Creating Sustainable Real Estate Consumer Relationships in the Groundswell/Recession Era Jeremy...

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Creating Sustainable Real Estate Creating Sustainable Real Estate Consumer Relationships in the Consumer 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 new participating in a whole new knowledge services knowledge services

technologytechnology

These are historic timesThese are historic times

They are historic by virtue of They are historic by virtue of the fact that the industry 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 yearsThe path of the past eight years

• 2002 - Market goes over 5M for the first time2002 - Market goes over 5M for the first time• 2003 - 2004 450,000 new agents brought in2003 - 2004 450,000 new agents brought in• 2005 - Market goes over 7m units2005 - Market goes over 7m units• 2006 - Sub prime mortgage crisis begins2006 - Sub prime mortgage crisis begins• 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 arrives2010 - With luck the new market arrives

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

events of the eight years, 2002 events of the eight years, 2002 to be exact, the last time we to be 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 at They are historic because at some point in the next 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 timing, aren’t certain about the timing, the destination or the mode of the destination or the mode of

traveltravel

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

about to assume a whole about to assume a whole new role in the business, the new role 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 even business model was made even more certain by the events of more certain by the events of the past eight years including the past eight years including

the emergence of a new market, the emergence of a new market, the arrival of a the new the arrival of a the new consumer, informational consumer, informational

technologies and social mediatechnologies and social media

They are historic because, They are historic because, depending upon your depending upon your

perspective, we are either in perspective, we are either in the last year of the last era the last year of the last era or in the first year of a new or in the first year of a new

one.one.

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

different business modeldifferent business model

Hunkering down to the slash Hunkering down to the slash modelmodel

2002 2009

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

brokerage business modelbrokerage business model

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 the forward to going back to the

2002 market driving their 2002 market driving their 2002 business model.2002 business model.

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

exceeds anything the exceeds anything the industry has experienced industry has experienced

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

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

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

and how will it create and how will it create relationships with today’s relationships with today’s

consumer?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 to blueprint that will be used to support your company as it support your company as it engages a whole new real engages a whole new real

estate consumerestate consumer

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

phase?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 business The 1953 brokerage business configuration was designed to configuration was designed to provide a platform for a bigger provide a platform for a bigger than life super person whose than life super person whose personality controlled all that personality controlled all that

they touched …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 model in traditional business model in favor of a “slash” or survival favor of a “slash” or survival

model. As the market model. As the market returns every brokerage will returns every brokerage will

have to make a decision have 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 the understands that all of the rules of business directly rules of business directly

apply to real estate.apply to real estate.

The shotgun merger was a The shotgun merger was a short term solution that may short term solution that may cause more difficulties than cause more difficulties than remedies moving forward …remedies moving forward …

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

The elements of profit …The elements of profit …

• Premium service for a premium feePremium service for a premium fee• 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 agent What is the relationship between agent centricity and profitability?centricity and profitability?

• What is the relationship between What is the relationship between consumer centricity and profitability?consumer centricity and 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 your takes commitment. Use your level of commitment to your level of commitment to your

agents as a starting agents as a starting measurementmeasurement

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 just This is not about building just the agent/consumer 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 withConsumer want relationships with

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

relationships with this relationships with this consumerconsumer

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 commissionThe consumer will pay a fair commission

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

What does today’s What does today’s consumer consumer want from their business want from their business and professional and professional experiences?experiences?

SimplicitySimplicity

InnovationInnovation

SpeedSpeed

RelationshipsRelationships

EntertainmentEntertainment

CollaborationCollaboration

TransparencyTransparency

IntegrityIntegrity

ScrutinyScrutiny

CustomizationCustomization

FreedomFreedom

Community ServiceCommunity Service

requires you to appreciate requires you to appreciate what they have gone what they have gone

through in the past two through in the past two years. years.

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

consumer?consumer?

The recession was the most The recession was the most traumatic economic event traumatic economic event the United States since the the United States since the Great Depression. It will Great Depression. It will impact the American real impact the American real

estate consumer for the next estate consumer for the next 20 years20 years

ThriftinessThriftiness

Conspicuous consumptionConspicuous consumption

Conspicuous Environmentalism

Big business and Big business and Big GovernmentBig Government

Day to day ethical behaviorDay to day ethical behavior

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

requires an appreciation that requires an appreciation that they are way short of “trust” they are way short of “trust”

right now. 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

Building sustainable Building sustainable consumer relationships will consumer relationships will require you to abandon your require you to abandon your

traditional approach to traditional approach to marketing and meet them in marketing and meet them in

social media social media

Please read this …Please read this …

Trendwatching.comTrendwatching.com

Building sustainable Building sustainable consumer relationships will consumer relationships will

require you to allow that require you to allow that consumer into your world consumer into your world

This means that encouraging This means that encouraging consumers to rate, rank and consumers to rate, rank and comment on their real estate comment on their real estate

experience will be critical experience will be critical moving forwardmoving forward

Engage with client experience ratingEngage with client experience rating

requires administration and requires administration and automation automation

Relationship building will not be Relationship building will not be automaticautomatic

• 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 doing?”Ask the consumer “how are we doing?”• Seek frequent input from the consumerSeek frequent input from the consumer• Listen carefully to the answersListen carefully to the answers• Carefully monitor what the consumer is Carefully monitor what the consumer is

saying about you on the Internetsaying about you on the Internet

Building sustainable Building sustainable consumer relationships will consumer relationships will

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

Long term relationshipsLong term relationships

• Sustainability means quality, utility and durationSustainability means quality, utility and 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 real relationships with today’s real

estate consumer will be the estate consumer will be the centerpiece of success for your centerpiece of success for your

brokerage moving forwardbrokerage moving forward

Creating Sustainable Real Estate Consumer Relationships in the Groundswell/Recession Era Jeremy...

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