With more than 1,000 Inman posts, Bernice Ross is a long-time contributor whose weekly column on real estate trends, luxury, marketing and other best practices publishes every Monday.
Inman Connect New York is just around the corner, and I can’t wait to hit Start Up Alley to see who may have the next game-changing technology. Nevertheless, I believe our industry’s current focus on technology and being agent-centric is misguided, especially when it fails to make the customer experience paramount.
At Inman Connect San Francisco, Gary Keller laid out the dichotomy that the industry faces in terms of technology — will we have tech-enabled agents or agent-enabled tech? Keller is betting on tech-enabled agents, especially with his most recent announcement as he takes the reins of the Keller Williams as CEO.
As Keller wrote in a letter to Keller Williams associates:
Together through Labs, Josh and I have collaborated with thousands of you — our agents and leaders in the field — to design the real estate operating system of the future, putting your data back in your hands, and empowering you through AI to provide more value to your clients.
Many other companies seem to be going a different route, as REAL Trends’ Steve Murray noted in a recent podcast:
There is a strong belief that to compete in future, real estate brokers at the local, regional and national level are going to have to have comprehensive, integrated, big data, artificial intelligence driven technology platforms to equip their agents to compete for the customer of tomorrow.
The question Murray raises later in the podcast is whether data and knowledge about consumer habits will trump the power that agents and their relationships hold with their customers.
Based upon the findings from a recent Harris Insight study that REAL Trends conducted, Murray concludes this isn’t happening any time soon.
Sixty-nine percent of recent buyers and sellers of all generations said the No. 1 thing they rely on in choosing an agent is a referral from a trusted source. Do all these organizations believe that data and technology platforms are going to replace that? I don’t know the answer to that, I don’t think anybody knows the answer to that.
What we do know is that major national real estate companies are making a huge bet that rather data and knowledge about consumer habits, attitudes and practices will one day trump those personal relationship matters. We’ll have to wait and see but, for this observer, I don’t think that’s going to happen in a hurry.
The 2018 NAR Profile of Home Buyers and Sellers reports similar findings to the Harris Insight Study.
Sixty-three percent of sellers and 53 percent of the buyers found their agents through a referral from a friend, neighbor or relative or used an agent they had worked with before to buy or sell a home.
Furthermore, 75 percent of the sellers and 68 percent of buyers interviewed only one agent that they hired.
Technology may help an agent or company to identify who is going to transact now or make it easier to convert a lead into a client. Nevertheless, it’s the agent who gets that first face-to-face interview who normally gets the deal.
Technology is never the solution
Last week, I had a fascinating conversation with Dan Duffy, the CEO of United Real Estate Group (a client of mine), the parent company of United Real Estate and United Country Real Estate.
Prior to entering the real estate industry 12 years ago, Duffy served as president and CEO of the world’s largest Microsoft Business Solutions Partner with 26 offices spanning three continents, which served over 12,000 clients operating in 48 countries.
When I asked Duffy his take on real estate companies making the move to become technology companies, his response was:
Technology is never the solution. I’m not certain that these companies understand what is required to truly become a technology company. Without the legacy tech DNA in all levels of the organization, it presents an incredible change management challenge. Senior leadership can try to change this, but the culture, mid-level management and staff remain entrenched in how real estate tenured professionals think and work, not how technology tenured professionals think and work.
Instead, technology is one of a number of enabling tools that when properly designed and deployed makes the fundamental task easier or more automated. Furthermore, envisioning what should or what could be, a demonstrably better condition than what exists today, is vastly more important. No computer that I am aware of can do what a creative human can do in this department.
Advances in artificial intelligence (AI) only amplify the degree of difficulty in execution and the reward for getting it right. You may have the perfect algorithm that alerts you that a person will transact in 43 days.
The AI may also recommend certain words such as “security,” “trust” or “preservation of wealth” that may make the person more likely to transact. Even with these capabilities, AI falls woefully short in its ability to handle the deep emotional challenges required to close a real estate transaction.
Do companies need their own proprietary platform?
Duffy argues that they do. This platform must provide essential functionality to support the agents’ and brokers’ roles in the real estate transaction. Lack of a core proprietary platform can result in margin erosion, lack of the ability to innovate and less ability to serve clients down the road.
In terms of the “flavor of the day” emerging technologies, Duffy recommends:
Avoid any approach that cobbles together third-party best-in-breed solutions. It is expensive and any one of your competitors can easily eliminate the differentiation that is needed to compete. Nevertheless, a few vertical or deep functionality third-party solutions may be appropriate when it is not worth it to build those yourself.
The challenge real estate technology companies face
Where technology companies fall short is failing to recognize that to be a complete solution, they must solve what Duffy calls the “real estate problem.”
This means having a dependable source of highly competent and process-disciplined agents who have high standards for quality assurance and who deliver a consistently outstanding consumer experience.
In other words, it must be both agent and consumer-centric. This function cannot be outsourced. No tech company can solve for it without partnering or acquiring it. Ironically, this has the same impact on the tech company’s margins and long term prospects.
‘Satisfy and delight customers’
In a recent article titled, “Why agent-centric is the wrong way,” Erica Ramus makes a powerful argument for why the customer experience must be paramount.
According to Ramus:
My goal is to satisfy and delight customers by empowering our agents to provide the best customer experience possible. This is what brings repeat business and referrals. Furthermore, when there is a problem, I’m right there to help them fix it.
Go the distance
A key takeaway from the 50 women I interviewed as part of the California Association of Realtors WomanUP! Initiative was that those companies that have made the customer experience their prime focus are the ones who have gone the distance for decades, regardless of the tech changes or market shifts. I don’t believe that situation is going to change any time soon.
Bernice Ross, President and CEO of BrokerageUP (brokerageup.com) and RealEstateCoach.com, is a national speaker, author and trainer with over 1,000 published articles. Learn about her broker/manager training programs designed for women, by women, at BrokerageUp.com and her new agent sales training at RealEstateCoach.com/newagent.