Why, in an industry in which customer service is one of only two ways to set yourself apart, have brokers been so wary of measuring customer satisfaction?
It isn’t because agents don’t care. I’ve never met a Realtor who didn’t care about his customers. In fact, when we talked about Redfin’s customer satisfaction goals last week, a broker immediately contacted us to ask how we measure customer satisfaction.
Will the Brokers Who Measure Customer Satisfaction Please Step Forward?
I was going to refer him to someone else in real estate who uses our scoring system — we’re just beginners — but then I couldn’t find anyone else. Which is surprising, given that it’s the same system used by Apple, Costco, FedEx, American Express, Dell, Vanguard and literally thousands of other companies in virtually every industry — except real estate.
The broker ended up scheduling a meeting with Redfin’s Matt Goyer at Inman Connect. It may have been one of the only Connect meetings explicitly about customer satisfaction all week. In looking over the otherwise dazzling agenda — I have been to both Inman and Bloodhound conferences, and both are very good — I noticed that every type of marketing under the sun was in the program — except the one that works best: customer marketing.
The Perils of Transparency Are Worth It...
The reason measuring customer satisfaction wasn’t more prominent is because people think of customer testimonials as the old-school word-of-mouth that Realtors traditionally rely on, whereas Connect is all about the new school: YouTube, Facebook and Twitter.
E-Commerce for Agents Not Houses
But the message matters as much as the new-fangled medium, and our message to the world has to be about the quality of our service. The same transformation in how consumers research listings will change how they choose an agent. Rather than meeting face to face to review listings, consumers now evaluate listings online. They can’t see or smell the house in person, so they bury their nose in numbers. When their first encounter with an agent is online, they’ll take the same approach.
Therein lies the great fallacy in many people’s original conception of real estate e-commerce: that the product being sold was a house. I’ve been asked a thousand times, “who would buy a house online?” In fact, what customers want to buy online isn’t a house but the services of a real estate agent.
Almost all of our customers don’t like choosing an agent based on intangibles. Who wants to be the judge in a personality contest? What people want is to choose an honest, competent, careful agent based on simple, objective criteria. We think the most important of these criteria will be customer satisfaction. The sites that have been scrambling to bring together all sorts of data about a property now need to do the same for an agent.
In this coming arms race, we believe that the most important weapon will be data about your own customers. And the only way you can use it is if you share all the data, not just a few cherry-picked reviews.
Gathering Customer Data
Since Redfin wrote up its first offer, we’ve surveyed everyone who works with us using a free online survey tool like Zoomerang. Zoomerang is dead-simple to use; no programming skill is required. We now have a formidable data, of thousands of survey responses, which we can use to guide not only our own decisions, but those of our clients.
Show the 5-Star Reviews, the Less-Than-5-Star Reviews and All the People Who Didn't Respond...
The one question we’ve consistently asked in every survey is dead-simple too: whether the client would recommend the company to a friend. The yes/no answer to this question was from the beginning the primary determinant of our agents’ bonuses.
The Ultimate Question
Over the past year or so, after one of our board members read Frank Reichheld’s The Ultimate Question, we got a little more fancy about it. We asked clients the same question — it turns out that this question is Reichheld’s “ultimate” question — but with the answer rated on a scale of 1 – 10.
That allowed us to calculate what Reichheld calls a Net Promoter Score (NPS), which is the percentage of promoters (9’s and 10’s) minus the percentage of detractors (0 through 6). Everyone in customer service at Redfin, including me, has a bonus that depends on this score.
It turns out that the difference between just saying you’re “satisfied” and actually being a 10 out of 10 is huge. And we need as many 10’s as we can get: nobody is going to make the leap from seeing your web profile to becoming a client unless you have raving customer lunatics spreading your gospel all over the Web.
On the flip side, the damage one detractor can do to Redfin — I feel like I know them all by name — has been staggering. Given customers’ high expectations from real estate agents, it makes sense for us to add up the promoters and then dong ourselves for every detractor. Every one else in between affects our score too — as a lost opportunity to create a fanatic.
Frank Reichheld's "The Ultimate Question" is Redfin's Little Red Book
Raising Response Rates
Who gets surveyed? Anyone and everyone. We survey people who tour a property or make an offer, regardless of whether their offer goes through. About half respond. We used to give people a $25 Amazon gift certificate for filling out the survey, but we tried taking away the gift certificate and response rates didn’t change.
Reichhfeld’s book tells you to stop asking any questions in the survey except the ultimate question, so more people are likely to respond, but doing that never changed our response rate much. 50% – 60% of folks answer the question, while only 25% overall answer additional questions in a second survey, which is linked to the first.
The only tactic that really increased response rates was a short survey link, to prevent the link from breaking up across two lines in the email we use to send it out. We use bit.ly to shorten the link.
But Why Can’t the Clients Just Say It To Your Face?
By now, you’re probably thinking you want to do this informally, just in person whenever you get the chance. Big mistake.
Opportunities for Introspection in Real Estate Can Be Rare...
Clients will tell you plenty in a survey that they would never have the courage to say to our face, especially when someone besides the agent — the broker, for example — sends out the survey, and anonymous responses are allowed. By rigorously surveying everyone, you can track down people you had a fleeting encounter with, and never find out why they chose another broker.
Letting that person just disappear is a lost opportunity — not just to earn a commission, but to get better. Our surveys have taught us not only how individual agents can raise their game — each agent gets a complete report on his client’s responses, every month — but how we have had to improve as a company: speeding up the website, hosting more tours and offering more agent choice.
We have made so many mistakes at Redfin that we can no longer hope to be smarter than our competition, but we do think we know more about our customers. I often wonder how a large brokerage has any idea what’s going on between its agents and its clients.
What We Like About NPS
To start learning, you could probably use any old survey and it would do the trick. But here’s what we like about measuring Net Promoter Score:
1. It’s simple. The best thing we ever did to our compensation plan was to simplify it. Pay through the nose for promoters; nothing for detractors.
2. It allows us to benchmark our performance to those of other companies. Anything above 50% is considered a good NPS score. You can do better.
3. It separates the goats from the sheep: simply asking a customer if he is satisfied resulted in uniformly high scores. Focusing on 9s and 10s makes it easier to reward the top performers.
4. Agents love it: getting a score every month that isn’t just a sales number, but a real reflection of how your customers feel about you is really uplifting. Agents need more feedback like that.
5. Consumers love it: we started publishing ratings to our website about halfway through 2008. Traffic to those pages shot up.
The only problem was that consumers don’t understand NPS well enough for us to publish our results.
This was easy enough to fix: in the survey we added the word “yes” below 6 and up, and “no” below 5 and on down. Now we can say that 97% of our clients would recommend our service — 97% gave us a rating that was correlated with “yes” — even though our NPS score for last quarter was only 75%. We can also publish the numeric rating for each transaction. Maybe as NPS becomes a more prevalent concept, we can publish our aggregate NPS score straight up. We’ll probably start doing that soon.
How Do You Measure Customer Satisfaction?
By now this post is very long, and we should cede the floor so we can hear how other brokers monitor customer satisfaction. All of us can learn from the discussion. In a time of economic anxiety, digital personas and skepticism about Realtors, letting the world know how we treat our customers is the only way to build trust, which is the only way to begin all the other conversations we want to have via Twitter, YouTube, Facebook and blogs.
(Photo credits: Golo on Flickr, E3000 on Flickr)
J Boyer Morristown NJ says:
Measuring satisfaction is always a great idea. The former broker in my real estate office used to mail out surveys and then share them with the Realtors as a way to try to help the individual Realtors improve their game, and as a confidence builder when a survey came back with great results.
I wish they were still doing that. As for me personally, I would like to implement this but as a single agent there is currently no way to justify doing so, other then seeing out self addressed and stamped surveys myself for people I work with.
January 15, 2009 — 12:14 pm
David G from Zillow.com says:
Hey Glenn,
As a customer service guy, I’ve always paid close attention to Redfin’s satisfaction claims. Kudos to you for asking and for listening but as a client who used Redfin to place an offer, I have never seen a satisfaction survey and I’ve always wondered why. That bid was unfortunately unsuccessful and I have only used Redfin once but I got the impression that you only send surveys to folks who close deals with you. Is that the case?
January 15, 2009 — 12:21 pm
Glenn Kelman says:
David, that is baloney that you never received a survey. We send surveys to everyone, regardless of whether the deal succeeds or fails. We’ll send you a survey, and look into why you didn’t receive one in the first place.
Regards, Glenn
January 15, 2009 — 12:31 pm
Thomas Johnson says:
Glenn: You have employees. Brokers have independent contractors who earn 1099’s (and unlike the new Treasury Secretary, must pay social security and medicare taxes). Most brokers herd cats and avoid payroll taxes and health insurance premiums. The cost advantage they have over you is a competitive edge for them over your rather well capitalized balance sheet. They trade that advantage for marginal revenue. In a split model, a broker has no investment in a new hire. He can play for that one deal that every rookie has. By the time you have paid for a rookie that will cover your employment costs your competing broker has picked off 3-4 agents doing one deal each and is on to his next recruiting seminar. Isn’t that what you are really complaining about? 3-4 deals gotten by a rookies that probably couldn’t even correctly fill out your employment application, or are part-timers just taking transactions out of the revenue pool? BTW, I have the same gripe.
Until you succeed in changing 50 states’ laws regarding real estate brokerage, well, we have all gazed at this navel far too long, and I assure you there are no cat skins embedded in the belly button lint. Cat skins result from navels engaging other navels.
Since you asked: divorce the commissions which requires the mortgage banking industry to rewrite its underwriting guidelines, and HUD to rewrite the US Code, raise the barrier to entry, take away the 1099 exemption and then the brokers who have become employers might have an incentive to compete with the broker who has employees.
At the moment the mortgage industry is busy lobbying against Barney Frank’s idea of change, so neither Barney nor his contributors are looking at this issue. In short: Ain’t gonna happen.
January 15, 2009 — 12:39 pm
Tom Hall says:
Glenn – there is a designation – QSC – quality service certified which my broker highly encourages every agent to obtain. Third party organization monitors and administers the surveys. QSC certification also can lower E & O premiums.
The challenge IMO is that independent contractors versus employees may be more of a challenge to hold accountable to survey results. I measure my success on referrals – my past clients are better marketing tools – not necessarily an objective score.
Perhaps why many don’t embrace the measurement?
January 15, 2009 — 12:48 pm
David G from Zillow.com says:
Glenn –
Not baloney Glenn and as your customer, it’s certainly jarring to read that accusation. It is good news that you send the survey regardless of whether the deal is closed and it could well have landed in my junk-mail. Frankly, my Redfin agent actually didn’t communicate the fact that we lost the deal until I tracked him down a few days later so FWIW, you can put a check in the dissatisfied column on my behalf.
January 15, 2009 — 1:16 pm
Glenn Kelman says:
By the way, I want to clarify an earlier comment. When David complained he hadn’t gotten a survey, I wasn’t challenging the claim, only deploring that Redfin had screwed up…
@Tom Hall and Thomas Johnson: why can’t brokers survey the clients of their contractor-agents? If someone is going to pay to use your brand, don’t you have to take steps to protect that brand? And why would contractor agents resists surveys, if the data from those surveys was published to the web in a way that helped them attract new clients?
January 15, 2009 — 1:18 pm
Glenn Kelman says:
David, we published our respective second comments simultaneously but yours appeared first. My original comment was unclear: when I said, “baloney” it means, I believe you, and I’m unhappy that Redfin screwed up. Not that you aren’t telling the truth. That’s why the last sentence of my original comment says “We’ll look into why you didn’t get a survey” — if you said you didn’t get one, you didn’t get one. And beyond just sending you a new one, we’ll look into the root cause as to why you didn’t get it.
January 15, 2009 — 1:25 pm
Tom Hall says:
Glenn – my broker pays for the designation so they are in a stronger position to insist that their agents/brokers allow themselves to be measured. Every transaction I complete, I am surveyed – less than 15% return rate.
While I think it sounds good to consumers, never in 6 years of selling have I had a consumer seek me out due to my QSC rating – not to say it isn’t important, it hasn’t had an impact on my income. I have had success building trusted relationships with past clients – again, they are a far better indicator of satisfaction. I am not 100% sold that a consumer will choose me because I scored highly on a customer sat score – my personal experience suggests it.
From a different perspective, I may have a perfect rating and simply not connect with a potential client. If my income were tied to a particular metric, my behavior would no doubt change, however i still may not be measured objectively from a client’s perspective.
January 15, 2009 — 1:41 pm
Glenn Kelman says:
Tom, I wonder if your survey responses would mean more to consumers if your online profile included the responses in full?
January 15, 2009 — 1:56 pm
David G from Zillow.com says:
Thank you Glenn!
January 15, 2009 — 2:17 pm
Tom Hall says:
Great point Glenn – in many cases I have snagged the comments on the survey and put them online in the form of testimonials – sometimes you recognize client’s handwriting 🙂
I don’t want to discredit these metrics – for me, I gain greater insight into what clients value.
The real meat on metrics IMO is list price to sale price ratio. Days on market relative to comps. Expired listings and/or cancelled listings. These should be an agent’s scorecard. They’re the facts – less subjective and more at the core of an agent’s effectiveness – imo.
January 15, 2009 — 2:25 pm
J Boyer Morristown NJ says:
Though I am in favor of having a survey system, I think it is probably more important for a company like Glenn’s where his employees don’t have as much stake in client satisfaction as most of the Realtors out here who are our own small businesses and we know our business lives or dies by how good we do, and how well we serve our clients.
As they say, if you can sell, you can write your own ticket and I suspect that many of Glenn’s people know that saying all to well and once they feel they have mastered the art of selling they move on to a full commissioned possition selling what ever, real estate, mortgage, medical devices, …
January 15, 2009 — 2:30 pm
Kirby Brooks says:
As a smaller brokerage in a populous, yet more rural region of Colorado, our customers are historically REPEAT customers. That’s how we measure our satisfaction. In smaller communities, your business practices are your business card. Perhaps if more brokerages in larger service areas took this approach, customer satisfaction would be higher no matter what metric you used to measure it.
January 15, 2009 — 2:31 pm
Michael Rahmn says:
in response to @Thomas who said:
“Until you succeed in changing 50 states’ laws regarding real estate brokerage…” and “divorce the commissions which requires the mortgage banking industry to rewrite its underwriting guidelines…”
While I agree with the intent behind both these points, It surprises me how often folks in the “traditional” industry write off the approach Glen is taking (and generously exposes in detail) with this trifecta of excuses:
1) they are well capitalized
2) they have employees
3) what we need is (NAR, The Government, some external entity) to ‘raise the bar’ in ____ way.
There is nothing Redfin is doing that can’t be easily modeled and implemented (1) for less than you think and (2) with independent contractors (just takes leadership).
As for (3), I’ll leave that for Greg :-).
January 15, 2009 — 2:44 pm
Joe Lane says:
After reading the original post, then the comments, I’m thankful for our area. We are small enough were everyone knows everyone, and if a customer is dissatisfied it’ll get around. Surveys, although helpful, are not the end-all. My wife was the #1 producer last year in her office of 20ish agents and she knows her clients are happy with her every step of the process. At the end of the transaction, Colleen doesn’t need a survey. I think the true testimony (and what ultimately counts) is returning and referring clients. I wonder if that little tidbit is included in the surveys.
January 15, 2009 — 3:57 pm
Thomas Johnson says:
Glenn: ERA does send a survey to every client represented. I have a big stack of ’em. ERA has international awards for client satisfaction. We get them at our international convention. ERA has won JD Powers awards.
As a career minded agent I encourage my clients to complete the survey (so I can learn and hopefully garner some testimonials). I don’t know about Redfin agents, but as I follow up belly to belly with my folks in my Zestifarm, I KNOW from their comments/body language what their level of satisfaction is. My broker doesn’t necessarily need to know, but if he wants to find out, he can go see them.
Out of curiosity, as CEO, when was the last time you were face to face, navel to navel, with a client, say, like a David Gibbons? I daresay that the failures are more instructive than the successes and you will learn more about your market and this business than the metrics of a red book survey will ever provide.
January 15, 2009 — 4:09 pm
Thomas Johnson says:
@ Michael:
“There is nothing Redfin is doing that can’t be easily modeled and implemented (1) for less than you think and (2) with independent contractors (just takes leadership).”
I agree. The point of my post and Glenn’s for that matter was, that a 1.0 model broker can pitch the pasta on the wall, see what sticks, lather rinse repeat while an employee model has constraints on the quality of agent they hire, because their brand is critical.
Can Redfin compete in an under $250k sprawling sunbelt market and pay salaries/benefits? If so, I think Redfin would be in Houston where price declines have been minimal and job growth positive.
Glenn?
P.S. Michael: If you can get me an agent level IDX feed from HAR MLS, at a reasonable cost, for a blog site, let’s talk.
January 15, 2009 — 4:26 pm
Greg Tracy says:
Historically agents think of client satisfaction in terms of whether or not they see referrals come in, or they (the agent) think they did a good job.
The real difference is not whether or not agents care about, or use, client satisfaction surveys, but the extent to which they use them, and apply the results from them, into their practices.
At BlueRoof we have been surveying clients at closing for years and we’ve learned a LOT about what clients like and don’t like about their online home searching experience and the services we provide.
But the typical real estate person is extremely different from the typical technology person- in almost every way.
Tech people crunch numbers and details- real estate people do not. Tech people develop and, more importantly, use, systems to check, monitor, and improve things- real estate people do not.
Real estate people in general are not detail-oriented people, they are sales people. They care about people, not processes. Redfin is a technology company so it is inherent for you, but not for typical real estate person, to accumulate and crunch this type of data.
Brokers and agents need to utilize technology better and this is one great example of how technology can help Realtors everywhere.
Thank you for sharing…
Greg, BlueRoof
January 15, 2009 — 7:29 pm
Don Reedy says:
“Therein lies the great fallacy in many people’s original conception of real estate e-commerce: that the product being sold was a house. I’ve been asked a thousand times, “who would buy a house online?” In fact, what customers want to buy online isn’t a house but the services of a real estate agent.”
Wow, not a single pushback on this statement. I am rather perplexed, and certainly amazed.
What people want to buy online is a “home”, not a house, and they are certainly INITIALLY not looking for the servcies of a real estate agent. You sound like a trumpet blowing, card carrying member of NAR.
Look Glenn, the whole idea of transparency as it relates to the net, is that people shop for their home, are seamlessling introduced and welcomed by the fuzziness, expert abilities, common sense or marketing acumen of the agent, and then (and only then) does the role of the agent begin to reveal itself.
Well, I think your post clearly elicited responses about “customer satisfaction surveys”, but I hope you’ll go back and take a look at your premise, because if you actually believe internet clients are looking for agents first, homes second, then I’m betting the issue of customer satisfaction surveys won’t matter in the long run.
January 15, 2009 — 8:16 pm
Glenn Kelman says:
Don, folks use our website first to look at houses, but so far as what they are buying from us, it is our real estate services. Increasingly, they are evaluating our agents online, with the same hunger for information they bring to the evaluation of properties.
January 15, 2009 — 10:15 pm
Don Reedy says:
Glen,
Gottcha. But with your input in mind, perhaps Redfin (and others) should turn their attention to creating a “Consumer Reports” for agents, affiliates, etc.
January 16, 2009 — 7:05 am
Jeff Brown says:
Over the years my firm has hired third parties to survey our clients. The ground rules say the client must absolutely believe (cuz it’s true) their answers to the rather lengthy phone survey will never have their name attached.
We’ve been both surprised by what they praised and criticized. It’s never failed in two areas:
1. To show us the obvious — where we’re champs and where we’ve been chumps.
2. That at my age I still pout. 🙂
January 16, 2009 — 11:08 am
Glenn Kelman says:
@Don Reedy: that is one heck of an idea! Love it…
@Jeff Brown: which third parties? We’d love to do that…
January 16, 2009 — 11:51 am
Jeff Brown says:
Glenn — It’s usually some marketing firm we’re using at the time. Solid marketing pros are like Washington D.C. journalists — always lookin’ for the worst possible news. 🙂
Marketing pros are also our top choice because they know what to look for. They dig beyond the yes/no and A-D type questions into the guts of the process as perceived by the client.
A real surprise has been how often we’ve been able to recognize a potential new source of income via suggestions our clients offer during the interview. Once such idea has resulted in roughly half a million bucks in the last four years.
Make sense?
January 16, 2009 — 12:04 pm
Marlow says:
Our firm, Coldwell Banker Bain, sends out a letter inviting feedback from each client at the conclusion of a transaction. A quick call to a few friends at other brokerages (Windermere and John L. Scott) indicates that they do the same. Though it may not be a company-wide mandate, most brokers do want to know how their agents are doing and make some effort to do so.
Just because the survey is not automated doesn’t make it any less valuable. We send out a letter with a stamped self-addressed envelope. Old school, but we usually get a response.
Our firm has also offered a money-back guarantee for many years.
January 16, 2009 — 12:50 pm
Glenn Kelman says:
@Marlow. Good stuff (and hello there!). I like the guarantee too.
@Jeff Brown… that makes a lot of sense. Thanks for commenting…
January 16, 2009 — 1:23 pm
Cheryl Johnson says:
Forgive me, Glenn, for the absurdity of this question, but somehow it feels like an elephant in the room to me.
Are customers who receive commission rebates at closing generally happier than customers who don’t receive rebates?
January 16, 2009 — 7:12 pm
Thomas Heimann says:
We have used the NPS for little over a year at Bravo to track customer satisfaction, and we actually track NPS for Buyers, Sellers and Customers overall.
I find this an invaluable tool and one thing we have not yet done is to bonus out based on NPS, I think that is a fantastic idea and I will look at implementing that immediately. Great idea Glen.
We tried email surveys early on however the response rate was extremely low, so we now have someone independent (we contract this out) follow up with all those who did not respond or respond completely.
When looking at the NPS it is not only critical to obtain the number (10-9 = Promoter, 8-7 = Passives, 6-0 = Detractors) but the follow on question is equally critical. We want to know what specifically Promotors would tell their friends in recommending us. Those answers translate into fantastic testimonials; We want to know what it would take for a Passive to become a Promoter, and most importantly we want to know from the Detractors what the reason for their score is.
Finally I would like to take a stab at Cheryl’s question posted and since we run a business model that is very similar to Redfin’s our experience may give a clue.
When surveying our customers we found the following:
– Our rebate was the reason customers decided to do business with us about 50% of the time. The rest of the time it was simply because we were the quickest and most diligent in our follow up with inquiries.
– When it comes to overall satisfaction, our rebate was important but rarely ever the most important thing (and it is not our rebate Promoters are telling their friends about most)… it is our truly FANTASTIC service that stands out, period and of story.
And the truth is that we can and do provide much better customer service than 99% of our competitors in our market place, and dare I say an indpendent one wo/man operator simply cannot match our level of anytime/anywhere outstanding service.
A final clue is found in our client testimonials that we publish on our website. I do not think a single one is raving about all the money they saved although of course they do save a ton.
People love our rebate and in this tough economy especially but I assure you that if we provided marginal service we would have no business.
What people want is great value and great service.
All the best!
Thoomas Heimann, President & CEO
Bravo Real Estate, Inc.
Sarasota and Tampa, FL
January 17, 2009 — 5:59 am
Bob says:
17 years ago I went to the post office and got a PO Box. Then I opened up MS Publisher and created a survey. I created a logo with the name FutureTrends, added the PO Box, and mailed them out.
It was an easy way to get an unvarnished opinion.
January 17, 2009 — 9:59 am
Claudia Gonella says:
Great post – working in emerging markets like Panama, Belize, Nicaragua and Costa Rica we always feel data starved in comparison to the US as it’s hard to get market comps etc. (Just wrote about this today over at GeekEstate Blog). But customer satisfaction is something that international agents could measure. And those who did would stand out.
January 20, 2009 — 2:55 pm