Skip to content

Recent Articles

15
Jun

The Battle Lines have been Drawn between Service and Price

case studyAwhile ago I was speaking to a friend of mine about diapers. Yeah, that’s an odd way to start a blog. More specifically we were talking about all the diapers she was going through and how grateful she was to Diapers.com for the speedy delivery and awesome service. I had to admit I never heard of the company even though they have been around for about 7 years or so. Thankfully my diaper changing days are well behind me. The fact is that this was a company that came out of nowhere and turned into a half a billion dollar company. I asked my friend about it. The first word out of her mouth was ‘service’. I decided to take to the internet and do a little research on the company and lo and behold I found some interesting details that parallel the real estate industry closely. Maybe I should be more specific. They way they ran their business is the way I want to run my business.

Consider that Diapers.com had lots of competition. They knew they couldn’t win on price but they recognized that having a baby was a challenging time in everyone’s life. Sleepless nights and general chaos and mayhem. Mothers needed help, assurances, guidance, and faith that, when ordered, the diapers would arrive on time. By their very nature diapers are heavy and bulky and expensive to ship so Diapers.com decided that they did something different. They couldn’t compete on price so they poured all their energy into customer service. They believed that their brand would only be as strong as their relationship with the consumer. They poured their efforts into shipping and tracking software, creating supply chain efficiencies and using data to anticipate the needs ahead of time. If they didn’t make money on their first order, they bet on the long-term strategy… build trust and the money will come. The strategy paid off as they figured that 35% of their business came as a result of word-of-mouth. As a start-up, the two founders boot-strapped their business part-time for a few years working nights and weekends. In fact they didn’t do any real marketing until 3 years after they launched. Consider other internet businesses that build a website and pour millions of dollars into marketing in order to gain traffic then try to figure our how to make money from it.

To me this is the ultimate business case for service over price. We can learn a lot from other’s experiences. In real estate we are trusted to help our clients buy or sell their largest asset. For the busy or uninitiated, they want it to happen quickly with the least amount of hassle and for the most money if they are selling (and the least if they are buying). Ok so maybe my title is a bit over dramatic. In the end, I believe there is a place in our world for both sides and quite frankly the customer should have the opportunity to do it all themselves if they so choose. At the end of the day however I think that an agent’s referral business comes from them doing a great job and building and maintaining their relationships with their clients and not for doing it for less money.

mark mclean is the Broker/Manager at the Bosley Real Estate Queen St W office and President-Elect for the Toronto Real Estate Board. The opinions expressed here do not reflect the opinions of TREB or Bosley RE.

12
Jun

Is That Innovation Or Just a Good Idea?

mousetrapThere has been a lot of talk about innovation within the real estate space these days so I thought I would throw in my two cents on the topic. Innovation is all around us, and not just in our industry either. At the core I’m a big fan of innovation. I remember being mesmerized listening to Luke Williams the professor of Innovation at NYU speak on the subject. The first question, of course, is why do we innovate? What makes us decide to build, for example, the metaphoric story of a better mouse trap? Well for some its purely about making money. For others it’s about doing a better and faster job of eliminating mice in your house.

Taking the mouse trap idea full circle, a lot can be said about innovation. We know the common snap trap works well but there are down sides. Sometimes you get a clever mouse who figures out a way to beat the trap, other times it only catches a leg or worse, creates a bloody mess. Still, the trap is fairly effective so people buy it. Then someone comes along and builds a trap that is 100% effective at killing mice, plus there is no mess and no need to bait the trap. You never see the mouse but you know it is dead. But is that innovation? In doing a bit of research on the subject I found an over-riding theme about innovation…it doesn’t become true innovation until the majority of people adopt it. This, in my mind is a powerful message. If we think about the mouse trap again, one could argue that the new mouse trap cuts the spread of disease and reduced allergens in large urban centres and ended up saving billions in health care costs. Whammo. Innovation. But if it doesn’t do that it’s not innovative, it’s simply a good idea.

Another earmark of innovation is that it often trades something we have grown to accept with a new idea that people rush to because it saves time or money or both. It starts off as a small idea and grows. Innovation sets a new standard for how people live and work. Then it becomes the new standard until someone innovates again. Think about it, there are any number of innovations out there that we now take for granted…electricity? Wifi? You get the picture. Innovation is ground breaking, earth shattering and life altering. In the end it requires someone to stick their neck out and risk everything. As it relates to the mouse trap again one also needs to consider the market place. A new trap idea is not going to work in an area with no mice. Neither will the idea fly if its only a small number of people who need traps and they are spread across a continent. The reality is that while they might really want the new mouse trap they won’t pay a massive premium that would be required to ship it to far away destinations.

There is good news though. One by-product of innovation, or at least those who claim they are innovative, is that they provide, indirectly, a benefit to the competition. Using the mouse trap idea again, the person who designs the better mousetrap had some pretty good ideas but the originator of the snap trap sees those ideas and adapts their trap thus being able to change their existing marketing efforts to include the words “new and improved” while still owning the market for traps.

So I encourage innovative thinking and applaud those that think outside the box. There are only four things that come out of an innovative idea. If an idea has merit, it will succeed on its own and become the industry standard. If the idea is sound the competition will tweek the idea to suit their needs and take ownership of it. If the competition thinks it’s a bad idea they will downplay it and call the innovator a fanatic…. at least until the idea works. Or the idea will fail. Either way, innovations or just plain ‘new ideas” are good things that push us to be better.

Think about an idea or innovation in any industry, including real estate. Will it stand alone as the new industry standard? Can you adapt it and make it work for you? Does it frighten you because at the core its existence threaten your business and you would rather fight it than adapt? or is that idea just plain dumb? Two additional points, new ideas and innovations take time to develop and you can hype a product until the cows come home, but hype is not innovation.

mark mclean is the Broker/Manager at the Bosley Real Estate Queen St W office and President-Elect for the Toronto Real Estate Board. The opinions expressed here do not reflect the opinions of TREB or Bosley RE.

5
Jun

Dum Da Da Daaaaa! Where Do Clients Come From?

meeting client picI know you’re dying to find out the results. Earlier this week I sent out a simple message to my agents…”The results of my little survey are in BUT you will have to attend tomorrow morning’s meeting to find out where clients come from. The methods were highly unscientific but the results will be mildly informative (hopefully) and, with any luck, generate some worthwhile conversation”. The heading was also a bit catchy…Dum Da Da Daaa!

I have to admit that I was rather curious too. A few weeks ago I pulled the last 120 deals from our records. I wanted to know two things; Where did the agent meet the client AND how long did they know them before they bought or sold their house. I had a feeling what the top response would be but I was more curious about other responses. It took me some time to contact each agent and ask the questions but in the end I was able to categorize the responses into twelve clear groups. We had a full house at our meeting to unveil the results. Now, if you know me then you know that reading them off is NOT something I do well. I prefer the pomp and circumstance of an event, even if the results aren’t all that exciting so we played the “Realtor Feud” game, pitting the Red team against the Blue team in an epic battle (not really) with the winner getting bragging rights for the day.

Obviously the results will vary but I thought it interesting that the top four responses, representing 67%, came from the people we know the most; past clients and friends. I suppose that makes sense, after all, our past clients and friends know us the best. We are still picking up clients from people we don’t know as well. That’s a good sign and evidence that traditional methods of prospecting work. Flyers, news letters, open houses, sign calls and walk-ins accounted for 15%, family and neighbours accounted for 10%, clients coming from social media and web accounted for 6%, and professional referrals (people you are associated with in business such as referral companies, lawyers, accountants) accounted for 3%.

So the next question is how quick did agents buy or sell homes? Well not surprisingly (again) agents had long-lasting relationships with friends, past clients, family and professional referrals. Social media and web-based clients had the shortest relationship time followed by signs calls, open houses and walk ins. This indicates that clients coming from these sources have done their research and are in the active buying or selling process.

The take away from this little bit of non scientific research is that you need to prioritize your inbound clients. Past clients and friends are on a slow drip campaign when it comes to touching base and follow-up. Online leads, open house and sign call clients are ready and able so deal with them quickly. I believe this little test is further proof that a solid CRM system is a mandatory tool for our business. I would encourage all Realtors to evaluate where their clients are coming from and prioritize their contacts.

mark mclean is the Broker/Manager at the Bosley Real Estate Queen St W office and President-Elect for the Toronto Real Estate Board. The opinions expressed here do not reflect the opinions of TREB or Bosley RE.

Follow

Get every new post delivered to your Inbox.

Join 4,987 other followers

%d bloggers like this: