by Conrad Zurini, Broker/Owner
For the first five days of August my home internet/cable was down. That meant I was without streaming on my smart TV and of course no mainstream TV. It’s not that I am a TV or streaming junkie but I use these entertainment sources as white noise in the background. As I move from room to room I catch tidbits of useless information, but my worst habit is something I got from doing quick overseas trips. That is having the TV is on all night while I sleep. I have done my share of quick trips to speak in Europe and as a result I have trouble with the time difference, primarily on the second night, and the white noise of the TV has always been my sleeping pill. That’s why if you put me in front of a TV and I happen to be lying down I’m out cold no matter how exciting the subject matter is.
Sometimes It Makes Sense and Not Dollars
As I retreated to my iPad and my iPhone during the Olympics I went down the proverbial rabbit hole on not just the games themselves but some of the back stories. Like NBC buying the rights for 10 Olympic Games (2014- 2032) for just under 8 billion dollars, nearly a billion dollars a broadcast with revenues around $1,000,000,000 (summer games averaging more advertising revenue than the winter games). Can we say that was a really a great deal for NBC? That is why they have enlisted the likes of Snoop Dog to call a ping pong match and dressage to boast ratings, or is NBC’s Olympic’s coverage just a ruse to promote Snoop Dog as the latest coach on the Voice? Sometimes decisions we make do not have to have a profit attached to them. There is often a bigger picture. The question is do you know what that ultimate vision really is?
And Sometimes It Does Not
In the shadow of Toyota’s recent announcement to end its over $800 million sponsorship of the Olympic Games, it makes you wonder why the IOC’s largest partner is opting out. It has been reported that Toyota was not happy with how the money was used, and felt it ‘was not used effectively in the support of athletes or to promote sports’. Isn’t that the whole premise of the Olympics. When did the IOC go off course? Why aren’t they staying in their lane? Maybe Toyota felt its audience wasn’t really into surfing, skateboarding, break dancing, or 3 on 3 basketball. What’s wrong with just having 5 on 5 basketball? Or regular 6 on 6 volleyball, why do we need beach 2 on 2 volleyball on sand, under the hot sun, and in skimpy uniforms in the Olympics… oh I know why.
Be Cautious When Jumping on the Bandwagon
The fact that organizers of the Paris Olympics opted for a carbon neutral summer games and built the Olympic Village housing the athletes with no air-conditioning during the hottest part of summer is a clear example of trying too hard to be green. And instead it turns out they had to install 2,500 electricity-sucking temporary air-conditioning units which are far from carbon neutral. The recyclable cardboard beds that were as comfortable as sleeping on the floor, and the plant-based protein meals that no one wanted to eat. This ‘trying to be different for the sake of being different’ greatly diminished the culture of camaraderie amongst athletes all living in the village has been lost, as some teams hired their own chefs and even moved out all together.
Stop Trying So Hard
When you try too hard you end up over-compensating in another direction, which leads to the consequence of diminishing the heart and soul of what you are doing. The fact that they doubled down on racing in the River Seine, where athletes got sick with gastrointestinal infections makes no sense at all. I read that the Australian team took E. coli medication for a month prior to the games in preparation for the pollution levels of the Seine, Is that not a banned substance? I am not arguing about the theories around global warming, but I will say that to put the stars of these Olympics in substandard conditions is wrong. There could have been a way to serve both the athletes and the environment. I think the organizers should have to stay in the Athlete’s Village and the athletes should stay in their air-conditioned hotels, and fly in the private jets that shuttle the stars to and from Paris. What can these so-called gaffs at the Olympics teach us about the clients we serve, the partners we engage with, and our businesses as a whole? I have always believed in asking myself and my team 5 questions before we embark on something which affects the success of our business.
- Is this an example of us/me trying too hard?
- By doing this are we staying in our lane?
- Who does this initiative serve?
- What would it be like to walk in the shoes of those it is intended to serve?
- What’s the plan for the last mile?
Without a doubt we have seen some interesting changes in consumer and business behaviour over the last 5 years, some in part due to COVID and others due to the over-abundance of cheap money which played a role in rising inflation. Some businesses took advantage of the rise in goods and services by raising their prices which lead to consumers voting with their feet. Low interest rates made businesses and individuals look at investments and growth as something that would flourish, forever fueled by low cost leverage and rapid appreciation. They justified over-extending themselves because the cost to do so was a small part of their expenses and it would all last forever. Well it didn’t, and now we must adapt to the aftermath and try to predict where the almighty consumer will go next. If we all could adopt solid business principals that transcend market fluctuations and avoid these pitfalls our businesses would take a steady growth trajectory which is sustainable and scalable.
Are Some Real Estate Brands Trying Too Hard to Be Different?
It is well documented that the primary reason Gary Keller chose the so called ‘profit-sharing tree’ was because he wanted to differentiate his business from the crowded landscape that was real estate. The landscape at the time was just different brands with different flags carrying the same message. Agent compensation was always in the forefront but the theory was if an agent had more compensation, they could use those resources to achieve better results for their clients. Like the age old statement, “you are better at spending your money than the government is”. As a result RE/MAX was born. The founders Dave and Gail Liniger understood the premise that the agent on the ground knew where and when to spend the resources needed to get their client’s home sold, and build a profitable business for themselves. So what would emerge is taking that compensation model one step further where two types of real estate companies would emanate. One which focused on delivering to the consumer a buying/selling journey with many touch points (RE/MAX, Royal LePage, C21, Compass, etc.), and the other to recruit agents to a so-called down line which focused primarily on the well-being of the real estate agent (Keller Williams, eXp, REAL, Revel etc.). These companies labeled themselves disruptors but their so-called innovation to our industry was not focused on making the buyer/seller’s experience better. It came in the form of multi-level marketing, whose primary focus is the betterment of the REALTOR® by providing a built-in side hustle. Remember, Avon was founded in 1886—hardly a new business model.
I have always felt that if you want to be innovative in any industry and in real estate particularly, you must walk in the shoes of the consumer. Understand their pain points, their frustrations, celebrate their wins, improve the workflow, etc. I am not sure how MLM is an innovation for the consumer. Correct me if I am wrong, but this type of pyramid sales is the function of a market which has too many REALTORS® who got into the industry to make a quick dollar off of someone else’s work. When the market shifts and requires expertise and skill, these models somehow promise to supplement an agent’s income but as the market shrinks so does the proverbial downline.
Every Business Wants to Master the Last Mile
Remember when Amazon showcased their drone delivery system, and it was part of a 60 Minutes feature in 2013? It was toted as the answer to the proverbial last mile by delivering packages more efficiently through the air, skipping over driver-less vehicles which have yet to become mainstream. Packages would go short distances from a central warehouse to your home via drone. More than 10 years later the US Federal Aviation Administration (FAA) finally permitted Amazon to expand its drone delivery service, now allowing operations beyond visible line of sight. This is a blue sky idea which would probably put an end to last mile discussions at Amazon.
Most businesses do not have the resources and vision of Amazon, but we all wrestle with the last mile. Be it a manufacturing company or a service-based one, these last mile discussions are had in board rooms across NA. So when is the last mile in real estate? Never!!! I like to refer to the fact that there are several last miles in every interaction we have with our clients. Last miles are a subset of what is happening in the moment.
A real estate transaction is multi-faceted, which, in—turn demands the last mile at every twist and turn. When you show properties there are so many facets to the last mile. You must equip your buyers with deep neighbourhood knowledge, sales history of all the properties you are showing them, the price per square foot of comparable sales, and the trends that are happening, from months of supply, to the list-to-sales ratio of a specific neighbourhood. Without all this data, the last mile becomes irrelevant and you fail to give your buyers a rich post-showing wrap up, to either eliminate a property or put it on the short list, thus creating a clear expectation as to how deep the negations will be.
Can Someone Please Tell Brands to Stay In Their Lane
\There seems to be a trend in and around chasing the next level of consumer. Dollar Tree, a well-known discount retailer, has found that their growth is with shoppers who have a combined household income of $125,000. In response to that Dollar Tree has increased their upper limit to $7 from the $5 price ceiling, as they found those who made a higher income were shopping in their stores. Some would say this strategy is a sharp divergence from the brand’s mainstay and is a departure from their lane. They attribute much of their growth to this sector as they attract this type of consumer who is looking to save on their day-to-day needs. Time will tell if this strategy is successful or not. It may persuade their core customers to experience higher check-out balances and opt to go back to traditional retailers.
When you change your consumer profile from serving first-time buyers, to downsizers, to move-up, to investors, or to luxury buyers and sellers, you need to adapt to their specific needs. It is fine for Dollar Tree to up their price points to attract upper-income buyers, but is that the only attribute to find success in this sector? Will they need to improve the look and feel of their stores. Will they increase price points and lose their core clientele, as they feel they have become too expensive? To expand your client base you must always be aware of what resources you need and how it will affect your mainstream and loyal customers. If you jump from serving investors to first-time buyers because the market has turned, you will find your investor clients who still need your expertise, moving away from you and it will be hard to get them back.
What Does McDonald’s Have to Do with Real Estate Commissions?
McDonald’s has learned the hard way that going away from their core value proposition of providing quick and cheap or great value at a low price has met with consumer backlash. Many of McDonalds’ customers protested loudly on social media causing 2 outcomes: patrons stopped going and ate at home to get better value for their money, and the other group went to more sit down mid-level restaurants instead, saying, “if I’m going to spend more money, I might as well upgrade to a higher quality brand”. This all lead to McDonald’s reporting their first loss in global sales since the pandemic, so to win back consumer confidence, McDonald’s reintroduced the $5 Value Meals. Let that be a lesson to us all, when you go off course on your pricing or your service offering to the point that your consumers do not recognize your brand promise, you will in turn suffer the consequences.
I get this call all the time from my agents who flirt with substantially lowering their commissions to buy the listing instead of doing more with the resources they have to heighten the prospect of a sale or improve the customer journey. When you zig and zag like this, you send the wrong message to your clients, especially past clients who experienced a higher commission when times were good, but you reduce your commission when times are bad. How does that make any sense?
Your Brand Promise is the Foundation of Your Success
When you get out of your lane and default on your brand’s promise, you make your customers rethink their loyalty to you. When you fail to understand what got you where you are in the first place, you turn your back on your core customer, which can cost you sales. When we try too hard to be everything to everyone, we water down our brand deliverables, and more importantly, stretch ourselves too thin. It is important to go deeper on what you deliver rather than go wider; once you find your footing, that’s the indication to expand your reach. When you get seduced by the next shiny object and introduce it into your daily interactions, you confuse your clients and make them second guess your motives. By creating a format to test the viability of a new initiative, we set in motion a plan to either go forward or abort mission, which sets the stage for your ultimate success by not overdeploying resources.