Glenn Kelman is CEO of Redfin, and a keynote speaker at Real Estate Connect.
We asked Kelman his thoughts on what’s changing in our economy and what he sees as the key trends that are most important to real estate. From the new competitive advantage of giving customers what they want, to the last-second economy, Kelman weighed in on a variety of themes that are redefining the real estate customer experience.
See Kelman live at Real Estate Connect on July 16, 2014, in San Francisco. Learn more about Real Estate Connect at realestateconnect.com.
Inman: What’s the most disruptive force changing the economy and consumer behavior and why?
GK: The obvious answer is the mobile Internet, but there’s a deeper cultural shift in the relationship between companies and their customers.
Competitive advantage used to consist of the ability to maximize profit per customer. Now that customers can so easily use Yelp or Facebook to blow up a brand — for better or worse — businesses have focused on maximizing overall profits, by maximizing the number of customers who love their service. You can’t pull one over on anybody anymore: Awesome service is the only reliable marketing.
Businesses like Schwab, Amazon or CarMax are all celebrated for their technology, but the founders of each of these businesses attribute their success to a business that was organized top to bottom to give customers what they want. Their true competitive advantage is cultural.
When talking about disruption we focus so much on technology, but technologies used to create competitive barriers around a business that doesn’t give the consumer what she wants will always be swept aside. Technology is just a means to an end, where the end is better value and better service for the consumer.
Inman: Every day there are more services described as “Uber for X.” Do you think this trend will continue? If so, what’s next? If no, why not?
GK: Uber is the culmination of several trends that will only grow in importance:
- The last-second economy, in which consumers expect immediate service at the touch of a button on their phones. Now more than half of Redfin’s home-tour requests are for same-day service.
- The emergence of high-end services for the digital elite, in which it is now common for people to ride in the town cars once reserved for old-school bigshots. Redfin has certainly noticed that Uber waited to deliver a mass-market, value-based service, UberX, after establishing its brand through a high-end service.
- The serendipitous service provider: What’s underappreciated about the Uber model is that the only equipment Uber needs to provide its drivers is an iPod, converting anyone with a little spare time into a driver. Work for some people is going to be less 9-to-5 and more opportunistic. This trend is perfect for a casual workforce, but less encouraging for professionals who want to develop a career, or perhaps for the American economy overall.
- The combination of digital and real-world services. Years before Uber, Taxi Magic let people order a ride via an iPhone. Uber became a hundred times more valuable by having the audacity to develop its own transportation system to pair with the app.
Inman: What’s the one trend you’re keeping an eye on for 2015 and why?
GK: We think the trends described above will accelerate, but the most transformational is the last one: what Greylock’s James Slavet calls the emergence of “end-to-end companies” or Andreessen Horowitz’s Chris Dixon calls “full-stack startups.” What could a school, a hospital, a research lab (or a real estate broker) be like if it was reinvented by someone with the technical talent and access to capital of Silicon Valley, but a commitment to making a difference in the real world?
Inman: What is the one thing real estate needs to do to innovate on the consumer experience?
GK: The first step is just what we’re doing now: talking about how to make the consumer experience better. At many real estate conferences, the overwhelming emphasis is on how to meet more customers. But the only sure way to do that is to focus first on what we rarely talk about: a fundamentally better customer experience.
To deliver on that, we as brokers will have to influence the service our agents deliver, and be able to see what’s working for our customers and what isn’t. If a brokerage wants to stand apart for a superior customer experience, it has to be able to reward agents who deliver on that experience, and fire agents who don’t.
We all know the great brands in real estate, from Century 21 to Coldwell Banker, as readily as we know the names of retailers like Costco and Nordstrom. But whereas anyone in any city could say how Nordstrom is different from Costco, few of us could say how the customer experience varies from one brokerage to another.
But that is changing; the real estate industry is changing. What is emerging from that change are the brokerages who can deliver differentiated consumer experiences across their entire workforce of agents.
Inman: What’s the most important takeaway of your talk at Real Estate Connect?
GK: Brokerages can shape the future of real estate: We as brokers can be the advocate for the consumer and the technology platform for our agents to deliver a better consumer experience. We just have to be willing to take chances, to take a stand, to be different, to think long term, to invest in the future at the expense of the present.
My goal will be to make some practical suggestions around what has worked for us — and what hasn’t — to deliver better service to our customers. We’ve made all sorts of mistakes, more and faster than perhaps any brokerage in history, but we’ve learned quickly, too. Hopefully sharing what we’ve learned will be useful to everybody at Real Estate Connect.