Monthly Archives: January 2008

IN or OUT? How about Way Out?

Marc Grayson has a post up on Real Estate Tomato asking whether bloggers should focus on the IN audience (industry peers) or the OUT audience (consumers).

You know what I realized after reading that?

If you have to think about IN or OUT, then this might be a good time get way out.  As in, out of the blogosphere completely.

Seriously, there’s a pretty good chance that you’re just contaminating the blogosphere with that blogs-as-marketing crap.

More I think about it, more I believe blogging is a horrible, horrible marketing device.  I know there are plenty of people who think that blogging is driving all kinds of traffic to their paying jobs and such.  Maybe from a professional day-job standpoint, I should be a huge cheerleader for blogging-as-marketing, since each of those blogs is a potential customer of my company’s products & services.  But this is my blog, not my company’s blog.

I’m a blogger — not as rabid or as clever as some, but I do it because I enjoy writing.  I would do this even if I had no readers.  (And believe me, looking at my traffic, I may as well have no readers. :) )  I suspect that all great bloggers are the same way.  Manolo probably would be writing about shoes and going “Ayyyy” even if five people in the world read his stuff.

In fact, that’s what makes blogs good: the personal passion, the personal voice, the uninhibited opinionating.

Marketing, in contrast, requires discipline, focus, and of course, ROI.  And Marketing — even if you’re a disciple of Cluetrain like I am — does require thinking carefully about framing, positioning, and persuasive power, all towards a given business goal.

I have to say, even as a huge proponent of blogging (yes, I do believe all companies in real estate should blog, and allow their employees to blog more or less without restriction), I would rather see far fewer “blogs” that are just thinly disguised pitches for business.  I keep seeing some site called tugboat.realestatesomethingoranother pop up in my Akismet spam filter.  Turns out, it’s some bot-crawl operation that takes snippets of posts and puts it on their site with a link to mine.  How lame.  How silly.

Anyhow, if you’re blogging because you want to make more money selling real estate… I have to advise you to stop.  Spend that time doing something else.  Database marketing maybe.  Join a civic organization or something.  Work at a charity.  Because there’s no way that you can be a genuine, authentic, personal voice when your goal is simply to drive more business your way.

If you’re blogging because you’re just… born that way, or something is a bit off-kilter in your head that you’d rather spend time in front of a computer than watching TV or whatever else it is that normal Americans do… then yeah, keep going.  Keep blogging.  Your opinions are probably interesting to read.

So if you’ve got to think about IN or OUT or target audience or whatever… please, just get out of blogging altogether.

-rsh

Occupational Licensing and Capitalism Perfected

Once again, Bloodhound has a fantastic post up on a topic that is tangential to much of a theme I’ve been hammering since I started this blog. Greg Swann tells the story of an unfortunate eBay merchant who is being threatened with legal penalties for “auctioneering without a license”. Read the whole thing — it’s worth the time.

Greg’s point is that licensing laws are bad — they don’t protect the consumer, but the licensees:

But there are consumers who need protecting, right? Oh, you bet:

D&J Virtual Consignment had 11,000 feedback comments on eBay and 14 were negative, Pletz said, giving her a 99.9 percent satisfaction rating.

Ebay is not just perfect Capitalism, it is Capitalism Perfected — everything that has always been implicit in free-market commercial transactions made utterly transparent by means of database management. If you are looking for the complete and irrefutable refutation of Das Kapital, you’ll find it not on but in the form of Ebay.com.

So where’s the beef?

Amoros, the state spokeswoman, said investigations were a “complaint-driven” process but those complaints are confidential.

Uh huh.

It is only possible to for you to defend occupational licensing laws by ignoring the palpable harm they do to actual consumers — higher prices for lower quality goods and services. But even then, don’t get downwind of yourself. This stuff stinks.

As a non-practicing attorney, I know what Greg speaks of firsthand. The work of a first year attorney is something that most chimpanzees that are not brain-dead can do. We’re talking about stuff like deciding where a comma should or shouldn’t go and making photocopies. In most firms, the senior paralegal has forgotten more about the law than the new lawyer has ever known.

Yet, that snot-nosed lawyer commands $175K a year (in NYC) while the paralegal gets by on $50K because the former has that shiny thing the paralegal doesn’t: the license to practice law.

So I agree with Greg overall. However, and c’mon you knew there was a ‘BUT!’ in here somewhere, there is something he’s not taking seriously enough.

Greg is mostly correct (I think) in describing eBay as “Capitalism Perfected”, but he glosses over what makes that really possible: utter transparency made possible by means of database management.

I’m as big a fan of the free market as just about anyone, but even I think there is a role for government in the market. Its critical role is to cover the one enormous weakness of capitalism: access to information.

People (and companies) rarely have the incentive to provide complete and full transparency. I haven’t yet seen a case where complete transparency has redounded to the benefit of the person or company being transparent. Even between husbands and wives, complete transparency might not really be the best policy. I mean, do you really want your wife to know your actual, true, transparent opinion on whether those pants make her look fat?At the same time, for a free market to function, there has to be enough information available for buyers and sellers to make a rational choice. This is not the same thing as saying that buyers and sellers have to be actually informed — merely that the information must be reasonably available. Otherwise, the notion of caveat emptor just doesn’t apply.

If you’re looking for a heart surgeon, wouldn’t the information that Dr. Smith has had 3 of 3,000 patients sue him for malpractice while Dr. Jones has had 400 of 3,000 patients sue him be a relevant piece of data in helping you make your choice? Of course it is. If you had that information, learned it, you can still choose to go with Dr. Jones — but you’re probably going to bargain the price of services down, or negotiate for insurance arrangements, or do something where you benefit as the consumer.

eBay is Capitalism Perfected in a sense because of its reputation management system. While it can be gamed a bit, it’s very, very, very difficult to game it consistently over time with thousands and tens of thousands of interactions. So someone who has a 99.9% satisfaction rating with 11,000 feedback is plainly trustworthy. Applying licensing laws to someone like that does indeed stink, as Greg puts it.

But in the real world, we don’t have the benevolent eBay dictatorship able to track all of the transactions and gather feedback on a person-by-person basis, then presents all of that information in a single, easy-to-use place for the consumer. Trying to get the equivalent of a eBay rating in the real world would take weeks and months of painstaking research — even if the information were actually out there somewhere.
Furthermore, eBay’s transaction regime is pretty one-dimensional: did the seller deliver the item to the winner in a satisfactory way? How do you evaluate the performance of professional services? Is someone a good lawyer because he’s prompt with his responses, considerate of your needs, and a good father, even if he loses every case for you? Is the opposite a good lawyer — he wins every case, but treats you like a piece of crap?

In the real world, I do think there is some justification for a licensing scheme for some professions. Not a lot, but some — and certainly the schemes we have need some real improvement.

In a way, licensing is merely branding with teeth. The purpose of a brand is to engender trust in the consumer by having lived up to the promise of the brand time and again. Licensing extends that concept and gives it some teeth.

If I’m looking for a lawyer, I might not have the time to do what I really should do: sit down with the man, and quiz him on torts, contracts, constitutional law, corporations law, income tax, property tax, federal courts, and the numerous other fields of law to make sure he knows what he’s doing. I should look up all of his past cases to make sure that he hasn’t absconded with client funds, or defrauded clients, or done any one of the really horrid things a lawyer could do. But I just don’t have that kind of time.

So I rely a great deal on his license. If he had absconded with client funds, he would have been disbarred. If he didn’t know a thing about basic black-letter law, he wouldn’t have passed the Bar exam. His license to practice law is a brand that proclaims, “this man knows enough and is ethical enough for you to trust him with your life savings”. Or in some cases, your life itself.

If the licensing scheme is coherent, rational, and rigorous, and it is designed to further consumer benefit, it can be a very important stand-in for the eBay User Reputation system. A great example is the designation of Master Sommelier. Try getting one of those — there are only 1

Now, just because I can defend these licensing schemes does not mean that I can defend all licensing schemes, or for that matter, that I want to defend licensing laws. I could see some jobs where the possibility of harm is so great to the consumer or to society that we need the power of government to prevent anyone who does not have the proper training and ethics from working those jobs without a license. Commercial aircraft pilots come to mind. Even if licensing laws in that case result in protecting the licensee’s turf, the downside of not making sure that someone flying a 747 is properly trained is way, way too big.

For most professional services, however, the licensing laws are a big problem.  There is no coherent benefit to the consumer, and the license itself no longer carries the ‘brand’ that it used to.  In those cases, I think a professional registration program — with much higher, more stringent standards — is far superior.  Rather than prohibiting people from practicing law without a license, why not simply have those who have passed the Bar register with the State Bar Association, and make that data public.

The application to our real estate industry is, I trust, obvious.

-rsh

Dear NAR: Whatever You’re Doing Ain’t Working

Over at TechCrunch, a hugely influential web technology site, there’s a profile of Redfin up. The profile itself is pretty bland and content-free. But the comments to that post has some… ah… action in there.

For example, here’s a “Kerry R“:

I’m not paying an F-ing real estate agent any fees, they don’t do anything! I don’t care how much they rebate. If I’m going to sell my house I’m going to use Craigslist or Backpage or ChoiceA but definately not paying realtor commissions. And before I sell I’ll use Cyberhomes or Zillow to validate my pricing strategy. This whole “you need a realtor” BS that is all over my TV is tired. C’mon, $30,000 in commissions to sit down and post a house on the MLS and just wait for a buyer to call you. National Association of Realtors will be in the deadpool by 2012.

And then, a couple of comments later, here’s a “Marzipan“:

Second, to #3 Kerry R….Realtors charging the typical 6% do get paid too much. But paying 1-2% is quite fair. The reason is that sombody else handles the BS, but more importantly…you are buying an entity and/or individual to sue in the event the $hit hits the fan somewhre in the transaction.

May I suggest to whomever the powers be at National Association of Realtors that whatever they’re doing ain’t working?

Particularly interesting is Marzipan’s perspective: that using a broker is essentially taking out an insurance policy on the home sale transaction. Is that what real estate brokerage has been reduced to in the Internet age?

Marzipan’s comment reminds me of a conversation I had a couple of years ago at Realcomm. A top residential broker from the Houston area had just presented to a room full of commercial real estate people how she uses the Internet and virtual teams to get her tasks done. As she was going through it, I realized that her team (spread throughout the world, including India) was doing everything from marketing to website maintenance (her own site) to contracts and paperwork to setting up closings to followups. Now, she was a Re/Max agent, but used absolutely nothing that Re/Max presumably offered her except perhaps for the business card.

So I asked her, “What exactly does Re/Max do for you, since you’re a totally self-contained operation?”

She said, “They provide liability insurance.” That was it. That was the entire value of being part of Re/Max for this top real estate agent whose team did north of $15M in GCI.

So apparently is the entire value of working with a real estate agent for at least that Marzipan guy.

This goes to the heart of a debate I’m having in the comments of the Halstead Brand Suicide post. If the core value proposition of a real estate agent is brokering, then the industry is doomed. The Web does brokering — the matching of buyer and seller — better than just about any human being. We’ve seen this in finance, we’ve seen it in travel, we’ve seen it in dating, we’ve seen it in job search, we’ve seen the phenomenon in every industry where the essential value is matching a buyer with a product/service.

Why do so many real estate people think it won’t happen here?

NAR’s advertising campaigns have been incredibly bad.

Apparently, NAR doesn’t realize that the image of the real estate agent is so bad that anything they say is simply treated as a lie.  It’s probably true that right now is a great time to buy (assuming you’ve got the cash, the credit, and can get a mortgage) for all the reasons the ad mentions.

Too bad the consumer just thinks Realtors are full of crap.  Just check out the comments on YouTube on that video.

“I keep finding realtors/former realtors that were topless dancers (pole dancers) or that are going back to that business (or prostitution).

Is it the lure of easy money combines with the lack of morals? ”

“Realtors are parasites.”

“It is always a good time to buy. You know why? Because if you don’t buy homes, realtors starve. They can’t pay their mortgages or put gas in the Escalade.

So go ahead and buy, even though your house will be worth less in a few years and you will have no equity.

NAR would be better off spending their ad dollars to give to people as down payments. It’s the only way half the people will even be able to afford a house.”

I don’t know if I agree that NAR is better off spending ad dollars to give people down payments.  But I do think NAR should fire whoever its ad agency is, maybe fire whoever is heading up the PR/Marketing efforts for NAR, and spend some real time and money understanding consumers and why they think Realtors are such scumbags.

If marketing is a conversation, then NAR has simply been plugging its ears going “Nyah nyah nyah, I can’t hear you!” for years.

And given the Texas agent’s comments, that problem is up and down the entire real estate value chain.

How to fix this problem?  I don’t know.  If I knew for certain, I think I’d be a rich man on a tropical island somewhere.  But I do have some thoughts.

First, get rid of the bad apples.  It may be that most Realtors are hardworking, conscientious professionals who take their responsibility very seriously.  If so, the industry needs to purge those whose behavior reminds consumers of prostitutes and pole dancers.  If the 1.3 million Realtors goes to 500,000 Realtors, but every single person who carries that tag represents the best practices, best intelligence, best knowledge, and highest ethics, I think that’s an improvement.

Second, go back to the grassroots.  Have conversations.  Instead of spending $40M on TV ads that make consumers think you’re a slimy douchebag, why not spend it training every single Realtor and every local Realtor Association to get out to the community, in person, to hold seminars, teach consumers the ins and outs of the market, evaluation, housing laws, zoning regulations, and share whatever knowledge and expertise Realtors have?  People generally find it harder to call you a scumbag to your face, especially if you’re telling them something they didn’t know that could help them, without sales pressure and sleazy tactics.

Third, really understand and proselytize among the brokerage community what the value proposition is.  If it’s brokering, then prepare for a bloodbath.  If it’s something else, then work to make that happen.  My personal belief is that the value proposition of brokers in the Internet age is wisdom and judgment.  Websites can give me valuations; they can help me find homes; I can get neighborhood info from them.  What I can’t get is an expert’s wisdom and judgment.

This is more or less how it works in finance.  In law.  In accounting.

Why would real estate brokerage be any different?

-rsh

But… That’s SO Web 1.0!

Dan Green over at Bloodhound Blog understands marketing.  Well, I’m sure I’ll find some place and time to be a pain in the ass to him to, but he’s absolutely on the money with this post:

Click-throughs from a search engines are not “leads” and that’s why the NAR statistic is misleading.  Until a reader engages the author personally, the click-through is only that.

A Web site visitor that registers for free search, free reports, or free seminars is not your client.  He is a window-shopper taking home free samples.  He’s a client when he signs, and never before.

He goes on to vouch for the power of database marketing, good old fashioned email, that the Web 2.0 gurus have been telling us is dead as the proverbial doornail.  I think he’s exactly right.  Read the whole thing — it’ll be worth it.

Okay, maybe not exactly right.

I suppose if I had to pick a bone with him, it is that while he’s absolutely correct that a click is not a lead, and that a random visitor is not a client, he doesn’t soften the blow by pointing out that one should still care a great deal about generating that random traffic.  There is value in clicks, value in the random visitor.  Just not as much as some people think when they go on and on about “user experience” and “customer interaction” when they’re really talking about the random visitor.

After all, the random visitor could turn into a customer; the non-visitor never will.

Of course, you have to make the site enticing and provide value to the random visitor in the hopes that he will turn into a frequent visitor, then a regular visitor, then finally take that step and become a customer.  But first, you do have to get them to your site somehow.

I don’t think he’d disagree with me.

The real lesson from Dan’s post, I think, is to avoid getting caught up in the hype of the latest tech gimmickry.  Just because something is “old-school” doesn’t mean it’s ineffective.  Pursuing innovation for the sake of innovation is a pretty good way to lose a lot of time and money.  Connecting the marketing effort as directly as possible to the business model is a far better way.

If I were responsible for marketing for a local brokerage, I would take my entire paid search budget and spend it on doing live, in-person weekly seminars on the local real estate market instead.  The people most likely to list with me are those who already live in town.  Why not make a concerted effort to educate them on the topic they care about deeply: the value of their homes?

But Rob… that’s not even Web 1.0.  That’s like… Cro-Magnon marketing.

So?  Establishing your company, and your agents, as experts in the market conditions of your local market is a bad thing how?  Getting people to come to your office one evening to hear an objective lecture (free from all sales-pitches and smarmy sales tactics) on what’s going on nationally, regionally, and locally and meeting potential customers face to face is bad how?

It might be different for a large regional brokerage, or a national network, but the local broker will probably get more ROI on those evening lectures (cookies and soda aren’t that expensive, yo) than on any amount of money spent buying keywords on Google.

-rsh

Tribe Management in Real Estate: Just Don’t.

Seth Godin, he of the bald head and brilliant marketing insights, has a new post up talking about how branding is dead, replaced by what he calls ‘tribe management':

It adds to that the fact that what people really want is the ability to connect to each other, not to companies. So the permission is used to build a tribe, to build people who want to hear from the company because it helps them connect, it helps them find each other, it gives them a story to tell and something to talk about.

And of course, since this is so important, product development and manufacturing and the CFO work for the tribal manager. Everything the organization does is to feed and grow and satisfy the tribe.

Instead of looking for customers for your products, you seek out products (and services) for the tribe. Jerry Garcia understood this. Do you?

Who does this work for? Try record companies and bloggers, real estate agents and recruiters, book publishers and insurance companies. It works for Andrew Weil and for Rickie Lee Jones and for Rupert at the WSJ… But it also works for a small web development firm or a venture capitalist.

People form tribes with or without us. The challenge is to work for the tribe and make it something even better.

With all due respect, I think Seth made a mistake by including real estate agents in that list.

There are a couple of reasons why.

First, the term “tribe” by its very nature implies permanence.  The Webster.com definition of tribe is:

1: a social group comprising numerous families, clans, or generations together with slaves, dependents, or adopted strangers

2: a group of persons having a common character, occupation, or interest

Add to that dictionary definition, the anthropological notion of a tribe being organized around kinship connections, and you get the idea of permanence.  After all, what is more permanent than family?

You can extend the metaphor plenty — after all, the second definition above is about as wide open as you can get.  So you can speak of a ‘tribe’ of a particular writer’s fans — I belong to the ‘tribe’ of George R.R. Martin’s fans.  I also belong to the ‘tribe’ of people crazy about Alison Krauss and Union Station.  The membership in these various tribes is based on relatively durable interests.

So when Godin speaks of working for a tribe, I have to think he means some sort of a more-or-less durable group of people with common interests.  Blue-state conservatives, or people who love chocolate, or whatever.  Work for such a group, and find products and services for that tribe, and you can be successful.

Fine.

But what happens when the “tribe” is held together by absolutely nothing except a passing, momentary need?  If the sky opens up in a sudden rain shower, is it logical to call all those running for cover a “tribe of shelter-seeking people”?

What Seth neglected to take into account is that real estate consumers surface every seven years on average.  Alex Periello of Realogy likened them to whales who breach the surface every seven years in a frenzy of activity for a few months, buy/sell the house, then disappear for another seven years.  There is no permanence there.  No enduring interest, no enduring common character.

Are there special niches within real estate where tribes are found?  Sure.  Commercial investors might make up such a tribe — because they have an enduring interest, a permanence to the membership.  But for general application, the “tribal management” approach to real estate marketing is likely to get you very broke, very fast.

Second, and this is perhaps a bit more fundamental a critique, it appears to me that even within a tribe, branding occurs.  Unless we’re talking about paleolithic hunter-gatherer societies, you always have specialization in any group of human beings by the very fact that we’re not the same.  Some people are just better at making pottery than others; some are just more talented at writing poetry than others.

Seth’s focus on ‘what people really want is to connect with each other’ is just a touch too much of the soft muddled buzzword-driven thinking that infects so much of modern marketing.  (Personally, I blame Facebook.)

In some cases, what people really want is to connect with each other.  In other cases, what people really want is someone to solve their problem for them with the minimum hassle.  If my pipes burst, I really have no desire whatsoever to connect with the plumbing community and partake in their tribal rituals.  Sorry, I don’t.  I just want a competent plumber to come to my house and take care of my broken pipes.  That’s it.

And frankly, I really don’t have the desire to go and engage in a lengthy conversation with my tribe (whoever the members may be) and learn the ins and outs of a plumber’s skill level, education, perspective on piping, and his philosophy of ecological sustainability.  I just want to know who to call, and if he’s reasonably competent.

Branding is absolutely critical in those cases.  I’m not likely to call the guy who brands himself as “The Best Baker in Town” with my piping problem, despite not having connected with him or his tribe, or held lengthy conversations with my neighbors about his qualifications to fix my pipes.  I’m far more likely to go to Google or Yellowpages.com and search for “plumber” and go with the guy with the best branding.

Because I really don’t want to think about it anymore than I absolutely have to.

Now, combine the two factors and you have a perfect storm of non-tribal work.

Real estate consumers are not a tribe, because its “members” surface every seven years.  When they DO actually surface, they’re not looking for kinship connections or establishing common interests.  They’re looking for someone to help solve their problem with a minimum of hassle: buying, selling, or renting a place to live.  The buyers are not looking to connect with the sellers anymore than they absolutely have to.  The sellers are not interested in having the potential buyers come over for tea and biscuits while they discuss all of the various interests they have in common.  They’re just looking to transact business for their own purposes.

In that context, I submit that branding is absolutely crucial.  Being branded as a professional real estate agent, who knows what he’s doing, who knows the market, who is an expert in the process, and can get things done with a minimum of hassle and maximum of helpful advice, will be of far greater utility than any sort of “tribe management” strategy.

Ignore branding at your own peril, if you’re in the real estate business.

-rsh