In part 1, I argued that we are living through a “post-middle” era as far as marketing is concerned, where consumers can be divided into either Thrift-minded, or Aspirational. Then in part 2, I examined some ideas for how realtors might think about marketing homes for sale given that consumers are either driven by price or by lifestyle aspirations.
In this next part, I’d like to look at how service providers — the real estate agents, the mortgage brokers, the appraisers, etc. — might think about marketing themselves.
You Can’t Be Everything to Everybody
Before we even get into the Post-Middle issues, I would first point out that far too many real estate folks try to get every single piece of business possible under the sun. Stop. It doesn’t work, and it’s likely hurting your business.
You simply cannot be the best damn realtor to a first-time homebuyer and also be the best damn realtor for the $20m mansion of a hedge fund manager. It’s not possible. Whatever time you are taking out from studying the list of the world’s wealthiest billionaires who could buy that $20m mansion to service some 28-year old couple looking to buy a $200K starter home is time you’re not spending on behalf of Mr. Hedge Fund. And vice versa.
The only way this is not true is if the service you are providing is not that complex. If you mow lawns, then chances are you can provide the same level of service to everybody. If you’re a corporate bankruptcy attorney, then you can’t.
It very well may be that realtors are “professionals” in name only. It may be that the service the real estate agents provide are so basic, so undifferentiated, and so lacking in actual expertise that the same person could service the low and the high end client. Certainly, that appears to be what the vast majority of consumers believe.
I do not. I happen to think that there are expert realtors out there, and that the practice of helping clients buy and sell real estate could be a profession like any other. To be sure, it is a profession in need of sharper definitions and higher bar for performance, but real estate is a profession when done right.
Marketing to the Thrift Consumer
With that out of the way, let’s get into how services might be marketed to a Thrift consumer.
This one is easy: the Thrift consumer is concerned primarily about cost. Therefore, marketing to them is simply being the lowest-cost provider with the greatest number of payment options.
We have already seen the coming (and going in some cases) of the discount brokerage models, and the refund models, and flat fee models, and the like. I would advise the realtor marketing to the Thrift consumer to embrace one or more of these models and promote them.
In addition, to effectively market to the Thrift consumer, you will want to do some competitor research. It makes little sense to say, “I’m the cheapest guy around” unless you really are.
On the buy-side, it isn’t clear to me that there is a way besides refunding part of the commission to the buyer to be the “lowest cost option”.
On the sell-side, of course, you can set your price however you want to set it.
Now… let us not forget the 4 P’s of marketing: Product, Price, Promotion, and Place (distribution).
For services, the marketing mix still applies. For the Thrift consumer you are obviously emphasizing Price. But you have to consider Product (i.e., the services you are willing to offer), Promotion (i.e., how you’re getting the word out), and Place (i.e., where are you trying to sell your services).
Product is up to you — however much you can do and still make a profit is what you want to look at. But I will note that if you’re going to market your own services to the Thrift consumer, it’s unlikely that your listings mix will be Aspirational. “Yes, I’m the cheapest realtor around, so let me show you this $4.5m mansion” doesn’t really work all that well to me.
Promotion, however, requires a little bit of thinking. If you are making a Price play for the Thrift consumer, consider the image you want to project. Consider the messaging you want to put out into the world.
For example, you don’t really want to be driving your Thrift consumers to showings in your Mercedes 600SL. Leave that at home and get a nice comfortable Toyota Camry or some such.
Distribution channels — you’ll want to do a bit of segmentation work and figure out where all the Thrift consumers live, or are coming from. Advertise there, and promote yourself there as the lowest-cost provider.
Marketing to the Aspirational Consumer
This is where things get interesting.
How exactly does one market services to the Aspirational consumer? Except in high-end luxury services market (e.g., valets, celebrity chefs, personal trainers, etc.), people simply do not walk around aspiring to have a service provided to them.
“Oh geez, I really wish Joe the accountant would let me pay him to do my taxes,” is not a thought most people have. It doesn’t fit in with a lifestyle decision, nor does it necessarily add to self-perception.
And yet, there are some exceptions to the rule.
David Boies is one such exception. He’s widely considered one of the best lawyers in the world in the high-flying and highly competitive world of corporate litigators. He’s the guy you call if you have a “bet your life” type of lawsuit at hand. This fawning Time Magazine article gives you a sense of why he is an exception.
Another exception could be Scott Boras, the sports agent. He may be the most hated sports agent in history (although Drew Rosenhaus could give him a run for his money on that score), but his clients stick by him, and one might say that a sign of having “made it” or a validation of having the possibility of “making it” is to have Boras represent you.
For a more mundane example, you have the various private banking services offered by the likes of JP Morgan. Note that this is not your pedestrian JP MorganChase where the average joe blow can go desposit his paycheck. This is the original J.P. Morgan, the house that saved Wall Street countless times. When you get right down to it, every asset manager pretty much does the same thing: take your money and make a bigger pile of money for you and take a piece of the action. Whether the minimum portfolio size is $500 or $5m, the actual services provided are likely not that dramatically different.
Yet, JP Morgan Private Banking is definitely aspirational, while Charles Schwab is not. What is the difference?
Superior Results, Superior Talent
The common thread that ties all three disparate service providers together is a track record of superior results which suggests a superior talent.
David Boies isn’t the most sought after lawyer in corporate America because of his good looks. He’s the most sought after because he has litigated and won some of the biggest cases in American legal history. He has a long track record of success. Scott Boras consistently gets his clients more money than imaginable, including Alex Rodriguez’s quarter-billion dollar contract. (Although, to be fair, A-Rod fired Boras for his second contract.) JP Morgan Private Banking, it turns out, does pretty well.
The suggestion, from a marketing standpoint, is that such superior results come from superior talent. JP Morgan — like all investment banks — makes a pretty big deal about this, talking up the amazing degrees and credentials of their bankers. As it happens, there are some pretty smart and talented people at places like JP Morgan — more than you might find at a place like Joe’s Financial Advisors.
Not Just Anybody Can be a Client
Another key element in Aspirational marketing, I believe, is at least the appearance of exclusivity. Private banking won’t talk to you unless you can plunk down seven figure assets to be managed. David Boies isn’t interested in taking on your $5,000 car accident lawsuit. And Scott Boras may not think your high school pitcher son is worth the trouble of representing.
The Aspirational service providers are all generally expensive, but they don’t particularly care if you balk at the price. Go somewhere else, then, is their attitude. You didn’t come to me looking for a bargain, but for superior performance.
That necessarily means turning business away. Part of the reason, certainly, is professionalism. If you cannot devote adequate time and attention to a client, you don’t want to deceive the client into thinking you will. There is something admirable about that stance.
Applying to Real Estate Services
In applying some of these observations to real estate, the Aspirational realtor will be one with a superior track record of performance that indicates superior talent, and one who isn’t afraid to turn down business.
Imagine that for a moment.
On the one hand, you want this agent to represent you and sell your house because she can provide evidence of superior performance. “Over the past ten years, homes I represent sell for 5% more than the area average, and here’s the data to prove it.” That is a powerful statement, and a powerful trigger of Aspirations — namely, the aspiration to make more money. “Last year, during the downturn, I sold 48 homes; the area average is six homes.” That is a powerful marketing message, and not one based on price.
Rather than telling someone, “I’m the best out there”, the agent is showing the client that she’s the best out there. Let the client say, “She’s the best out there” to himself.
Note that track record of superior results is only an indicator of superior talent, not a promise of future superior results in this particular instance. Nor is track record alone adequate. The rest of the package also has to be superior in some real way. For example, David Boies has a photographic memory and can recall the specific page of an obscure journal that some obscure case is on. Scott Boras has a scientific approach to sports that is only partially indicated by this:
Whatever statistics he wanted were as his disposal, courtesy of a computer in the basement operated by a former NASA engineer that has data and video of games dating back to 1871.
In other words, to get out of the Price driven arena of the Thrift consumer, professionals have to show a track record, personal skill/expertise, and some evidence or reason for the consumer to believe that he’s dealing with a superior talent. They have to have evidence of competitive edge that the consumer can see, understand, and accept as providing that edge. The customer service must be topnotch to convey to the consumer that he is now being represented by the best, who doesn’t take everyone as a client, and can therefore lavish each and every client with attention and care.
Finally, the Aspirational agent has to be comfortable turning clients down and sending them elsewhere. Without exclusivity, there is no Aspiration. Supply has to be lower than demand in order not to compete on price. For the realtor, this may mean taking longer vacations. Rather than take on yet another client, the realtor simply has to say, “I’d rather go to Tahiti” and do just that.
What I Don’t Understand
Given the above, what I don’t quite understand is why so few real estate brokerages and agents provide superior performance data. If you can show that your average DOM is lower, and show that your average sale price to list price ratio is higher than the average, and so on… why wouldn’t you?
If the reason is that the local Association or local MLS has rules against sharing that information, then the superior agents/brokers need to be fighting some political battles to get those rules changed. Being forced to pretend that someone who sells 50 homes a year at 98% sale-to-list ratio is the same as someone who sells 2 homes a year at 85% sale-to-list is ludicrous at best, and fraudulent at worst. And it forces all realtors into the same hazy not-quite-aspirational-not-quite-price everything is sorta commoditized marketing hellhole.
Given the above, what I don’t understand is why some companies and agents are so careless about their brand. Being perceived as the JP Morgan Private Banking of real estate is an enormous advantage in Aspirational marketing. Turning away clients and refusing listings that will negatively impact the high-end brand may be the best branding strategy possible. Yet so few people in real estate do this.
You Can’t Be Everything to Everybody, Recap
Again, you can’t be everything to every client. You cannot, without some transformational change in technology, be the lowest cost provider who is also the absolute best.
On the other hand, you can and should be the best thing to somebody. If that’s the Thrift consumer, then you can and should strive to cut your costs to a point where none of you competitors can touch you on price. If that’s the Aspirational consumer, then you can and should strive to have the highest performance possible, a verifiable track record of success, the best in support and service, and unquestionable expertise in your field.
Either way, pick a path. Then start walking down it.