The quest for quality in real estate services
Perspective: Industry shouldn't settle for inconsistency
By Inman News, Thursday, December 8, 2011.
Service stamp image via Shutterstock.com.Editor's note: The following guest perspective is republished with permission of the WAV Group. It was originally published on Nov. 21.
By MARILYN WILSON
Real estate agents in our industry spend millions of dollars as a group annually to become a Realtor and to stay a member of the Realtor family. As someone who cut their teeth working with some of the most highly trusted brands in the world like Fisher-Price, Sesame Street and others, I have a few observations of the real estate industry's branding efforts.
First, when I ask most Realtors what makes them different than non-Realtors they say, "the code of ethics." While I appreciate the fact that those who live to the letter of the National Association of Realtors Code of Ethics may treat their customers differently, I would beg to differ that the code is a strong brand differentiator.
Consumers expect every licensed real estate agent to live by a standard of service that includes integrity, honesty and above-board practices. Wouldn't you lose your license if you demonstrated unethical or even unprofessional business methods? I don't believe the code of ethics "cuts it" as a key brand differentiator.
Now let's look at some of the strongest brands in America today, like Apple, Trader Joe's, Ritz-Carlton, Nordstrom's and others. What do they have in common? Do they simply offer the promise that "we won't rip you off"? I would say no. They promise a lot more than that.
Service consistency
Each of these high-quality brands delivers a consistent level of service. When you walk into an Apple Store or purchase equipment you know you will enter an environment that is fun and full of positive energy.
You know you will work with someone who is knowledgeable and respectful regardless of your level of product knowledge or technology expertise. You will not need to leave the environment until your question has been answered or you have found the product that works best for you.
Have you ever walked out of a Nordstrom's store feeling you didn't get the service you deserved? Has Trader Joe's disappointed you without providing a great sample from a warm and friendly "crew" member?
Did you ever walk out of an Apple store with buyer's remorse because you didn't feel the product you purchased was up to snuff or the sales rep wasn't completely helpful or respectful of your time?
This is what great brands do. They set an expectation of service quality and then deliver on it every time you interface with the brand.
Can the real estate industry claim this level of service consistency? Do we set expectations with the consumer and then meet it with every Realtor experience?
Do we consistently monitor service satisfaction levels and then eliminate those who do not provide the service quality we know consumers deserve?
I would say definitely not. The consumer experience in real estate is inconsistent at best. In my own experience I have satisfying customer service experiences and absolute disasters! I'm sure I'm not alone on that.
We wonder why our profession doesn't have higher satisfaction ratings with consumers, yet we do nothing to ensure a consistent service experience.
For the most part, it is highly unlikely that a consumer will have the same service experience with two agents in the same brokerage, not to mention with agents across the country.
How can we expect to build a meaningful brand that is not based on accountability to a standard of service quality like every other strong brand in America delivers?
Measurement of service quality
The industry uses the excuse that agents are all independent contractors, thus we cannot require a certain level of service quality. I would beg to differ with that cop-out, too.
Have you ever purchased carpeting or other types of contracted services from Lowe's or Home Depot? They use a network of independent contractors to provide services under their brand. Those contractors are carefully vetted and chosen.
After they complete a project at your home you receive a feedback form asking you to rate the experience of those contractors at your home. If a contractor gets known for being too messy, disrespectful of the homeowner, or doesn't show up on time, guess that happens to that contractor? The contractor gets fired, of course!
The same thing that happens to employees at Trader Joe's, Enterprise Rent-a-Car and other great brands known for their service quality.
If we're going to change this industry we're going to have to put real service quality standards in place, and when an agent doesn't meet the standards we need to clear them out! The industry also needs to promote what the Realtor brand stands for and show a genuine interest and commitment to improving the customer experience with Realtors.
Why are we having such a hard time adopting the concept of consumer feedback and ratings transparency? Every other industry in America -- even doctors and lawyers -- now participate in consumer feedback programs, yet somehow the purchase of a consumer's largest asset continues to be unregulated.
I'm amazed there haven't been more lawsuits given the gravity of the purchase, coupled with such poorly managed service delivery.
So what can be done to change this weakness in the Realtor brand?
Outline service quality standards
As the stewards of the Realtor brand, NAR can outline service quality standards based on input from consumers about what a satisfying consumer experience looks like. Service quality standards should not be outlined solely by agents or brokers.
The standards need to conduct the highest level of service quality, not just a compliance-driven mindset that so many industries use.
For example, I was asked to complete a satisfaction survey in a hospital after my mother had spent several weeks there.
The questions were ridiculous and had nothing to do with service quality. The questions at the hospital centered around things like "Were you told about your insurance requirements?" rather than about things like "Did your family member receive the respectful care they expected?"
These questions were actually insulting because they did not give me a chance to provide the feedback I wanted to give.
I wanted to tell them about the nurse who went totally above and beyond the call of duty and provided us with an amazing experience. I wanted to tell them about the woman in the bed next to my mother who called for over an hour for someone to help her out of bed so she could urinate. Nobody ever came, and sadly, she wet the bed.
Our industry at some level has adopted somewhat of a "blind eye" to what consumers are looking for. Of course, there are many amazing agents out there who go well beyond the call of duty.
Many times, they are just amazing people who have taken it upon themselves to deliver an amazing customer experience. There are no standards of service that have required or even encouraged them to achieve this level of service quality.
The industry needs to define service quality standards by what it takes to delight consumers, not just by whether the disclosure documents were completed properly or the inspection was completed on time.
Adhering to service quality standards
We have an industry that is based on membership. NAR is incentivized to include even subpar agents in its ranks so that it has the political power on Capitol Hill with the largest trade association in America.
Local associations and multiple listing services need the membership revenue to support the programs they would like to deliver.
Brokerages need to maintain their lowest producers so they can continue to receive technology fees and marketing fees.
Real estate industry is an industry with an extremely low cost of entry. Maybe it's time to change that and think about adhering to quality standards and see what happens?
I have heard from many top-producing agents who would be happy to pay more for their monthly subscriptions and fees if it would help eliminate the agents who are unprepared and deliver poor service to their clients.
Maybe it's time to overtly demonstrate to consumers and the U.S. government that we are serious about stepping up the levels of professionalism and have outlined strong recommendations to brokers and associations about putting programs to place to improve the customer experience.
Maybe as an industry we could actually put a meaningful service quality monitoring program in place that is run by the industry and not by third parties.
Zillow, for example, now includes 70,000 consumer ratings on its site in just a few months after it launched them. Consumers are desperate for this information, and because we are not providing it to them they are, yet again, going to third parties for answers.
It's time for real estate to wake up and realize that the needs of consumers really do drive the industry. Just because it's not convenient for us to provide meaningful methods for managing service quality doesn't mean they don't want it.
They will find it somehow, some way. I would really like the solution to come from the real estate industry - before it's too late.
Marilyn Wilson is a part of the WAV Group, a real estate research and consulting firm.
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Submitted by Victor Lund on December 9, 2011 - 8:49am.
It would be great to see a large franchise or large broker take on this quest - albeit painful and arduous. Today's broker is more likely to live with a bad agent as long as the produce. The income is more relevant than the customer. Only a courageous and passionate customer-minded franchise could pull it off.
I see service ratings as an aptitude test for hiring. New agents would need to appretnance with an established agent to accrue ratings. Agents who have low ratings would be fired or demoted until they get it right.
In fairness, there are plenty of leaders taking swipes at measuring consumer satisfaction. They usually own their problems and use the results to inform training and technology roadmaps. It's a good effort, but falls short of using consumer feedback to inform hiring and recruiting practices.
Kudos to the Houston AOR for providing consumer feedback to agents and brokers as a member benefit. The California AOR is piloting a similar program in MLSListings. I would hope that Bob Hale of HAR, Larry Romito of QSC, Jim Harrison of MLSListings would talk to anyone with the ambition to improve service quality in our industry. They understand the challenges at all levels. I think they are all planning to attend ICNY - and there is going to be a consumer track at the conference. I
t's time for the industry to step up and spread dignity deeper into our ranks.
Victor Lund
Partner
WAV Group
http://waves.wavgroup.com
http://www.wavgroup.com
Submitted by Victor Lund on December 9, 2011 - 8:52am.
Sorry for the typos in my comment - its an iPad thing - perhaps an Inman staff member will clean it up for me.
Victor Lund
Partner
WAV Group
http://waves.wavgroup.com
http://www.wavgroup.com
Submitted by Agi Anderson on December 10, 2011 - 5:25am.
Marilyn, You hit the nail on the head, public perception of Realtors goes back to selling caves, along with the archaic compensation structure. With technology being what is is today and the enormous power of NAR, it's time to escalate the brand of Realtor. Just using YouTube alone has the capability of reaching millions in a nano second! The time has come to change mindset, public perception and old broken business model.
Agi Anderson, Real Pro Advisor
ePro FL Real Estate Broker
Real Pro Virtual Marketing
Submitted by John De Souza on December 10, 2011 - 10:22pm.
Which brokers are doing this well already? Anybody care to share?
We survey all of our closed transactions and receive about a 25% response rate. Of that, 98% would use us again.
Although those numbers look good at first glance, I know there is more knowledge we can gain from better surveys, and from sampling more often during the process.
Submitted by Kevin McQueen on December 12, 2011 - 7:08am.
I completely agree with Marilyn and Victor (and Bob Hale / Larry Romito) on this one. I envision step one for brokers is to use client survey feedback as an internal tool to manage risk and evaluate agents' performance and their impact on the brand. Brokers *could* keep these metrics to themselves, share the success stories during internal sales meetings or they choose to brag about the results of some or all of their agents to consumers through multiple channels. The point is that the broker remains in charge of how to leverage this asset.
During planning sessions, associations and MLSs almost always talk about their strong desire to "raise the bar on member professionalism". When we ask what they have in mind, they talk about educational programs for the members and spending more money on various programs. I say, "Good luck with that strategy and how will you measure the results". That gets people thinking about alternatives.
Rather, why doesn't the association / MLS provide the BROKERS with the tools and pay for it. I have seen a number of proposal and the cost is LESS than the educational programs and the results could be significant at raising the bar and empowering the brokers to be more aware and accountable for agent behavior.
I really like Larry Romito's story, (from his wise mother I believe). She said, if you want teenagers to misbehave at a party, turn the lights out. In this manner, I believe that we must turn the light ON in our industry right now if we are going to have a positive impact on agent behavior, empower the brokers to do their part and have a chance to raise the bar in the mind of consumers. They are the (only) ones that really matter, right? What is the cost of bad-behavior? It's huge. (thanks Jay Thompson for causing me to think today).
I believe this is the last call for organized real estate - associations, MLSs and brokers, working together on this topic. Avoid it much longer and it will be too late to change consumer perception about the industry. The cost to do this is so incrediably low and the benefits of shining the bright light of success on the good ones is very powerful. What's stopping you?
Kevin McQueen
President, Focus Forward
(248) 374-1045
kevin@kevinmcqueen.com
Submitted by John De Souza on December 12, 2011 - 12:22pm.
Kevin "I believe that we must turn the light ON in our industry" -- as Supreme Court Justice Brandeis' said - "Sunshine is the best disinfectant".
For what it is worth, I am a fan of the book "The Ultimate Question" about Net Promoter System NPS. http://www.netpromotersystem.com/
Submitted by Michael McClure on December 13, 2011 - 6:11am.
Marilyn,
Great post! As a 21 year veteran of the industry, both as a REALTOR® and as a broker/owner, I think your analysis of many of the things that plague our great industry are spot on. More specifically:
(1) I completely agree that the Code of Ethics is not a strong brand differentiator. I wrote a blog post peripheral to this point at http://p1fran.com/2009/12/real-estates-gaap-gap/. From anecdotal experience, I can tell you that most of the people I work with as clients and even many inside the industry struggle to explain the difference between REALTOR® and non-@REALTOR. I founded an open Facebook group called "Raise the Bar in Real Estate," and this very topic has been discussed on a number of occasions (I would invite you to join that group and see for yourself what I am suggesting here);
(2) Regarding your entirely logical statement of "wouldn't you lose your license if you demonstrated unethical or even unprofessional business methods?," I would suggest you read this eye-opener of an article published less than a week ago: http://www.tampabay.com/news/business/personalfinance/criminal-record-no.... Yes, you read that right: you can have a criminal record and still get a real estate license (at least you can in Florida, and it's my understanding that, in most states, no actual background check is performed; many states simply ask applicants if they've ever been convicted of a felony). This underscores in a huge way why the barrier to entry is not just too low but, in some cases, positively inexplicable and completely counter to any real effort to protect consumers or raise the bar;
(3) You are again spot on in terms of the lack of quality branding in real estate. I've written many blog posts on this very topic, which you can read at http://p1fran.com/tag/branding/. I completely agree that real estate lacks anything even remotely comparable to an Apple or a BMW-like experience, and that is unfortunate given that, for most people, a home purchase or sale is the most financially significant event of their lives;
(4) There is no question that the image of the real estate industry suffers because of the low barrier to entry and because of these other factors. Just Google "real estate agent Harris Poll" or "real estate agent Gallup poll" and the results are there for all to see (I've written about that one too: http://p1fran.com/2010/01/the-people-have-spoken/). There are many reasons things "are the way they are," namely: painfully easy entry into the industry in terms of real estate licensing (in many states, including my own, to obtain a license to cut hair requires 1,500 hours of pre-license training, while in real estate, that number is 40; this is a literal, actual example), (2) a predominant business model that actually encourages the retention of marginal performers (because brokers often charge non-performing agents a monthly fee of some variety, so the broker profits even when the agent produces nothing), (3) lax enforcement of rules, etc. I could go on, but you get the gist;
(5) Without going into too much detail, let me just say that, again, you are correct in that the entire industry is based on a "more people is better because we need more revenue from dues" mindset. And that creates amazing inertia and resistance to any attempts to truly raise the bar (because, as the argument goes, that would force people out and then we'd lose revenue and then where would we be?). I have proposed publicly that this issue would be easy to solve: just raise all dues at all levels dramatically. The agent performing at a high level is not going to leave the industry even if the dues are raised tenfold, but that would certainly sweep out a mass of people who view real estate as a hobby (and, with some stats showing that as many as 73% of all agents as earning the majority of their income from sources OTHER than real estate, that means there are a heck of a lot of hobbyists out there), and
(6) You are absolutely correct that "it's time for real estate to wake up and realize that the needs of consumers really do drive the industry." Amen! I spent over two years trying to rally momentum for a raising of the bar in the real estate industry (here is a sampling of my efforts: http://p1fran.com/rtb-directory/). What I concluded after that experience was that there are simply too many reasons that the industry - for the most - really does not want change.
It is all of these things - and more - that caused us to create VerifiedAgent.com, real estate's first truly independent, third-party corroboration of the critical client service characteristics that studies show clients most want in a real estate agent: honesty, trustworthiness and a great reputation.
We think agent review sites are great, and we view our service as complementary to what they and to what excellent companies like QSC do (see industry icon Stefan Swanepoel's commentary on this at http://www.verifiedagent.com/press-releases/a-message-from-stefan-swanep...). We just go a step further - beyond basic client reviews - to cover full-time status, minimum performance standards, peer reviews and licensing status, so that, when the public engages a Verified Professional Agent™, they know that they are working with a real professional. And we feel that is precisely what the public wants, needs and, most importantly, deserves. That it gives the quality real estate professional real, legit competitive advantage is just the icing on the cake.
Thanks again, Marilyn, for shining a light on what I feel is truly the biggest challenge to the long-term health of our great industry!
Best,
Michael McClure, CPA
CEO, VerifiedAgent.com
http://www.verifiedagent.com/
Submitted by Valasie August on December 17, 2011 - 1:03pm.
Victor is correct. Every area we attempt to influence with regard to professionalism in the RE industry and the type of behavior we strive to promote cannot be achieved without the buy in of broker owners and supervising branch managers.
At the first Hear it Direct conference recently consumers were given the opportunity to tell us what they want from their Realtor. But until those in charge of their companies determine that a consistent and reproducible minimum standards policy is worth enforcing the industry will not move towards that end except agent by agent. While I like even that slow change over NO change at all, it is simply not going to happen fast enough to keep our industry from being forced into a re-invention that is not the kind we are looking for nor one that is in the best interests of the public when it is all said and done.
We can blame the individual sales associate for not being the type of professional that operates with standards that promote and protect their client's interests but that is like blaming the underage kids for drinking in our home when we supplied the alcohol AND the keys. And all because we wanted them to like us and maybe even be our friends.
A little tough love is needed here!
Valasie (Val) August
Managing Broker
Long and Foster Real Estate, Inc
@valasie