Editor’s note: This series details business strategies employed by a range of brokerage companies. Read previous columns in this series: "A case study in cost competition," and "@properties: It pays to be different." This column — the second of two parts — focuses on the business strategies in play at a small, independent real estate brokerage company. Read Part 1: "Small brokerage thinks big."
Where the GoodLife Team differs from differentiators like Chicago brokerage company @properties stems primarily from its focus on a specific type of agent. Its recruitment and training ties in to the company’s focus strategy.
Focus strategy, as defined by Michael Porter in his 1980 book, "Competitive Strategy: Techniques for Analyzing Industries and Competitors," "rests on the choice of a narrow competitive scope in the industry. The focuser selects a segment or group of segments in the industry and tailors its strategy to serving them to the exclusion of others."
Recruitment can be a time-consuming process for the GoodLife Team. The team has been known to track a particular agent for months on end to ensure proper fit with the systems, the culture and the expectations of the company.
For example, GoodLife Team does not hire any part-time agents. In fact, GoodLife Team does not hire anyone who is not the primary breadwinner for his or her family. The idea is that only those who are doing real estate as a real full-time career can live up to the demands of the GoodLife Team.
Put another way, only those agents whose families depend on their earnings would see enough value from the services and products of the GoodLife Team to pay the premium.
Given the importance of the corporate brand to its strategy, GoodLife Team does not hire agents who see themselves as independent businesspeople.
In fact, some of the best recruits for GoodLife Team come from outside the real estate industry. The company heavily recruits people who have had success in corporate sales, know how to work in a corporate environment, know how to utilize support, and are comfortable with being managed actively.
An interesting aside from Jack Miller, the chief technology officer for the GoodLife Team, is that the company often has difficulty with experienced real estate agents, as they have to unlearn too much to be effective within the GoodLife Team system.
The organizing principle around which the GoodLife Team’s Focus strategy is formed is coaching. All of the above factors really are about how coachable an agent is. An agent who is part-time may not have the kind of motivation to follow through the directives of the GoodLife Team coaching staff (who also happen to be the co-owners and paid staff).
An agent who sees herself as very independent may disregard the coaching and the systems; the GoodLife Team’s focus strategy is of little value to such agents.
The training at GoodLife Team is extensive, but it isn’t fair to describe it as training — it’s an intensive coaching program, conducted by company founder Krisstina Wise, Kelley White, and Jack Miller as the three primary trainers/coaches.
Kelley White is former head of training for Keller Williams who developed that company’s Keller Williams University program. Wise is not only a top-producing agent, but a highly sought-after coach in her own right. And Jack Miller was a trainer and technology coach for Keller Williams for many years. The executive team at GoodLife Team has more than 30 years of professional coaching experience between them.
As Jack Miller said, "We work with education, not just training. Training is showing someone how to do it. We do that, but we do education. We do the background to the training, from the fundamentals of sales, of marketing, of business, and explain the whys behind the hows of the real estate business."
For example, when GoodLife Team conducts training on how to work with expired listings, the focus is on the fundamental concerns of the sellers. GoodLife Team would review the economic conditions, breakdowns in the market, why a listing might expire, and how the seller’s psychology is impacted by the expiration.
With the explanation in place, the company provides a script and methodology to each agent — the GoodLife Team executive team considers this to be the best way to address the fundamental concerns of sellers.
Each agent at GoodLife Team undergoes six months of continuous sales training, with weekly coaching-style follow-up that demands accountability and responsibility from each agent.
The technology and customer relationship management system are built around coaching, as well. The CRM system collects much of the data around the real estate transaction, from leads to conversions to showing notes and performance.
With the data in hand, the weekly sales meetings (which function as coaching sessions) are conducted to drive home accountability to the training. And the data and metrics assist the executive team in understanding and managing the performance of agents. …CONTINUED
GoodLife Team does not utilize any external coaching programs. The view of GoodLife Team is that the industry is filled with trainers and coaches who simply mimic and copy the best practices of top agents and brokers.
According to Miller, the members of the executive team have been through every single one of the major coaching programs and found them all wanting. Their approach, honed over their collective experience as professional trainers and coaches, is to take fundamental education about sales and marketing and real estate, then to apply and interpret them to the Austin marketplace.
As GoodLife Team sees it, the level of coaching and the type of training that it offers at no charge would cost an individual agent thousands of dollars a month with an external coach/trainer. The company demands that each of its agents go through the training process, no matter how productive or experienced they are.
The fit and strategic competitive advantage
The company’s recruitment process filters out all agents who are unlikely to realize value from the GoodLife Team system; and each one is then trained and coached heavily in the GoodLife Team way of doing business. That business process incorporates the technology system, which was built around the company’s coaching and performance-management values.
The technology enables the kind of marketing that emphasizes the GoodLife Team brand rather than individual agent brands.
Agent productivity appears to be a competitive advantage of the company’s focus strategy. Agents who have been with the GoodLife Team for four months, with no prior real estate experience, have averaged two to three transactions per month, as an example.
The average GoodLife Team agent completes 18 transactions per year, while the average for the Austin market is four transactions per year.
Main strategic threat
Like other differentiators, the main strategic threat to GoodLife Team is that its services are not seen by the agents as having sufficient value to warrant the premium price. In the specific case of the GoodLife Team, I believe that is tied to productivity: If an alternative strategy by a competitor can show either higher productivity or same productivity at a lower price, that is a strategic threat to the GoodLife Team strategy.
A centerpiece of the coaching-based system is the technology that allows the GoodLife Team executive team to monitor every useful metric, and to take advantage of all of the data it collects.
It is possible that advances in technology might render the proprietary systems of the GoodLife Team out of date. The coaching-based infrastructure may survive such changes, but its value may be reduced below acceptable levels.
The company’s focus strategy is also vulnerable to changes to its target market segment. Consider that the target segment is "coachable" real estate agents. This segment may be much smaller than GoodLife Team believes it to be.
Corporate salespeople may not wish to try their hand at real estate. In fact, scalability of the GoodLife Team model is one of the major questions of the executive team itself.
The GoodLife Team system is interesting for a number of reasons. First, its emphasis on differentiation strategy — as a small company that is more like a high-end agent team than a brokerage company — is unique. There are very few agent teams that have invested and continue to invest as much as the GoodLife Team has and does in its systems.
Second, the organizing principle of coaching as the dominant strategic factor is relatively unique; other companies offer training and coaching. Indeed, Keller Williams considers itself a "training organization that happens to run real estate brokerages" and @properties has a very strong in-house coaching program. But neither is built around coaching.
Third, the emphasis on coaching and the systems built to support a coaching-oriented model means that GoodLife Team has to focus on a relatively small segment of the agent population: those who are eminently coachable. In many cases, they come from outside the real estate industry altogether and get trained from scratch in the GoodLife Team methods.
It is an effective competitive strategy: differentiation, but with a strong focus. The result: increased productivity, at a premium price.
As Miller said, the broker-agent splits are a non-issue if the agent is meeting personal income goals.
Robert Hahn is managing partner of 7DS Associates, a marketing, technology and strategy consultancy focusing on the real estate industry. He is also founder of The Notorious R.O.B. blog. You can reach him on Twitter at @robhahn.
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