Top Banner

Click here to load reader

Rise of the Autonomous Consumer & the Opportunities for REALTORS®

Aug 23, 2014

ReportDownload

Real Estate

Consumers are increasingly taking control of the purchasing process across a wide range of industries, and making decisions with far less reliance on ‘experts’. It is important for REALTORS® to understand the resulting impacts and find ways to respond to trends such as decreasing loyalty, low perceived REALTOR® value, increased switching, REALTOR® auditioning, increasing demands for transparency, Buyer Agency Agreement tension and removing the REALTOR® as middleman.

This research report is a part of the British Columbia Real Estate Association's Journey of Discovery. BCREA launched the Journey of Discovery (JOD) to help our organization and BC’s eleven member boards strategically plan for the next five years. This project seeks to understand where the greatest contributions of products and services could be for increasing the innovation of REALTORS® in service of their consumers. If organized real estate is to effectively adapt to and proactively initiate change, which we believe is necessary now more than ever, the first stage is to gain a solid understanding of the current and future states of the industry. For access to the slides with links and our other reports, please visit http://web.bcrea.bc.ca/jod/reports.htm

This presentation was prepared by CE Holmes Consulting, Solvable & Monique Morden Consulting

  • BCREA JOURNEY OF DISCOVERY THEME 1: CONSUMER AUTONOMY 23 MAY 2014 VERSION 2
  • Image Credit: Arturo de Albornoz Nike Transparent Billboard, under Creative Commons Attribution-ShareAlike 2.0 Generic Image Credit: James Willock, build($ikea->desks), under Creative Commons Attribution-ShareAlike 2.0 Generic
  • How can we create opportunities for greater consumer involvement across the transaction process? How could the REALTOR and consumer co-create within the transaction process? Many industries struggle to gain the attention of their cus- tomers, and engage them in their product or service. Think of insurance, accountants or antivirus software, where consumers glaze over or avoid the product or service entirely (or until they can no longer afford not to). Market- ers in these industries require creativity to get the attention of consumers (e.g., Geico) in low involvement categories while marketers in even moderate involvement categories have more room to create engaging and inspiring brands (e.g., Nike). Nike doesnt involve their customers through inspiring advertising alone. They employ a multi-pronged approach: NikeID allows consumers design their own product, NikeTown stores let consumers testdrive products onsite, and Nike+ Running App gives consumers the ability to track their workouts and share through an online community. Leverage Consumer Involvement Apple similarly involves their customers in many ways through their interconnected web of products and services including the one million plus apps created by other com- panies. More and more companies are bringing the consumer into the process through co-creation activities to strengthen the consumer relationship and increase loyalty. Dan Ariely speaks of the IKEA effect where consumers have a closer connection to a product they have helped create. The effort involved equals more love for the outcome and a greater willingness to pay. The real estate industry benefits from a high involvement product category where consumers spend considerable time, thought, energy and information process capacity to the purchase process. After all it is biggest purchase of your life and the biggest investment youll ever make. High consumer involvement is half the battlebut only half.
  • Image Credit: Extraordinary Moments in the Real Estate Experience Image Credit: Mercedes-Benz of Austin, Bob Nolen
  • as performance transparency increases. The brokerage and REALTOR profession play will still play important supporting roles in the overall image of the REALTOR. Successful, established REALTORS will create personal- ized services centred on the emotional process of buying or selling a home. REALTORS entering the profession may rely more on the credibility of the brokerage for brand credibility, but only until they have substance to build their own personal brand. In the case of the REALTOR brand, it may even play a negative role due to overall negative per- ceptions of the profession. (See Theme Deck 2: Professionalism) Car manufacturers are creating emotional attachment to their brands by involving the consumer into the delivery process. Companies like Volvo, BMW, Mercedes and Porsche allow purchasers to pick up their new vehicle at the European factory, drive around Europe and then ship the car home to North America. What better way to cre- ate emotional attachment to your brand than through the creation of memorable experiences as a result of your pur- chase! Home purchasing is ripe with opportunity for emo- tion laden moments facilitated by the REALTOR. You Should Care More about the Brand Experience What can we do to create more extraordinary moments? What will the future brand of the REALTOR represent? Brand experiences are the moments that form an emo- tional or rational attachment between a person and a brand. But in the case of a real estate transaction, who/ what represents the brand? It isnt the running shoe (i.e., home or property). It is the individual REALTORs exper- tise and services consumers are buying. REALTORS benefit from a process that puts them in direct contact with the consumer (as opposed to consumer brands), facilitat- ing brand engagement through personal connections with their customers. Brand engagement provides multifaceted Return on Investment (ROI) from a higher likelihood to recommend, willingness to pay more and acting as a brand advocate (e.g., wear a brands logo). Of course, individual brands dont usually stand by them- selves. They are influenced by other elements of the brand hierarchy including the corporate brand (REALTOR profession) and the family brand (brokerage). While all three levels have an impact, our research shows the in- dividual REALTOR brand will become more dominant,
  • Image Credit: Apple EasyPay Image Credit: Bruce Spear, Berlin School of Economics
  • them up to play higher value customer service roles. Apple Easy Pay allows consumer to scan any item from an Apple Store with their iPhone and walk out with the receipt in under 60 seconds, completely bypassing the need for sales associates in the process. The real estate industry similarly sits at a crossroad where the signs of the middleman being pushed out of the equation are evident but not widely acknowledge by the industry. Similarly, the drivers behind disintermediation are not yet crystal clear. Technology is often blamed for something that may more realistically lie in the hands of the REALTOR and the industry as a whole. The industry frets about Zillow and Trulia and spawns theory after theory about how theyre out to disinterme- diate the real estate agent. I got news for ya [sic]. Zil- low doesnt need to do a damn thing to disintermediate anybody. The real estate brokers and agents are doing a damn fine job of disintermediating themselves with lackluster, lackadaisical, lackwit [sic] service. A Tale of Two Listings: Foreshadowing of the Future Rob Hahn, 9 May 2014 Slippery Slope of Consumer Autonomy What is ORE doing to pre-empt the disintermediation of the REALTOR? Does ORE have the courage to disintermediate itself in order to provide the consumer with more value? Consumer autonomy is defined as the ability for consumers to choose products independently, rationally and without undue influence or pressure. Buyers and sellers are striving for autonomy in the real estate transaction process, slowly pushing REALTORS out of the way, one stage at a time. This growing autonomy is being driven by a desire for an unbiased process and perceptions of value for service. Disintermediation is the process of removing the middle- man from the transaction. The travel industry largely re- moved the travel agent by letting consumers book direct. In 2004, Ana Marie Cox provided an avenue for the public to bypass traditional media through her political blog making previous heavy weights like The New York Times and Balti- more Sun appear like relics of the past as they struggled to keep up with the transformation of the newspaper industry. Apple didnt just disintermediate the music industry; it had the courage to disintermediate its own employees, freeing
  • Image Credit: MyStarbucks Image Credit: Dash by AmazonFreshOfficial
  • What can we do to reduce friction across all stages of the real estate transaction? Could frictionless transactions enable consumers to conduct transactions more frequently thereby increasing market liquidity? The consumer experiences many points of friction in the transaction process, potentially inhibiting some from enter- ing the market and others from conducting transactions more often. In a world where REALTORS may face the reality of doing more for less, an increased number of transactions can mitigate the situation. This can be achieved by reducing friction in buying and selling. Companies like Amazon recognize that their success is contingent not just on providing top products and services at low prices, but making it as convenient as possible to buy quickly and anywhere consumers might want to purchase. Amazon has taken incredible efforts to identify where purchasing friction exists, and create offerings targeted at eliminating the purchase friction. Amazon continually reduces friction from shipping (free purchases greater than $25) to Amazon Prime (membership gets you free shipping) to Flow an augmented reality app allowing Frictionless Transactions you to scan the bar codes of products around you at home or in-store to find it on Amazon, to adding products they discover on Twitter without leaving the microblogging site. Amazon Dash allows consumers to say or scan their groceries from home directly to their AmazonFresh shopping list. Amazon isnt the only company creating frictionless trans- actions. Starbucks has two mobile apps: mySTARBUCKS APP is about the ease of finding stores and consuming their products while the Starbucks Card Mobile App does everything to ease the purchase process including tweet a coffee where you can use twitter to send a friend a coffee. Car manufacturers have made it easier to understand the many makes, models and options they offer putting config- uration in the hands of the consumer (e.g., Build your own Mini, Audi Configurator, Toyota Build & Price). Further to the build and price features are additional shopping tools designed to facilitate a transaction: model comparison, payment estimator and inventory search.