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The real estate business model, branding, and loyalty

Toni&Guy, founded in London 40 years ago, is an internationally recognized brand in the academy and hair industry. Their model is founded on levels of education, and those levels and dedication to continuing education determine their wage for each client. Each individual stylist is exclusive to their craft. In other words, those who cut hair cut hair, and those who color hair color hair. The entire franchise is built around the academy.

Before I begin, I would like to make clear that this is not a comparison of practicing real estate professionals to hair stylists, rather, it is a comparison of models along with successes and failures of models in the realm of consumerism.

What you’ll discover at the onset inside of Toni&Guy is a question at the front desk about choosing your stylist’s level of education. If you think for a second that a simple men’s haircut could not possibly cost more than $35 bucks, you’d be mistaken- it’s more, and it can go even higher. What is disturbing is that no hair stylist is created equally, and the level of education means nothing when you consider that you have no idea how current the stylist is, whether or not they are familiar with modern styles, and if will they listen to you (or take a more vain “I know best approach” with your hair). You have no portfolio of work or references to view, nor do you have anything to actually evaluate other than a certificate on the wall. Your wallet is the only thing between you and the front desk clerk who is now evaluating your ability to pay- obviously, you’ll choose higher ed over risking your hair, right?

Now, I’m not saying this is a racket, as we in the real estate industry hold continuing education in high regard as a must in most circumstances. It is how you as a practitioner keep up with changes in local and federal laws as well, but practically speaking, savvy isn’t a skill learned in a classroom- business savvy is a gift and rarely is a certificate handed out for such a skill (unless you count the top producer plaques on the wall above their desks).

Further, I challenge the model of education levels and time in service based on the premise that it’s only good for the model and not the actual stylist. The entire branding of the business is built to drive loyalty to Toni&Guy from the start, beginning with the fictitious name of the stylist (no, that is not their real name you’ve been given). Now obviously, this is said to be a policy to protect the stylist, but in fact it is a policy derived to protect the salon brand from the stylist taking their clients with them if they should chose to leave Toni&Guy.

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Protecting a brand from loyalty erosion is an illusion to the brand. I say this strictly from experience. If my stylist leaves the establishment, so will I, unless I’ve been introduced to another stylist along the way and connected with them. Otherwise, I’ll probably slip through the cracks and find a new place to cut my hair, just as I would if my agent left a prestigious real estate brokerage- I would want to follow my human agent, not a brand.

The disconnect in this scenario is the failure of the brand to partner with the agent in the process. Toni&Guy empowers their agents with continuing education the same way many real estate brokerages do, but beyond the receptionist, there is no customer service from the broker or Toni&Guy brand ambassador (or manager). Consumers disavow an entire brand based on a single interaction with an agent (or stylist) because there is no connection readily available- do brokers call their agents’ clients to check up on them? Do managers come out to offer explanation of services? No, they do not. And they should, because regardless of what the agent (or stylist) thinks, that client is in agreement to the broker (or brand) and that broker (or brand) has a responsibility to ensure follow through- that is what builds brand loyalty.

Now in fairness, the Toni&Guy Brand in general is nothing to scoff at, in fact, I do take the training they receive very seriously, especially when I meet a stylist in a new salon, and it’s my understanding that most salons do hire based on that training and appreciate it as well. This is a plus factor for the real estate brokerage as well I’m sure. When hiring, we want the agent with the best training, however, we’re also going to take a hard look at actual execution, production levels, and follow through before hanging our hat on a new sheriff in the office.

In all, I think Realtors and brokerages should take a very hard look at this model and ask themselves how do each protect themselves? Is the academy approach the right way to go? Is basing price levels on education or length of service appropriate, and can an agent dedicate themselves to a brand who allows no consumer connection whatsoever?

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Benn Rosales is the Founder and CEO of The American Genius (AG), national news network. Before AG, he founded one of the first digital media strategy firms in the nation has received the Statesman Texas Social Media Award and is an Inman Innovator Award winner. He has consulted for numerous startups (both early- and late-stage), and is well known for organizing the digital community through popular offline events. He does not venture into the spotlight often, rather he believes his biggest accomplishments are the talent he recruits and develops, so he gives all credit to those he's empowered.

22 Comments

22 Comments

  1. Matt Thomson

    January 21, 2011 at 2:05 pm

    I may have completely missed the point as I got distracted by something you said early on.
    “Before I begin, I would like to make clear that this is not a comparison of practicing real estate professionals to hair stylists…”
    Just made me laugh with how frequently we compare ourselves to doctors and lawyers (“Would you hire a discount doctor if you were sick?”), I think that in many cases the comparison between the hair-stylist is far more apropos than the comparison with doctors and lawyers!

  2. Erica Ramus

    January 21, 2011 at 3:39 pm

    I agree! I believe that people hire the AGENT for the most part, and fire the AGENT/BRAND if things go wrong. I believe when things go right the agent gets the praise and yet if things go poorly they consumer then in fact WILL remember that and won’t go back into that brokerage.

    If an agent leaves, many times their clients will follow them. If the agent is doing a good job the client doesn’t care who they hang their license with, they’ll follow along.

    So, is brand really important? I used to think so but have changed my mind over the past few years. Very few consumers walk in my door and ask for any agent who can help them. They walk in and know who they’re going to ask for.

    Brand is seriously overrated. I would put more importance on the broker and his/her office than on the logo above the door. A good broker can have a good office no matter whose name is on the door. a BAD broker can have a bad office no matter how good the brand itself is.

    Question: Do consumers even NOTICE if the logo above the door changes? If the “real estate office” on the corner keeps the same sign and plasters a new logo over the old one, will any consumers think twice?

  3. Ruthmarie Hicks

    January 21, 2011 at 9:37 pm

    Around here there still appears to be some remnant of the brokerage brand particularly in the smaller villages where they convince people that an agent that live (gasp!) a whole 4 miles away can not possibly know the area well enough to list their house. This misconception still has legs and works very well in areas where one or two brokerages dominate the town or village. These are often franchises of some of the major players like Coldwell or Sotheby’s. But that loyalty probably does not extend beyond that particular town. If a resident moved to another state – that brand loyalty would be unlikely to hold. In this case, I’ve seen agents stay in a brokerage fearing that leaving would cause them to lose “loyal” clients – though that might be an oxymoron in that case.

    At the end of the day – the trend appears to be moving towards the individual agent. But the transition is surprisingly slow around here.

  4. JIm Gatos

    January 22, 2011 at 10:55 pm

    The ONLY thing a brand name will eventually be good for is to attract the agents to come work for certain brokerages based on the brokerage’s USP (unique selling proposition, NOT to attract the general public to buy real estate with a certain brand. The public really doesn’t give a hoot..

  5. Missy Caulk

    January 23, 2011 at 7:14 pm

    Glad to be compared to someone other than a Dr. or a Lawyer!

  6. Sara Bonert

    January 24, 2011 at 9:43 am

    “Consumers disavow an entire brand based on a single interaction with an agent (or stylist) because there is no connection readily available..” Actually I think consumers disavow the industry as a whole more so than an induvidual brand when something negative happens, unfortunately.

    I think it is worth noting that there are a few brands that have done a good job seperating themselves based specifically on defining their niche. For example, if I had a $10M condo to sell here in Chicago, Sothebys would at least be a brand of agent I’d interview. But more to your point, a human relationship or reputation of an individual would likely win over a brand.

  7. Agent for Movoto

    January 24, 2011 at 12:33 pm

    Ooh. I’ve never used Toni&Guy, and now I’m not going to.

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