There is a bear in the woods. He’s been around for a few years and poses a threat to us. There is an aggressive new competitor in our industry. This competitor appears to be an ally of real estate agents but is actually an adversary. There are a large number of web-based foreigners trying to break into the real estate market. These strangers are vying to recruit customers through early offers of gift certificates, cash, gift cards, or free discount opportunities. Several agents are also promoted to the consumer with the incentive of receiving sales materials such as CMAs or marketing plans. These companies attract consumers with lower fees or premiums.
The most sophisticated of all these intruders is Lending Tree. They have already been engaged in lawsuits with the Cendant and RE/MAX groups. I have no doubt that they will continue to cross the line and others will follow. The only service that these companies provide is to be the intermediary between the potential prospect and a group of agents bidding for the company. For this service, they want 30% – 40% of the commission!
These companies are working diligently to become big players in the agent referral space. For example, if a consumer used Lending Tree to help them find an agent, they could receive up to $2,000 in gift cards at Home Depot based on the price of the home.
The whole industry of these web party crashers is about making money at your expense. For you to do all the work you’ve already done, but for a 30%-40% reduction in your pricing structure.
There are others like Home Loan, which offers a cash reward of $500, or Master Moving, which offers a reward of 0.225% of the sale price. The reward would be $675 on a home worth $300,0000. All of these companies want a slice of an already thin pie.
A recent study by NAR gives us an indication of why we encounter these predators lurking in our industry. For the years 2003 and 2004 only 13% of consumers returned to the agent they had used for a previous purchase. This statistic shows our glaring lack of after-sales service. It shows that we are no better than other salespeople who make a sale and never follow up with the customer again. Until we change our ways, this bear will be out of the woods and into our customers’ backyards. He’ll be digging through the trash trying to find a way to get invited!
We need to push these bears back into the woods. The only way to do that is to really protect what we have right now!
As agents, too many of us rely on mail and email to build relationships with our customers after the sale. We use a pre-packaged CAP program, or customer appreciation program, where we give them “valuable items” monthly. I don’t want you to misunderstand me here. It’s good if you do that. There is nothing wrong with regular contact by mail or e-mail.
The problem is that we allow ourselves to be lulled into a sense of security because we send them something every month that creates an impression on our customer for a total of 30 seconds at best. Customers also know that you send these same “stuff” to over 500 other people. The consumer knows that we have only merged a mass letter and a mass marketing article. How special does that make them feel? Sending mass mail marketing items is better than doing nothing, but it’s a far cry from the exclusive relationship we hope for.
We need to realize and value these mass mailings for what they are… support pieces. The only value of these coins is to support the personal endeavors we should be engaging in. The personal efforts we make towards our customers are the basis of the increase in our referrals and the loyalty of our former customers.
Our personal efforts can be segmented into two key areas, the “relationship building” area and the “industry expert” area. We need to build the relationship so they know we care about them. We also need to establish ourselves as the industry expert. Our past clients need to feel that having an expert by their side outweighs the freebies that these companies entice them with. If all we have is a relationship, they will be tempted to evaluate and even accept these outside offers.
To master the arena of relationship building, we need to go beyond mail and email. We must intertwine personal interventions, telephone or face-to-face contact. Our past clients need to hear from us personally on a regular schedule. We need to increase the level of intimacy with our customers through the frequency of personal contact and the intensity of personal information. The intensity of personal information is the basic information about a customer. We will track this basic information on each client. An example would be birthdays, anniversaries, children’s birthdays, children’s activities and customer interests. There are more options than could be listed in an hour. The question is what do you want to track? What will give you the advantage of protecting what you already have? The power of this information in a usable format is explosive. A usable format would also establish intimate correspondence based on life events, such as sending birthday and anniversary cards. A usable format would be the ability to search your database based on these categories as well as other specific categories.
Very few agents will do what I will describe now. You have a client who is interested in golf. You know this because it is essential information that you track about your client’s interests. You have read an article on a golf topic regarding the opening of a new course in your greater area. You then photocopy this article with a note for the client saying, “I read this article and really enjoyed it. I thought of you when I read it because I know you love golf. I hope you and your family are doing well. “You then send the article to your customer. Then make a call within a few days to make sure they received it and you can ask for referrals. If we do that type of relationship building, we reduce exposure to customer defections. A defection is when someone leaves your database and uses someone else. Using the CAP system being your only avenue of relationship building is not not sufficient!
We also need to position ourselves as the industry expert. The reason the fees have felt additional downward pressure is the message from these outsiders, the media and others. The message they send is: “It doesn’t matter who you choose, as agents, we are all the same.” Our message must be “What matters is who you choose to represent your interests.” We must first believe in it deeply. Second, we need to be able to document this empirically with statistics. We need to be able to articulate our average list price to sale price, average days on market, and average ads sold versus ad taken versus board average or ad average. another agent. From these statistics which we call the “Big 3”, we have to show the benefits for the customer. The benefits of a higher net amount in their pocket, less hassle or disruption to their family due to fewer days on the market and a higher likelihood of a sale when they use us to represent their interests.
We must also regularly inform our client of the state of the market. Again, showing them empirical evidence of home inventory based on price range, number of homes sold in each price range, days on market in each price range, and rate of absorption. The burn rate is the number of months of inventory we have based on current trends. These statistics impact the value and ultimately the equity position of our clients.
There are endless ways to position yourself as an expert. We need to create a positioning plan and then implement or execute the plan to raise awareness to our expert status.
These outsiders are threats and they present a clear and present danger to our industry. There are strategic and tactical moves we can make in this game to minimize the momentum that builds from these outside forces. The time for implementation is now. We all need to work together to keep bears out of the woods.