Today’s North American real estate brokerage shares its market space with a concept and force known as “digital disruption.” Native to almost every industry in the contemporary economy, digital disruption is more than specific faces and brands. It is the application of several very effective and new business concepts that are proving to be overwhelmingly effective, especially against individuals and entities who attempt to cling to traditional approaches that no longer appeal to the contemporary consumer.
This recognition that digital disruption is a business doctrine practiced by brighter-than-average entrepreneurs rather than a tyrannical assault engaged in by terrorists, can go a long way in assisting real estate brokers to align their wonderful pasts with a successful future.
Virtually every industry is, in some way or another, affected by digital disruption. Volumes have been written about digital disruption, what it is and how it works. Even within this broad span of attention perhaps the most common observation made about this behavior is that it almost always arises out of a pre-existing condition, most predictably consumer demands and expectations.
There are several digital disruptors currently engaging the real estate industry. Without question, the one creating the most buzz is the third-party listing portal. In almost every marketplace, there are brokerages and practitioners who are expressing both outrage and fear regarding what they claim are inappropriate and unethical practices being engaged by these now not so new entities.
While only history will judge whether the alleged wounds and expressions of pain being communicated by these folks are or were appropriate, some aspects of their behaviors can be evaluated even now. The first thing that has become obvious is that both the strategies and the tactics utilized by the real estate portals are not reflective of their being mean-spirited or unethical, but rather that they are absolutely tuned to the demands and expectations of the contemporary real estate consumer. A second observation would be that, even years after learning about the importance of relationships, many real estate professionals refused to change their approach.
Practitioners of the traditional real estate service protocols are not victims of some new weapon of mass destruction. They may, however, be victims of a weapon of mass disruption. This new “WMD” is not chemical- or fusion-based, but rather is built around one of the oldest chemical formulas know to mankind: “give your customer what they want.”
The vulnerability that has been exploited by the listing portal is not some technical, chemical, biological or communications advantage, but rather consists of components gained by simply listening to the consumer and converting what one hears into simple steps that align the consumer real estate experience being offered with the demands and expectations being articulated.
All of which brings us to the simple conclusion that the traditional practitioner, by taking steps to be more sensitive and responsive to the increasingly powerful and influential consumer, could avoid much of the disruption currently being created by the portals. For the purposes of this article, the more obvious complications created by agent centricity will be ignored.
What specific things should brokerages do to begin the process of understanding their customers? The first step is a classic example of that “one giant step for mankind” thing. The current situation would be greatly improved if brokers would acknowledge that the consumer is in whole or in fact “their customer.” The very idea that expressing interest, gaining knowledge of or creating a relationship with brokerage customers violates some secret code or sacred relationship with the agent is both unacceptable and, in the face of the current marketplace, inappropriate.
Much has been made about the billion-dollar cap values being amassed by the portals. Yet the fact remains that what they are actually doing on a day-to-day basis is one of the easiest and cheapest remedies known to any industry; “listen to your customer.”
The probable place to begin this quest is to understand the issue from a consumer perspective. Most consumers today expect, and in many cases, demand a relationship out of every transaction no matter how minor. Consumers not only expect this relationship, but also demand that the companies they deal with hold up their end of the relationship bargain. Brokerages that have not adopted some relationship “standard” for their customers aren’t just falling behind, they are violating what today’s consumer believes is a righteous expectation.
Most brokerages today are further handicapped because they fail to develop what the Harvard Business Journal calls “relational intelligence.” They don’t understand all of the different relationships their consumers have with other vendors and brands nor how these relationships impact the consumer’s demands and expectations. Accordingly, they tend to operate in the dark regarding this critical factor, in most cases assuming, probably incorrectly, that agents are taking care of this requirement.
Obviously this situation must be remedied if brokerages are to appropriately and effectively respond to digital disruption. Brokerages must design, develop and implement programs that will give them the very knowledge about their consumers that will allow meeting this new challenge. Only with this information will they be able to gain control over a relationship strategy that will allow them to begin to set their rules and expectations rather than to be dragged down the road ruled by a one-sided consumer-generated relation expectation.
In this new environment, the brokerage’s marketing program can now be adjusted around the brokerage/customer relationship, an essential step forward.
Yes, in many cases these steps and tactics are going to upset agents – especially those who choose to cling to the claim that they own the relationship and have the right to abuse that responsibility by failing to either service or respect the consumer relationship. It is time for the real estate services community to recognize that the separation of brokerage and agent in this critical function is no longer acceptable or productive. The forces of digital disruption are widening the relationship gap every day, and even now, experts are looking forward to a “tipping point.”