Have you ever asked yourself, what is going to happen to real estate? With all the Big Data, Deep Discounters, Wall Street IPO's, Zillows, and more, it feels like Dorothy must have with the Lions and Tigers and Bears, Oh my! What must we do to compete with the billions being thrown at the relationship between us and future buyers and sellers?
Let's look backward to get a better view of forward. Remember, practices always continue to change, but principles never do. Let me tell you my own, most terrifying moment. I had about half of my income coming from selling new homes and half from a distributorship for a large marketing company. On Tuesday morning one week in early 1999, I attended our builder's sales meeting where they said the entire company was going on computer, there would be no paperwork everything would be done on the computer and online. This terrified me, I had never touched a computer before, I had heard they blew up, and that didn't sound good. Anything with a keyboard intimidated me, because I only passed typing in school because my coach was my teacher. I then figured, okay, I will just focus on my marketing company, until that next Saturday, when I went to a convention where they announced they were going 100% online! I honestly wondered if the world had passed me by, if I was going to live in a cardboard box somewhere. It was the most terrifying week of my entire life and career. Have you ever felt like you were being run over by change?
My response, once I was able to breath again, was I have to learn this stuff. I bought a "WebTV" set up and learned how to navigate the "World Wide Web." Keep in mind, this was only three years after the Internet was accessible to the general public. This was a brand new world. Once I gained confidence, because I learned I could learn it, it was something that I dove deep into. That one week, after shaking off the initial terror, I knew one thing for sure. I NEVER wanted to feel that way again, it was my Scarlett O'Hara moment, "As God as my witness, I will never be hungry again!"
There is some wisdom from the past we can all learn from today, the principles haven't changed. In 1982, John Naisbitt wrote the book "Mega Trends" this was the very dawning of the information age. His central point is just as relevant today as then, actually much more so. That is "The more the world goes High Tech, the more you need to become High Touch."
In 1999, one of the early leaders of Internet business modeling was Michael Dell, of Dell Computers. He spoke at the Detroit Economics Club about building a competitive advantage in an Internet economy. He taught about the critical C's to building a sustainable business in the Internet age.
Those three C's are Content, Commerce and Community.
Content - A product or service that people want and are willing to buy at a price that they will pay.
Commerce - Ease of ordering, ease of transactional activities. No drama.
Community - Building a relationship with company, consumers and providers.
Dell, lamented that he, and at the time, no one had figured out Community. That he would spend millions driving people to his website to buy a Dell Computer, but then when they needed another one, he had to spend that money all over again that there wasn't an ongoing relationship to capture them before they shopped around. In the brick and mortar world, our community was not only around where we lived, but on the roads to and from our house to work and to the kids schools and church. Almost every where we shopped was on one of those paths. If we took a new job, kids changed schools, we changed out shopping community. We may have gotten mad at a clerk at the grocery and vowed to never go back, and we wouldn't at least until the next week. Because it was on the way. Now, every website is already on the way. So we have to find ways to create a community that has stickiness. How?
Can we compete with the multi-billion dollar companies that are trying to get in front of and in between you and them by outspending them? By out advertising to the over all markets? Highly unlikely. However, we can go back to John Naisbitt's advice and raise the High Touch level to counter their High Tech. We need to create a consistent WOW Experience for our clients, one that they will refer to others as well as never consider going with strangers that some Big Data company sells their name to. How do you do that? Being consistently top of mind when not actively working with them, that they hear from you, through a consistent multi-media approach at least 33 times per year. Those would include at least a couple invitations to client appreciation events hopefully for some face to face time. How are you going to do all that and work with your active clients? Work 24 instead of 18 hours a day? No, you can't do it if you are trying to do all the work involved, not possible. That is why we as an industry have fallen prey to these companies, we got too busy for our clients.
I realized a lesson from my own experience. I had a bank account with the same company since I was six years old. The bank's name changed from American National to Society, to Key and I stayed. I owned businesses for years and new the branch managers, the tellers and even was able to call the president if I needed something. I was loyal to the relationships. Then we realized at one point we didn't go in as often, and every time we did we had to show our identification to do anything because no one there knew us and we didn't know them. So we decided that if we don't have any relationships there, we should go to one of the big banks who has more bells and whistles. So if we aren't known we might as well make things more convenient. Your clients will make the same choice if you allow them to be disconnected. They lost my community.
If you are still doing all your own transaction management, that is taking your time and squandering it at lower dollar value which takes away from the time you can be doing real business development by staying top of mind with your clients during the process and after. If you don't have a solution contact me, I will be happy to walk you through what you can do to fix it. Let me also recommend that you read the book "The Experience Economy" to get ideas on how to truly separate yourself and your business and enjoy not worrying about what the disruptors are doing. We have a HUGE advantage over all the Zillow's and Big Data companies, but we have to exploit it, that is to be the ones who focus on the Community with our past clients, sphere and database. We must be that Trusted Advisor that is top of mind for your help with real estate. In our firm, we have several tier levels of automated multimedia marketing touches to cover 20-25 of those 33 touches for you, so you can focus on the highest value ones yourself. Even better we offer multilevels of transaction coordination to take the low value work off your schedule so you have time to WOW your clients.
Monday, April 8, 2019
Thursday, April 4, 2019
REALTORS, The Disruptors are at the Gates!
The Disruptors are at the gates, the industry is seeing more clamoring to get into the middle of the transaction than we have seen in many decades. We are watching Wall Street dump billions into the home selling sector. They are not doing that without the belief that they can take the lion's share of the commissions currently going to Brokerages and Agents.
When I mention disruptors to most agents, most seem to think that the "new cool kids" broker model is what I am speaking of, I am not. While those types of "disruptors" might be disruptive to brokerages for a period of time, but that has been going on for the entire time I have been in the industry and longer I am sure. These remind me of a big Ferris wheel, who's cool this year is old next. Every hot cycle also spawns a lot of new low fee brokerages to attract agents, they are popular while it's hot and disappear when it's not. Those are not the disruptors I am speaking of.
The disruptors I mean is the game changer big data companies, and even more so this potential lawsuit against NAR and the industry practises. Anyone who thinks this is nothing isn't paying attention to who is involved, and the argument they are making. I see no way that we won't have a big change coming in the next 3-5 years when it concludes.
We have allowed them space in the market, just as we did Zillow, by not focusing on client experience and believing that our value was simply our control of information and data. As an industry most gravitated to a transactional model and away from a consumer focused one. This allowed our services to become commoditized making it vulnerable to these outside threats.
I am doing a deep dive study in my family's ancestry and since I'm a history and economics nerd I'm seeing some real lessons we should pay attention to today. As I look back across the centuries in my family almost all were farmers. Each generation the oldest living son would take over the farm. This went on from the 1600's until my siblings and I were the very first generation that no one stayed on the farm. This was in the late 70's to 1980. My dad and I tried to keep it going but to create enough cash flow to support two families we had to increase revenue per acre. We tried to put in a confinement hog operation to do that but were shot down on zoning. When you look to economic history you would see that in 1930 there were 30 million American farmers producing just enough to feed 100 million Americans. By 1980 there were only 3 million farmers producing enough for 300 million Americans as well as those all over the world. In 50 years technology eliminated 90% of American farmers. But this was fifty years so it wasn't as noticeable until about 1985 when Willy Nelson was having Farm Aid to try to save family farms.
I believe we are at the tipping point right now in the real estate industry and will see a similar sea change take place.
I had my "Scarlett O"Hara" moment, that "As God as my witness, I'll never be hungry again," was in 1999. It was the early days of the Internet, when we still called it the World Wide Web, the public was only introduced to it around 1996. I was running two businesses, one was selling new homes for a builder, the other was a marketing and distribution company. At our meeting on Tuesday morning the builder said that all of our contracts were going to be going online and paper would be no more. This was terrifying to me, because I had never touched a computer, anything with a keyboard intimidated me. I recall thinking that I would just put all my effort into my distribution company. However, that Saturday at a convention we were told it was going 100% online. I have never felt so terrified. I saw myself living in a cardboard box, wondering if there was even a place for me in this new world. I made the decision to learn, immersing myself in not only the Internet, but online marketing, reading, going to every seminar where the stars at the time were speaking. Michael Dell at the Detroit Economics Club really helped me see more clearly. Ever since, I am committed to never get left behind, to jump in front of whatever I see on the horizon to see if it is something that will be the disruptor or not.
My beliefs are that there will be two models that survive and thrive and those will he large super efficient systematized teams that will be transactional. They will be the Walmart lower cost per transaction to make everything happen quickly and smooth but the client will be responsible for more leg work. This will be lower commission but high volume. The other will be the Nordstrom model as professional concierge level service for those who value their time and experience more than trying to do it as cheaply as possible. This will be a higher commission rate for higher service levels. All those in the middle become Sears with similar futures.
All of this will require running as a true business model not the traditional self employed model where agents get lost doing all the transaction activities "pushing paper" and not focused on the ONLY two things they should be doing, giving their clients a wow Experience that they will refer and pay more for, and communicating with database and doing business development. Anyone who doesn't figure out how to systematize all their back end processes are going to be the farmers heading into town.
When I mention disruptors to most agents, most seem to think that the "new cool kids" broker model is what I am speaking of, I am not. While those types of "disruptors" might be disruptive to brokerages for a period of time, but that has been going on for the entire time I have been in the industry and longer I am sure. These remind me of a big Ferris wheel, who's cool this year is old next. Every hot cycle also spawns a lot of new low fee brokerages to attract agents, they are popular while it's hot and disappear when it's not. Those are not the disruptors I am speaking of.
The disruptors I mean is the game changer big data companies, and even more so this potential lawsuit against NAR and the industry practises. Anyone who thinks this is nothing isn't paying attention to who is involved, and the argument they are making. I see no way that we won't have a big change coming in the next 3-5 years when it concludes.
We have allowed them space in the market, just as we did Zillow, by not focusing on client experience and believing that our value was simply our control of information and data. As an industry most gravitated to a transactional model and away from a consumer focused one. This allowed our services to become commoditized making it vulnerable to these outside threats.
I am doing a deep dive study in my family's ancestry and since I'm a history and economics nerd I'm seeing some real lessons we should pay attention to today. As I look back across the centuries in my family almost all were farmers. Each generation the oldest living son would take over the farm. This went on from the 1600's until my siblings and I were the very first generation that no one stayed on the farm. This was in the late 70's to 1980. My dad and I tried to keep it going but to create enough cash flow to support two families we had to increase revenue per acre. We tried to put in a confinement hog operation to do that but were shot down on zoning. When you look to economic history you would see that in 1930 there were 30 million American farmers producing just enough to feed 100 million Americans. By 1980 there were only 3 million farmers producing enough for 300 million Americans as well as those all over the world. In 50 years technology eliminated 90% of American farmers. But this was fifty years so it wasn't as noticeable until about 1985 when Willy Nelson was having Farm Aid to try to save family farms.
I believe we are at the tipping point right now in the real estate industry and will see a similar sea change take place.
I had my "Scarlett O"Hara" moment, that "As God as my witness, I'll never be hungry again," was in 1999. It was the early days of the Internet, when we still called it the World Wide Web, the public was only introduced to it around 1996. I was running two businesses, one was selling new homes for a builder, the other was a marketing and distribution company. At our meeting on Tuesday morning the builder said that all of our contracts were going to be going online and paper would be no more. This was terrifying to me, because I had never touched a computer, anything with a keyboard intimidated me. I recall thinking that I would just put all my effort into my distribution company. However, that Saturday at a convention we were told it was going 100% online. I have never felt so terrified. I saw myself living in a cardboard box, wondering if there was even a place for me in this new world. I made the decision to learn, immersing myself in not only the Internet, but online marketing, reading, going to every seminar where the stars at the time were speaking. Michael Dell at the Detroit Economics Club really helped me see more clearly. Ever since, I am committed to never get left behind, to jump in front of whatever I see on the horizon to see if it is something that will be the disruptor or not.
My beliefs are that there will be two models that survive and thrive and those will he large super efficient systematized teams that will be transactional. They will be the Walmart lower cost per transaction to make everything happen quickly and smooth but the client will be responsible for more leg work. This will be lower commission but high volume. The other will be the Nordstrom model as professional concierge level service for those who value their time and experience more than trying to do it as cheaply as possible. This will be a higher commission rate for higher service levels. All those in the middle become Sears with similar futures.
All of this will require running as a true business model not the traditional self employed model where agents get lost doing all the transaction activities "pushing paper" and not focused on the ONLY two things they should be doing, giving their clients a wow Experience that they will refer and pay more for, and communicating with database and doing business development. Anyone who doesn't figure out how to systematize all their back end processes are going to be the farmers heading into town.
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