. Where's an opportunity to be generous and listen to your company has to be profitable.

[00:11:18] You have to be profit. In order to be generous, you can't give something you don't have, but consistently willing to make those investments and take chances to get something back versus taking no risk and no chance which is going to build trust, which is going to build reputation, which is going to build lifetime value versus transaction value is the way that I think about that contrast microscope versus telescope and.

[00:11:46] You know, I'm just curious to hear how you all think of this because we, it comes down to, I think, an important lesson for any business, which is to define your customer, not demographically, like okay. Women between this age range and this income profile you know, that kind of stuff. To me, it's just a bunch of marketing BS.

[00:12:10] Personas that talk about that kind of stuff. You know, what really helps you understand, communicate with the market and bring value to the market is, is really getting to not the demographics or the firmographics, like, okay. Anyone with a title, property manager is a potential client or anybody who owns rental property is our potential client.

[00:12:29] I don't think so. I think it really pays to get more specific than that. And, and think about how are we philosophically aligned? What do people need to believe in order to want to work with us and find a way to work with us and us to want to work with them and be married to them where we want to be generous over time to them.

[00:12:54] And for us, that's, we're looking for a triple wind-driven dedicated professional property managers. Companies people that are really trying to do the best property management possible, that creates a value for everyone. And they're aligned to that point of view, not that creates profit in this moment.

[00:13:20] One moment in time for. At the expense of others at the expense of trust, at the expense of relationships where we're not asking those questions, we're asking questions, like how do we create a resident experience so good that residents don't want to leave? How are we creating an investor experience so good.

[00:13:39] They don't want to sell, they want to hold. They want to buy more. How are we creating an experience so good for our team and the talent that. They want to work with us for our vendor partners, that they want to work with us. Right. And be in our business and working in our industry forever. Right. Like how are we striving towards that?

[00:14:03] And in creating triple wins for others and importantly it doesn't have to cut. Profit like you can do good for other people and drive that value, monetize that value, where you can build a profitable business maximizing again, the lifetime value of a, of a business relationship and focusing on that versus maximizing a transaction you know, value looking at things through that perspective.

[00:14:32] All that to say, listen, I'm curious to hear what you think. I think I got my feelings out. I think I got my thoughts out if this was for no one else other than me it was good for me. And thanks for listening if you got to this point, but I'd love to hear your comments and what you think is this everything that's right and wrong and property management today is there.

[00:14:50] Important things to say about this and the different perspectives here that hasn't been said yet. I'd love to understand what you all think and what you think is the right way to, to, to move forward and build a future together. So with that, I'm signing off, take care of catching up. That's all for this episode of the triple win.

[00:15:11] Thanks. Go out to Carol household and Jeff Tucker for everything they do to put these episodes together. And we want to remind everyone that you can find more resources, upcoming events, a link to our private Facebook group, where the conversation continues in between these episodes with other professional property managers.

[00:15:29] All of that you can find@rvpdotsecondnature.com. Again, that's RBP dot second nature. Dot com and until next time, keep transforming what it means to be in professional property management, by finding and applying your next triple win. We want it to be true that every time we see you, we see a better version of you and your business with that.

[00:15:57] Cheers.

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