Download pdf - Sustainable Consumer Relationships 10 7 09

Creating Sustainable Real Creating Sustainable Real Estate Consumer Estate Consumer

Relationships in the Relationships in the Groundswell/Recession Era Groundswell/Recession Era

Jeremy Conaway, PresidentRECON Intelligence Services

October 7, 2009

Thank you for being here Thank you for being here and thank you for and thank you for

participating in a whole participating in a whole new knowledge services new knowledge services

technologytechnology

These are historic timesThese are historic times

They are historic by virtue They are historic by virtue of the fact that the industry of the fact that the industry

events of the eight years, events of the eight years, starting in 2002 to be exact, starting in 2002 to be exact,

the last time we touched the last time we touched “normal”“normal”

The path of the past eight The path of the past eight yearsyears

• 2002 - Market goes over 5M for the first 2002 - Market goes over 5M for the first timetime

• 2003 - 2004 450,000 new agents 2003 - 2004 450,000 new agents brought inbrought in

• 2005 - Market goes over 7m units2005 - Market goes over 7m units• 2006 - Sub prime mortgage crisis 2006 - Sub prime mortgage crisis

beginsbegins• 2007 - Market goes into a down spiral2007 - Market goes into a down spiral• 2008 - Recession hits2008 - Recession hits• 2009 - Recession ends, recovery begins2009 - Recession ends, recovery begins• 2010 - With luck the new market 2010 - With luck the new market

arrivesarrives

They are historic by virtue They are historic by virtue of the cultural and of the cultural and

generational events of the generational events of the eight years, 2002 to be eight years, 2002 to be exact, the last time we exact, the last time we

touched “normal”touched “normal”

Following the generational Following the generational pathpath

19951995

20022002 20092009

JAGJAG NCISNCIS

NCIS Los AngelesNCIS Los Angeles

They are historic because They are historic because at some point in the next at some point in the next eighteen month we are all eighteen month we are all

going on a journey. But we going on a journey. But we aren’t certain about the aren’t certain about the

timing, the destination or timing, the destination or the mode of travelthe mode of travel

They are historic because They are historic because each of you, as your each of you, as your firm’s critical events firm’s critical events manager are about to manager are about to

assume a whole new role assume a whole new role in the business, the in the business, the marketplace and the marketplace and the

transactiontransaction

The requirement of a new The requirement of a new business model was made business model was made even more certain by the even more certain by the events of the past eight events of the past eight

years including the years including the emergence of a new market, emergence of a new market,

the arrival of a the new the arrival of a the new consumer, informational consumer, informational technologies and social technologies and social

mediamedia

They are historic They are historic because, depending upon because, depending upon your perspective, we are your perspective, we are either in the last year of either in the last year of

the last era or in the first the last era or in the first year of a new one.year of a new one.

In 2002 you were all In 2002 you were all driving the full business driving the full business model but by 2009 you model but by 2009 you

were driving a much were driving a much different business modeldifferent business model

Hunkering down to the Hunkering down to the slash modelslash model

2002 2009

Over the 18 months each Over the 18 months each of you will be involved in of you will be involved in the design, development the design, development and implementation of a and implementation of a new brokerage business new brokerage business

modelmodel

Unfortunately tens of Unfortunately tens of thousand of brokers are in thousand of brokers are in

denial and are looking denial and are looking forward to going back to forward to going back to the 2002 market driving the 2002 market driving

their 2002 business their 2002 business model.model.

The overwhelming The overwhelming challenge is how to take challenge is how to take advantage of a level of advantage of a level of

opportunity that exceeds opportunity that exceeds anything the industry has anything the industry has

experienced since the experienced since the post WWII period.post WWII period.

The only question is what The only question is what it is going to look like. it is going to look like.

How will it function. Will How will it function. Will it meet the challenges of it meet the challenges of

the day and how will it the day and how will it create relationships with create relationships with

today’s consumer?today’s consumer?

So what is your challenge So what is your challenge today?today?

To be thinking about a To be thinking about a blueprint that will be used blueprint that will be used to support your company to support your company

as it engages a whole as it engages a whole new real estate consumernew real estate consumer

What do we know about What do we know about the real estate industry’s the real estate industry’s

next phase?next phase?

Three probable priorities Three probable priorities … …

• ProfitabilityProfitability

• AccountabilityAccountability

• Consumer centricityConsumer centricity

Profitability is the Profitability is the ultimate challengeultimate challenge

In order to promote In order to promote capitalization and capitalization and

investment the industry investment the industry must evolve a brokerage must evolve a brokerage business model that can business model that can

generate market level generate market level profitabilityprofitability

The 1953 brokerage The 1953 brokerage business configuration was business configuration was

designed to provide a designed to provide a platform for a bigger than platform for a bigger than life super person whose life super person whose

personality controlled all personality controlled all that they touched …that they touched …

It was not designed to It was not designed to generate profit …generate profit …

Over the past four years Over the past four years virtually every brokerage virtually every brokerage

has abandoned the has abandoned the traditional business traditional business model in favor of a model in favor of a

“slash” or survival model. “slash” or survival model. As the market returns As the market returns

every brokerage will have every brokerage will have to make a decision to make a decision

relative to their new relative to their new business modelbusiness model

The industry now The industry now understands that all of understands that all of the rules of business the rules of business directly apply to real directly apply to real

estate.estate.

The shotgun merger was a The shotgun merger was a short term solution that short term solution that

may cause more difficulties may cause more difficulties than remedies moving than remedies moving

forward …forward …

The landing will tell the The landing will tell the story …story …

The elements of profit …The elements of profit …

• Premium service for a premium Premium service for a premium feefee

• Value propositionsValue propositions• Consumer experiencesConsumer experiences• Standardized service protocolsStandardized service protocols• Quality monitoringQuality monitoring• Consumer input and ratingConsumer input and rating

AccountabilityAccountability

QuickTime™ and a decompressor

are needed to see this picture.

The New ConsumerThe New Consumer

The industry is in the The industry is in the process of forming two process of forming two

camps around vastly camps around vastly different visions of the different visions of the future of the industry:future of the industry:

Agent centricity vs. Agent centricity vs. consumer centricityconsumer centricity

• What is the relationship?What is the relationship?

• Can a firm go both ways?Can a firm go both ways?

• What is the relationship between What is the relationship between agent centricity and profitability?agent centricity and profitability?

• What is the relationship between What is the relationship between consumer centricity and consumer centricity and profitability?profitability?

There are major players There are major players lining up to advocate both lining up to advocate both

sides of the debatesides of the debate

Lesson #1:Lesson #1:

Building sustainable Building sustainable consumer relationships consumer relationships takes commitment. Use takes commitment. Use

your level of commitment your level of commitment to your agents as a to your agents as a

starting measurementstarting measurement


Building sustainable Building sustainable consumer relationships consumer relationships

takes respect. takes respect.

Today’s consumer is Today’s consumer is dominating all that they dominating all that they

experienceexperience


This is not about building This is not about building just the agent/consumer just the agent/consumer

relationship. It is also about relationship. It is also about building the building the

consumer/brokerage consumer/brokerage relationship relationship

Consumer want relationships Consumer want relationships withwith

• The teacher and the schoolThe teacher and the school• The doctor and the hospitalThe doctor and the hospital• The mechanic and the dealershipThe mechanic and the dealership• The clerk and the storeThe clerk and the store• The agent and the brokerageThe agent and the brokerage


Building sustainable Building sustainable consumer relationships consumer relationships takes understanding. takes understanding.

The industry may have been The industry may have been managing consumers for one managing consumers for one

hundred years but they hundred years but they haven’t been creating haven’t been creating

sustainable relationships sustainable relationships with this consumerwith this consumer

The Break UpThe Break Up



What we all know …What we all know …

• The consumer wants professional The consumer wants professional assistanceassistance

• The consumer will pay a fair The consumer will pay a fair commissioncommission

• This new consumer wants to have a This new consumer wants to have a ““ realreal ” relationship” relationship

’ What does t oday s consumer ’ What does t oday s consumer want from their business and want from their business and

?professional experiences ?professional experiences

SimplicitySimplicity

InnovationInnovation

SpeedSpeed

RelationshipsRelationships

EntertainmentEntertainment

CollaborationCollaboration

TransparencyTransparency

IntegrityIntegrity

ScrutinyScrutiny

CustomizationCustomization

FreedomFreedom

Community ServiceCommunity Service



requires you to requires you to appreciate what they appreciate what they

have gone through in the have gone through in the past two years. past two years.

What impact did the What impact did the recession have on this recession have on this

new consumer?new consumer?

The recession was the The recession was the most traumatic economic most traumatic economic event the United States event the United States

since the Great since the Great Depression. It will impact Depression. It will impact the American real estate the American real estate consumer for the next 20 consumer for the next 20

yearsyears

ThriftinessThriftiness

Conspicuous consumptionConspicuous consumption

Conspicuous Environmentalism

Big business and Big business and Big GovernmentBig Government

Day to day ethical Day to day ethical behaviorbehavior

Consumer protection Consumer protection through social media …through social media …



requires an appreciation requires an appreciation that they are way short of that they are way short of

“trust” right now. “trust” right now.

Trust ….Trust ….



requires an understanding requires an understanding that they have turned to that they have turned to social media for trusting social media for trusting

relationships relationships

Don’t fool yourself. It is Don’t fool yourself. It is bigger than you can ever bigger than you can ever

believe.believe.

Listen to this man at Listen to this man at REALTOR® ExpoREALTOR® Expo

His name is Doug DevitreHis name is Doug Devitre





will require you to will require you to abandon your traditional abandon your traditional approach to marketing approach to marketing

and meet them in social and meet them in social media media



Please read this …Please read this …

Trendwatching.comTrendwatching.com


Building sustainable Building sustainable consumer relationships consumer relationships will require you to allow will require you to allow that consumer into your that consumer into your

world world

This means that This means that encouraging consumers to encouraging consumers to

rate, rank and comment rate, rank and comment on their real estate on their real estate

experience will be critical experience will be critical moving forwardmoving forward

Engage with client experience Engage with client experience ratingrating


Building sustainable Building sustainable consumer relationships consumer relationships requires administration requires administration

and automation and automation

Relationship building will not Relationship building will not be automaticbe automatic

• Automate the relationship from Automate the relationship from beginning to end.beginning to end.

• Set standards of practiceSet standards of practice• Ask the consumer “how are we Ask the consumer “how are we

doing?”doing?”• Seek frequent input from the Seek frequent input from the

consumerconsumer• Listen carefully to the answersListen carefully to the answers• Carefully monitor what the consumer Carefully monitor what the consumer

is saying about you on the Internetis saying about you on the Internet



will require a commitment will require a commitment to the long term. to the long term.

Long term relationshipsLong term relationships

• Sustainability means quality, utility Sustainability means quality, utility and durationand duration

• Through the transactionThrough the transaction

• Through the home ownership cycleThrough the home ownership cycle

• Through the lifestyle cycleThrough the lifestyle cycle

• Through the referral cycleThrough the referral cycle

Building sustainable Building sustainable relationships with today’s relationships with today’s

real estate consumer will be real estate consumer will be the centerpiece of success the centerpiece of success for your brokerage moving for your brokerage moving

forwardforward