BrokerageTechnology

Due diligence is the anecdote for ‘shiny object syndrome’

Weed out the bad candy in adult trick-or-treating

After more than 37 years of experience in nearly every aspect of the residential real estate brokerage services business, I have an important observation for both brokers and agents.

How many times have you been exposed to the latest, greatest shiny object being pitched to you by a vendor? The answer is likely “too many times.” Well, I feel your pain. It is that dreaded feeling you have after the demo that warns if you don’t do this, you just could be missing out on something great.

So I think it is time for you to upgrade the level of your due diligence process. Here’s why.

Each year, tens of millions of dollars are wasted by brokers and agents on platforms and solutions that amount to not much more than “a definite maybe.” A plethora of shiny objects emerge and retreat from this business each year, and don’t get caught in their promises of grandeur.

Rarely, very rarely, do shiny objects stay shiny in this business. Attend a National Association of Realtors convention and take a tour of the trade show area. For the past 30 years, I have attended these events and witnessed what I call “adult trick-or-treating.” You know what I mean: Thousands of people wandering up and down each aisle filling bags with shiny objects, most of which will be sorted out in the hotel room and never make it on the airplane ride home.

So why does “shiny object syndrome” exist?

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I think it is because so many solution providers are merely guessing at our industry needs. They fund what they think is a great idea, build that something, and then they hire people from the industry to peddle what they created to test their wild theories of value.

There are numerous fundamental errors in this process. So let’s take a closer look at errors made here by such vendors.

1. They fund something based upon their research of the industry. The goal is to get 1 percent of the “business” to buy in — to buy and then get rich. Little to no consideration is given to the industry turnover, sales cycle or to what I call the “tarnish rate” of these many shiny new solutions.

2. They build what they think will work in almost a total vacuum of industry feedback.

3. They get schooled quickly by those who are asked to sell what it is they have built about how far off the mark they are with their business assumptions.

So how do you, the industry professional, avoid all of this?

I have learned that there are generally two categories of business solutions: business-critical and business-optional. And there is nothing in between these two categories.

The business-optional solution is one that sounds good and has potential, but after you have heard all about it, you can easily detect that you could do without it. Maybe if it were free, you would try it for a while.

Then there is the business-critical platform — a platform versus a solution.

Now, here is where the rubber meets the road.

Business-critical platforms are almost always those that originate from industry players — not vendors. Brokers and agents just like you discover that they need something that is core to their business and doesn’t exist; then, they either build it themselves or work directly with others.

So, here are a few examples of such platforms.

Moxi Works is located in Seattle, Washington. Dig into who and what this company is and you will find that it is the testing ground for one of the residential real estate brokerage giants in our industry, Windermere Real Estate.

When the leadership of Windermere notes something they need to succeed as a brokerage company that does not exist, they take the lead and the design of the platform. Then, Moxi executes the strategy and builds it.

Most importantly, Moxi builds it and tests everything it produces in a real brokerage environment — the leading brokerage company in the Northwest, Windermere Real Estate — and only after the platform is proven do they then offer it to other brokerage firms.

That’s the way this should be done. And so what have they built?

A platform designed to measure in real time the performance of the company based on the summation of the performance of all its agents. You know, the goals that are set each year in January by each agent (that are usually never reviewed again), coached to success each day through the use of a sales performance platform.

What discerning leader of a major residential brokerage company doesn’t want to know how the company is performing on a daily basis, ahead of the financial news, for the CFO?

And so those leaders have commissioned a unique CMA solution and a website solution that plugs directly into the Moxi performance platform.

Another example: Many small- to medium-sized companies find it difficult to create and refresh a comprehensive marketing platform. It took a medium-sized brokerage firm to understand this fact. So it designed and implemented the exact collateral line of marketing support needed by a company and its agents to fundamentally get more listings and to make more sales.

That company is based in Orange County, California: Seven Gables Real Estate. It has designed, created and tested a complete, comprehensive collateral marketing line that it is now licensing to brokers nationwide in noncompeting markets. Brilliant!

It’s called the 7G Marketing Platform, and the good news again is that these are the same systems that have catapulted the company into a leading position in their market among strong national and regional players.

Once again a designed, proven, tested platform made available to the industry — by industry leaders.

Here’s the quick test for a business-critical platform:

  • Did an industry leader design the platform in brokerage services?
  • What core business objective does the platform specifically address?
  • Does it fundamentally enhance the company’s ability to get more listings and make more sales?
  • Will it deliver increased operational effectiveness?
  • Has it been proven and tested in a brokerage environment and what are the results?
  • Will it impact the success of the company at all levels?
  • What are terms of engagement?
  • Does it contribute to making a positive change on the company’s consumers’ experience?

In a brokerage world of ever-tightening margins and cautious decisioning, business-critical platforms should be the prime focus for adding value to a brokerage company’s offering. And long gone are the days of “try this; we think this is going to be great” consumption of sure-to-be-tarnished shiny objects.

Kenneth Jenny is an expert in the residential real estate brokerage industry and real estate marketing.

Email Kenneth Jenny.