Glenn Kelman’s recent Call to Arms brought to light for me the two paradigms that exist within the realm of transacting real estate – the traditional broker/agent-centric view and the evolving consumer-centric view. Ultimately both paradigms attempt to better serve the consumer, however, the perspectives are very different.
Glenn’s post queries why traditional brokers, i.e agent-centric business model, don’t embrace the consistent measure of customer satisfaction on an agent by agent basis after the completion of a transaction. The question is extremely valid – measuring customer satisfaction is a way to preserve the integrity of the broker and/or agents’ brand.
I question the validity of the metric – customer satisfaction – what is the criteria? In fact Glenn asked, “how do you measure customer satisfaction?” Defining the criteria is critical to measuring the ultimate value of the outcome – is 9 out of 10 a valid measure? What does 9 mean?
I’ve held the QSC – Quality Service Certified – Certification for almost 6 years. After each transaction, a third party administers a survey to measure how satisfied my clients were with the service level I provide. Interestingly, never once in 6 years have I had a potential client or prospect contact me because of my rating. In an agent-centric model, I measure customer sat by referral and repeat clients. I get measured on a scale from 1 to 5 and have been able to maintain a high level of satisfaction, but ultimately my clients have spoken more effectively about my skills and knowledge rather than my score.
While it may be important to know whether or not a particular consumer may recommend or even use the services of an agent and/or broker, I believe I need to know the “why?”.
The question has been asked many different times – what do consumers want? Again, Glenn asserts that consumers are seeking more metrics on agents. Depending upon whether or not a client is buying or selling, their wants have remained fairly consistent.
Buyers want assistance finding the the right home. They also want help negotiating the sales terms and price.
Sellers want to price their homes competively and effectively market their homes within a specified timeframe.
How does a number between 1 and 5 or 1 and 10 for that matter effectively communciate to the consumer that a potential agent can get the job done?
If sellers are concerned with pricing their homes correctly and selling within a specified timeframe, I think the better metrics might be the ratio of sale price versus listing price of homes an agent has sold within a seller’s area. How does an agent’s days on market compare to the comparables? How many cancelled or expired listings does the agent have? Why?
Is the criteria clearly being tied to what consumers want? Is the final metric meaningful enough to communicate that a potential agent understands and meets the needs of potential buyers and sellers?
Greg Tracy of BlueRoof also weighed in on the discussion with the following response:
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.
Agents don’t crunch numbers? We’re not detailed oriented?
Wow.
What about the consumer?
It seems there are two tales of two paradigms at play here – the agent versus the consumer AND technology versus the consumer. Regardless of whether or not real estate agents are technology or process focused, the real issue is:
What do consumers want?
Are consumers solely focused on the data? My experience suggests not entirely. In fact, I find that consumers want to understand the process of buying and selling – what are the steps? What information do I need – once I have it, how should I interpret it?
NAR’s 2008 Profile of Buyers and Sellers again confirmed that buyers and sellers want to understand the process. The irony for me is that there is no real technology solution which deals with the process of buying and selling, only aspects of the big picture.
Todd Covington says:
Tom, great blog. Shortly after joining the world of real estate, I realized that there were more car salesmen in this business that anything.
Customer satisfaction dose not come with some certificate, or a rating. It comes with building personal relationships. When a agent builds a personal relationship with their client, they care more.
It’s funny because I actually think the downturn in the real estate market is a positive. MANY MANY of the so called agents are now getting out of the business. The weeding out process is cleansing the business of all the less than superior agents. While many say it;s terrible time to become an agent, I say it’s a great time. Build personal relationships and the rest will take care of itself. Leave the certificates and badges to the car salesmen.
Care for your clients and that long term thinking will more successful than you could ever imagine.
January 19, 2009 — 11:35 am
Thomas Hall says:
Todd – thanks for your comments. The current economic climate is a true test regarding how clients value their relationships with agents.
While the relationships are key, I also feel it is important that we learn what works and what doesn’t work from our clients as well.
January 19, 2009 — 8:43 pm
Ryan says:
I think at the end of the day people are looking for good customer service. Although saying this can be a platitude. When you think about the customer service you offer, there is almost always something to be improved upon. The greatest benefits are to be gained by looking in not looking out. Good Blog
January 20, 2009 — 6:50 am
David Shafer says:
Great post! You speak of the customer as if it is one. It isn’t, therefore has as many different ideas about what it wants as there are customers. Some want technical competence and not much else. Other’s want hand holders. Some just as soon not have any contact with a “salesperson,” while others will hold the salesperson responsible for their mistakes!
As a real estate salesperson you must stay true to yourself and your ethics; the right customers will find you. You can’t be held responsible for all the stupidity in the real estate profession any more than I can be held responsible for all the bad advice on investments there is out there. Mortgage originators can’t be held responsible for bad acts of folks or bad acts of banks and lenders.
I know I have become very frustrated with the mortgage industry because of the bad acts of unqualified, greedy folks who were looking for the quick buck as well as the realtors who kept telling folks to buy no matter how high the prices went. But that is the function of the inherent system which in my mind, won’t ever change. Sure some bad apples will be drummed out of the business, and lenders will be more careful and realtors will have to work to get back trust, but it will all cycle back again down the line because ultimately customers don’t really know what they want, won’t take the time to discover it, and surely as a whole will not educate themselves to the point of being self educated in the process of buying a home. So, at the end of the day, customers will depend upon realtors and mortgage originators to help them with their real estate transactions and be either lucky or unlucky with the process!
January 20, 2009 — 11:58 am
Brandie Young says:
Hi Thomas
Awesome post! I’m a huge believer in 3rd party surveys to gauge performance and (shameless plug) am writing about it on Agent Genius this Thursday. I like your point that the score in of itself is meaningless to clients, and your measure of referrals is, IMO, right on the money. While a transaction is often bumpy, especially these days, ultimately it comes down to the clients’ needs and expectations being met or better yet – exceeded. What better way to measure than referrals, particularly when repeat business won’t come for a few years.
Brandie
@Brandiei on Twitter
January 20, 2009 — 3:43 pm
Marlow says:
I agree with Greg, most agents don’t crunch numbers and most buyers don’t care. Their purchases are often emotional decisions and as long as the price is at a point where they feel comfortable, market trends are often ignored. They buy a house based on how it makes them feel, not because of the price per square foot.
January 23, 2009 — 2:09 am
David Shafer says:
Marlow, you hit the nail right on the head. Emotions play a huge part in purchasing a home as well as expectations. Don’t we all believe in our hearts that owning a home is part of being a grown up?
But that begs the question, how should the real estate agent behave. Are they just there to collect their commission check? Or, do they have some fiduciary/other responsibility to their customers? And since at least 1/4 of the sales during the 2002-2005 era were for investment purposes, doesn’t the realtor have some obligation to run numbers/use experience to guide their clients?
In my mind, this is where the realtor line will divide. Those who will just feed the dreams and hope that nothing goes wrong versus those that will apply some evidence to the buy decision.
I know that I (I’m not a realtor) will never use the former and I have heard many grumblings from others about their realtor “not giving them good advice.” And of course, there are those who say that realtors do very little for their commission check and will look to avoid making that payment.
January 23, 2009 — 6:48 am
Tom Hall says:
@David @marlow- thanks for weighing.
Can’t dispute that many buyers & sellers
And decisions that are motivated by emotion, however, that shouldn’t minimize the use of metrics. In fact, in order to really establish objective levels if service, metrics are important.
I just fired a client last week – it was a mutual parting really. First time homebuyer looking to make the best investment possible. We’ve searched since August and after the third contract finly had one stick. The most recent deal came together only after my client walked away from negotiating a week and a half prior – they came bath after reconsidering.
3 days prior to closing, they pulled the plug wanting to renegotiate the price. From all accounts, cold feet – emotions got the best of them.
During the process, I educated my client on the market, patiently showed property I knew was not a good fit so as to have my client drawn their own conclusions. I went along with the lowball offers – again, when you lose the first two you become educated.
Bottomline – I acted as my client’s advocate thru out the process yet we parted ways.
Sometimes it just doesn’t work out. I did my job but my client simply doesn’t see it that way.
January 23, 2009 — 3:18 pm