Peter Lohmann's Mailing List - Issue #22

August 15, 2022

Welcome to the 67 new readers since the last issue!

Chris Powers - Graduating From the CEO Role

I interviewed Chris Powers on Owner Occupied! We go deep on property management, leadership, the Fort Capital onboarding process (which is fascinating), and more. I've never gotten more positive feedback about a podcast episode than this one, so if you've been looking for a place to start listening to Owner Occupied, I suggest giving this one a listen.

Chris was generous enough to interview me on The Fort Podcast in November of last year, so it was great to return the favor.

Some of the positive feedback from this episode:

Interviewing Dr. Benjamin Hardy

I'm thrilled to share that I will be interviewing Dr. Benjamin Hardy at the Triple Win Leadership Xchange (TWLX) virtual conference. This is a 2-day event August 23rd to 24th hosted by NARPM and Second Nature, with all proceeds going to Make-A-Wish.

I'm a huge fan of Dr. Ben Hardy and his book Who Not How (co-authored with Dan Sullivan) is the best book I've read this year.

Second Nature throws amazing events and I fully expect to walk away from this conference with actionable insights and valuable new connections. Would love if you can join me. Go here to register!

BONUS - I'll be on a "Systems & Process" panel hosted by Jordan Muela!

You Might Enjoy - The Real Estate God Newsletter

There are only 2 or 3 email newsletters that I read immediately when a new issue hits my inbox. This is one of them. Here's a sample from his most recent issue, "Creating Your Own Yacht":

Creating Your Own Yacht

The average person goes through life and nothing they do compounds. Their investments don’t compound, their skillsets don’t compound and their relationships don’t compound. Instead of using one of the most powerful forces in the world to make their life easier as they get older, they start from scratch every single time with everything they do, making their life unimaginably harder. It really is a massive disaster and it’s completely avoidable.

Most people are familiar with the first two concepts. Compound investing is one of the most harped about topics in the world. Compounding skillsets is somewhat well-known as well. Relationship compounding, however, is rarely, if ever, discussed. And that’s a shame. Because not utilizing it leads to a massive time sink and people don’t even realize it.

How Relationship-Building Should Actually Work

Let’s think about the time and energy usage of the average person. As mentioned above, the average person goes to a ton of different places and never makes deeper relationships at any of them, meaning that they essentially start back at square one in every social situation. This leads to that ground-hog-day-feeling that most people get in their late 20s when they realize that pretty much every weekend they’ve had for the last 5 years has been exactly the same. All that time spent going to new places results in…nothing. They literally have nothing to show for it. Just wasted time. The value of any new time spent creating relationships is exactly the same as it was when they first started going out – and it’s a very low baseline.

For the average person, the first energy spent in each new interaction is to establish things that they’ve established a thousand other times to a thousand other people. Who you are, where you work, what your lifestyle is, if you’re cool or not, how successful you are, how popular you are, whether you’re worth knowing, etc. These are all things that other people feel out when they first meet you whether they admit it or not. These are also things that should’ve already been established at this point in your life simply by virtue of compounding.

What if you could establish all of these things beforehand? Wouldn’t that give you an upper hand in starting a relationship? And if the answers to all those questions were positive, wouldn’t that make other people want to start relationships with you, without having to exert any of the energy that you normally exert and waste any of the time that you normally waste?

You can subscribe here.

NPS Results - Clients, Tenants, Employees

I'm a little obsessed with the Net Promoter Score (NPS). I think I can track my fascination back to this 5-year-old tweet from Keith Rabois (PayPal, LinkedIn, Square, Opendoor):

Sounds a bit like the property management industry!

If you're not familiar with NPS, it's basically that same survey question that everyone you've done business with sends you: "How likely are you to recommend us to a friend or colleague?" with scores from 0 to 10. The scores are analyzed and your company ends up with a grade from -100 to +100. Above 0 is good, above 20 is favorable, above 50 is excellent and above 80 is world class.

I flirted with NPS scoring a couple years ago and had a good experience using AskNicely to send & analyze surveys. However, their already-expensive service increased the price again and it was too much, so I cancelled.

Fast forward to last month and I finally found a great replacement - Retently. Extremely easy to use and very affordable. And it integrates with Zapier! So I got to work sending surveys to all of our residents, owner clients and even decided to send out an eNPS (basically a slightly modified version used to survey employees).

Without further ado, here are our results so far:

I'll be sharing more about this later, but for now I wanted to transparently share our results. Do you send out NPS surveys?

Client Churn Analysis

We've churned out an alarming number of property owner clients so far this year (one of the reasons I got moving again with NPS surveys, see above). I ran the numbers and it turns out we've lost 44 out of the 240 clients we started the year with. This got me worried enough that I asked a team member to do a detailed analysis. Her findings were concerning:

  • Sold Property: 52%

  • Poor Onboarding/Bad Fit: 36%

  • Unhappy With Us: 11%

Brutal. But I can't fix a problem until I know the details. So now we're digging in, and some great changes & improvements have already come out of this. It's extremely important to carefully track churn at a property management company. A churn rate of 25% (not uncommon) implies the average client stays with you for only 4 years (1 divided by 0.25). Knowing this lets you calculate your customer lifetime value (LTV), and with that, you know how much you can spend (marketing + sales) to acquire a new customer. This is known as your customer acquisition cost or "CAC". In the software (SaaS) world, which is surprisingly similar to property management from a unit economics perspective, you'll often hear about the LTV:CAC ratio as a way to measure the health of the business:

If the LTV/CAC ratio is less than 1.0, the company is destroying value, and if the ratio is greater than 1.0, it may be creating value, but more analysis is required. Generally speaking, a ratio greater than 3.0 is considered “good,” but that’s not necessarily the case.

Long story short: the lower your customer churn, the more you can spend to acquire a new customer, which means the faster and larger you can grow.

Closing Thoughts

Thanks for reading. Would you mind forwarding this to one friend in property management or small business? -Peter