In October of 2000 three Americans, George Ackerlof, Michael Spence and Joseph Stiglitz, were awarded the Nobel Prize in economics.
Their work essentially focused on information economics and the implications of asymmetric information – when the party on one side of a transaction has much better information than the party on the other side i.e. producer vs. purchaser, seller vs. buyer, insider vs. outsider.
In other words, a service provider possesses greater information regarding his/her true capabilities than the consumer deciding which provider to choose.
How does the side with the greater information effectively use and benefit from information advantage?
These three Nobel Laureates demonstrated more specifically that consumers prefer, have higher confidence in and are willing to pay more for products and services backed by a “guarantee.” The assumption on the part of the consumer is that value and quality are related to assurances of consistency and reliability. Consumers believe that the manufacturer or service provider presenting a “guarantee” is more likely to perform. This greater certainty offers greater value.
The notion that consumers prefer and will pay more for services and products that are guaranteed is not difficult to understand. Taking advantage of this principle to attract more clients and earn higher fees by guaranteeing service performance is, however, not easy to execute. It is especially difficult in an Independent Contractor culture.
The risks associated with guaranteeing a product or service only make sense when systems, processes, and controls are employed; when accountabilities are increased and problems or defects are reduced.
In the case of real estate service, how can any organization manage, control and otherwise influence behaviors where most activities take place “out of sight and beyond reach” by independent service providers? And if imposed standards, processes and controls solve one problem might they not create another – agent retention?
According to the three Nobel Laureates, attracting more clients and earning higher fees as a result of offering a greater certainty of better service is not a hopeful business assumption… it is an economic reality!
How can you capitalize on this reality?
The first step is to provide the leadership team, sales professionals and support staff with a clear understanding of the principles of consumer-centric service – presenting foundation education. In an industry that is frequently provider-centered, this is not an automatic.
From here it’s basically an eight-step process:
- Develop consumer based standards of service
- Create and implement a defined service process (each step)
- Implement a system for delivery consistency
- Measure performance with detailed metrics
- Commit to benchmarking and ongoing analysis
- Provide timely, multiple level performance feedback
- Offer recognition, awards and rewards for high achievers
But does this really work?
During the past two years thousands of real estate sales people and their managers have voluntarily elected to implement just such a process. They are attracting more clients, keeping them longer and creating higher levels of service satisfaction.
For example, the Quality Service Certified® (where I am the President and COO) real estate professional follows a defined service process, delivers it in writing to every client (every time), guarantees performance and submits to a service evaluation survey at the end of every transaction for heightened accountability. Do prospective clients see any advantage? As a consumer wouldn’t you!
The breakthrough: Service
When service performance results are compared between QSC agents and non-QSC agents who are from the same company, some interesting differences are noted. QSC agents are achieving 15-35% higher levels of client satisfaction and reducing dissatisfaction by as much as 80%. Additionally, clients are indicating a 50% greater likelihood of doing business with and referring business to their QSC agents over non-QSC agents in the same company, in the same markets at the same time.
Independent validation of service results through outside organizations such as Quality Service Certification, Inc. and Leading Research Corporation add the kind of credibility that is very difficult for an organization to generate when judging itself.
Quality control and greater accountability are essential ingredients in delivering measurably better service. In these uncertain times, prospective clients prefer and will pay more for products and services that offer greater certainty. But certainty requires more than a promise to perform.
Quality control, greater accountability and the systems supporting these objectives, can be developed through your own investment and creative efforts, or you can partner with an organization that understands your business and possesses existing resources.
Rx for recession… control service quality and raise professional accountability.