In a recent conversation during the Virtual ReBarCamp, Joe Ferraro was talking about the future of real estate brokerages, which he thought would be an Agent Centric Model. Rob Hahn of 7DS Consulting immediately chimed in that if the real estate industry became any more agent centric, it would put brokerages out of business because of their low profit margins. I saw the conversation and threw in my two cents – that a successful business should be consumer-centric.
All of the phrases seem to be buzz-words, but in order to have a discussion, we first have to have a common (or agreed upon) understanding of what we mean when we use the phrases – and since this is my post, I get to create those definitions.
So let’s define our terms for the purpose of this discussion;
Agent-Centric – where the operation of the business is centered around the real estate agent and the operation of the business is focused on the benefits to the agent first
Broker-Centric – where the operation of the business is centered around the real estate brokerage/firm and the operation of the business is focused on the benefits to the company first
Consumer- Centric – where the operation of the business is centered around the consumer’s needs and the operation of the business is focused on the benefits to the consumer first
I was going to try to make the other two cases , but I’ll just hope that Rob & Joe stop by to make their case in the comments. I’m just going to make the case for the consumer centric model. In that model, though the business needs to be operated in a profitable manner, and the real estate agent needs to make a living, it is the consumer’s need that has to be addressed first. In the words of Field of Dreams,”if you build it they will come”.
I don’t believe that the consumer-centric model is built around fee structures, or some obscure business model, but around quality service and attention to their needs and desires. The best agents I know, with the longest careers build those careers on their referral business, and that is a function of their satisfied consumers. And I don’t believe that consumers are driven solely by price anymore than I believe that agents change brokerage firms because of percentage splits. That being said, this model would put the interests of the consumer at the forefront of their search for a home. Business decisions would be made to facilitate whatever is needed to provide the consumer the best experience possible.
Jim Duncan (on the agent-centric side) chimed in with the question “How is having profit centers- in-house loans/closers beneficial to clients?”. In my mind its beneficial to clients because they indicate that they prefer a one stop shopping experience. However that doesn’t mean that those companies don’t need to be competitive and service oriented. The ownership of the company is less important then the service or product offered in my opinion. If the company (in a Broker-Centric model) is big enough to do the business and be profitable, then more power to them.
Jim also expanded on a statement by Joe ” agent centric IS consumer centric” saying “& Broker Centric is not“. I need you to know that I really respect both of these guys and think they are very smart. But in my opinion, in this case, even these really smart guys are just wrong. By definition, neither Agent nor Broker Centric models can be Consumer-Centric because they don’t start by having the consumer’s interest first – they place either the broker or agent first. It doesn’t mean that the people in either models are stupid or too self-serving to remember that the customer is central to our business, it just means that their strategies don’t start there. Take Nordstrom’s as an example. They are a retailer that built a business on serving the needs of the customer before the needs of the company, and became a model for customer service in the retail industry.
Perhaps the best example of my thught process is from the movie “Miracle on 34th Street”. In that movie a child comes to Macy’s (where the “real” Kris Kringle is working as a seasonal Santa) and asks for a toy that Macy’s does not carry. Kris tells him that Gimbels (Macy’s arch rival) does carry the toy, making the customer really happy. The manager is prepared to fire Kris, until they realize that people are flooding the store, because they want that consumer-centric service model (of course they weren’t using those terms – its a holiday picture for goodness sake!).
Without a Kris Kringle working in our office, I do believe that the most successful real estate companies have awesome consumer centered cultures, and those cultures provide both the agent and the company with a lot of consumer contact (generated at a low cost through word of mouth and referrals) and therefore the opportunity for lots of transactions. From those points on, its about the competence of the agent and the business models of the agent and company, both of which can be choke points for any person or operation. In other words, even if you have the opportunity, you won’t be able to execute against it if you are not good at your job. And of you have lots of transactions, and you run your company poorly, you may still manage to run your company into the ground.
No one is foolish enough to think that a business that doesn’t make money is sustainable. I don’t think any of us believe that a company that doesn’t treat its agents well can long retain a quality sales staff, and attending to the consumer’s needs is not only required by the Code of Ethics, but is just plain good business, for without clients and customers, we’re out of business. And for those reasons, it has always seemed to me that putting the consumer at the center of your business is the surest way to succeed. What do you think?