(This is Part 5 of a five-part series.
(This is Part 5 of a five-part series. See Part 1: Customer experience vital to successful real estate biz; Part 2: Top real estate agents dig for clues to consumers’ hearts; Part 3: Lock in consumers with great real estate advice and Part 4: Tap referral gold mine of past real estate customers.)
While there is heated debate about which business models will exist 5 to 10 years from now, one thing is certain: Consumers expect great service and will do business with those who provide it.
Almost all top producers share a common trait – they each have two or three niches where they specialize and have market dominance. While there are numerous paths to achieving top-producer status, staying on top requires repeat customers and referrals. Repeat customers and referrals only occur when the consumer has had a satisfactory experience. One of the best ways to build repeat and referral business is to become a customer experience niche specialist.
One strategy for providing top-notch service is to have a team of agents who specialize in different parts of the transaction. Typically, the agent heading the team is the rainmaker. In addition, there are usually one or two administrative people who handle marketing, provide customer support, and serve as transaction coordinators. Depending upon the size of the team, there may also be a listing specialist and one or more buyers’ agents. This specialization provides allows the team to develop expertise in specific areas. This normally results in a better experience for the consumer.
Help-U-Sell, seeking to further raise the level of service they provide, is experimenting with a new version of this approach. Rick O’Neil, president of Help-U-Sell, calls his company “the most misunderstood company in the business.” According to O’Neil, Help-U-Sell is a “full-service, flat-fee” company. The Help-U-Sell business models are challenging the traditional “full-service, full-fee” brokerage on the very basis on which they claim to compete: outstanding service. The Help-U-Sell value proposition for sellers provides services similar to most full-service brokers, including posting on Realtor.com, MLS, pay-per-click advertising, as well as traditional print advertising. The sellers handle open house and showings. Help-U-Sell agents conduct negotiations and handle closings.
Help-U-Sell is introducing an innovative way to work with buyers. Instead of having traditional agents handle initial contact with buyers, Help-U-Sell plans to hire customer service experts who will handle this function along with showings. When the buyer is ready to purchase, an agent who specializes in negotiation and closing the transaction takes over the transaction. The idea is to replicate the same level of service consumers receive from companies such as Nordstrom. In fact, O’Neil says that Nordstrom salespeople may be an ideal fit for the customer service role he envisions.
This approach raises an interesting question. Are employees better suited to provide high levels of customer service as opposed to independent contractors? Certainly, the employer has more control over the quality of the experience than most brokers have over their independent contractors. On the other hand, a large proportion of the most successful agents aggressively pursue providing their customers with outstanding service since that is the basis for future referrals.
Whether it is an individual or a company, those who place a high emphasis on customer service are a direct challenge to the plethora of new business models, most of which forego service in exchange for a fee reduction. These new models cater exclusively to people who purchase on price, which represents about 15 percent of the market. Five percent of all clients select their agent based upon their desire for premium service. The other 75 percent select their agent based upon value, which is a combination of service and price.
To see the inherent danger in ignoring service and focusing exclusively on cost cutting, consider what is currently happening in the auto industry. Zero-percent financing with cash back is no longer good enough. General Motors is now offering consumers the ability to purchase their vehicles at the employee rate. Sales are up, however, what happens when the promotion ends? What’s the next step when the employee rate is no longer good enough? Selling cars at a loss? Ironically, Toyota, Mitsubishi and Honda, all of whom provide an excellent product coupled with excellent service, are not competing by cost cutting. Ford decided to pay its salespeople $1,000 if they refer a purchaser. Although their sales did not increase as much as GM, they still posted a strong gain for June.
An additional danger in playing the cost-cutting game rather than the customer-service game is that there is always someone willing to undercut you. For example, one extremely successful agent took a listing at zero percent to undercut an agent who was trying to make inroads in his farm area by offering a 1 percent commission. The agent only had to do this twice before 1 percent agent went elsewhere.
Today’s consumer wants value. When the heated sellers’ markets across the country slow down, (and many are already showing signs of cooling), excellent service coupled with excellent marketing will be what is required to sell properties for the highest possible price. If the market becomes a buyers’ market, commissions and incentives to agents will actually increase. Are you providing your clients with a superb customer service experience? If not, the time to start is now if you to build a sustainable business, regardless of market conditions.
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