16 minutes, Refin, What's the Point?

So as many now know, Point2 produced a little Spoof on the 60 minutes about the 6% commission. First off, I hope I’m not commissioned to don lipstick and a wig anymore, but it was a fun day putting it together. So how did it happen? Well, we’ve had a rough wet and cool spring up in Canada. Thursday morning we were having a daily standup meeting with sunny blue skies and warm air in the background. I think we were feeling a little giddy and perhaps feeling less motivation to do real work that morning. Next thing you know, a quick script was slapped together, a wig was purchased and the camera rolling.

Personally, I still have some reservations about it. I don’t know if it was the right thing to do. It was produced in fun and if you really look at it, there are holes in the logic because it is not meant to make sense. Similarly, it does not make sense to produce an editorial about a very large industry, focusing on an involved topic, push an opinion, try to appear objective, but ignore the fundamentals. I disagree with Brad Inman, that the industry had a shot on the CBS show. If I understand the facts correctly, the NAR offered to participate in the program but they did not receive fair representation on air. This common place in media where objectivity is not goal, just the air objectivity is.

I would like to note that neither Point2 nor I have anything against Refin or discount models. I believe in really existing free markets and in perfect competition. Where a discount brokerage can enter the market, compete fairly and win, I’ll be biggest supporter. To be truthful, I really like Glen Kelman and I think he's very smart marketer. The main issue at hand is that Refin is not competing fairly. They are taking advantage of MLS structures and data sharing agreements to undercut brokerages they also want to cooperate with. Let me back up:

MLSs were first formed to facilitate cooperating and compensation between competing brokerages that agreed to pool their resources and provide better exposure for their clients. There is no other industry I can think of where competitors agree to cooperate to such a degree. The offer of compensation makes the cooperation work because the brokerages have similar business models. It has allowed clients to gain maximum exposure by leveraging the collective marketing dollars spent by hundreds or thousands of these cooperating professionals. The Internet added a new dynamic…

At some point, the MLS data became the standard data source for online listing display and IDX (or ILD) agreements became the de facto policy behind data sharing. It’s become problematic to have these managed at the MLS level because it allows companies to take advantage of the spirit cooperation due to global opt in, opt out provisions. Cooperation is possible if companies have similar business models but it does not make sense for a brokerage to cooperate with another company that undermines its business model. Listings are marketing assets in real estate and they are the product of money and time spent on advertising, promotion and networking. It does not make business sense for a brokerage to allow a competing company, that is undercutting commission rates, to use my marketing assets to attract new business for itself.

Now as a member of the MLS, I don’t mind if ANY company brings a buyer for one of my listings. I also don’t mind if that any company contributes listings to the collective MLS cooperative effort and offers a co-broke that will cover my full service efforts. What I can’t accept, again, is allowing that company to undercut my rates but expect me to offer up my listing inventory publicly to help them attract clients.

Cooperation in real estate must continue. Real estate is a local business. As a regular homeowner, I can advertise my own home on Craigslist and Google. I might even feel I can show and stage my how better. What I can’t do is leverage the collective advertising dollars of hundreds or thousands of real estate professional and at the same time, gain access to their collective network of buyers.

If the spirit of cooperating is to continue for organized real estate in the Internet era, brokerages will need to be able to make their own peer to peer business decisions on who to cooperate with if discounters continue to unfairly take advantage of the MLS. A peer to peer system will help melt away anti competition rhetoric. It will allow discounters to continue to participate without harassment from traditional companies because those companies will not be forced to publicly share marketing assets and be undercut at the same time.

Brad Inman comments that “if a spoof is the best way to make a case for full service, the industry has a bigger problem”. I certainly hope this video is not perceived as the industry’s response to discount models. But I would add, if the only way to grow a discount business model is to unfairly take advantage of data sharing, they would be well advised to figure out how to both cooperate and compete in an era where brokerage can make peer to peer advertising agreements.

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The Point2 NLS - A Different Kind of MLS

On January 2, Harley Rouda, CEO of Real Living commented on Inman News that “companies such as HomeGain and HouseValues, Zillow and Point2Homes are playing a role in aggregating property data, … and it's not clear where this trend is leading the industry.” That statement is very true, but it should be noted that the 4 companies listed are playing very different roles. I’m not surprised however that Point2 shows up in the same sentence as HG,HV and Zillow.

Homegain and HouseValues provide consumer portal that primarily grab contact information which is sold in the form of a lead to real estate agents and brokers. Zillow provides a consumer search portal designed to open up information to consumers and earn money with an advertising model. Where those companies are consumer focused, Point2 focuses on building applications for real estate professionals. While we operate a consumer search site at www.Point2Homes.com, solutions to focus on creating opportunities for the real estate professional and connecting consumer facing products to our real estate software that our brokers, agents and builders use.

In November, we displayed a booth at the NAR Expo and participated with the over 600 other vendors. After the show, we had a series of strategy meetings on messaging and development philosophy. We noticed at the show how easy it is to have your message lost in a sea of noise. Not only do we get mentioned with the 3 companies above, we are also mentioned with the likes of Advanced Access, Z57 and Homes.com. How can we tell the industry all the things what we do, how we are different and deliver one strong message that stands out above all others?

The answer we came up with was to execute on a 4 year plan and reveal what we are truly doing: creating 1 marketing system that allows real estate professionals to cooperatively market their listings online with complete control. Let’s be the answer to the DOJ threat. Let’s help real estate professionals take back their future. Let’s tie our product together and announce the 1 National MLS – the Point2 NLS.

Current members will notice that they have a more robust profile that might mimic what you could access in an MLS, but with more information. That profile will be what shows in Agent Handshake when you are managing relationships, on the message board and in the Point2 Homes directory. Members will notice that the referral system is now tied to that profile. Handshake has been improved so that the community can more effectively manage their Handshake relationships with rules and have more faith in the system. Members will automatically fall out of participation if they are blocked by other members for content reasons. Fair play will be necessity, not just a wish. The community will truly be in control.

The system is now more open with more choice for any real estate professionals. There is no longer a need to create a Point2 website for a member and use our software. Listings can be entered, involved in Handshake, syndicated and then posted on any website the real estate agent or broker is using.

Current MLS data was never meant for marketing but became the de facto standard. MLS’s have become most valuable as marketing tools however. Point2 NLS is a different kind of MLS. Data entered into the Point2 NLS will generate better results, have more photos, automatic virtual tours, deep analytics and complete control. In fact, members will even be able to opt out of displaying their listing on Point2 Homes (something we don’t expect to see many people doing).

Today is step one. All current Point2 members are now members of the Point2 NLS. Over the next few months, we will be releasing more features geared to enhance online marketing and facilitate the local cooperation of real estate professionals.

The real estate industry is one of a kind. In no other industry do competitors cooperate to the degree they do in real estate. But there are a lot of different business models coexisting with many different self-interests and industry views. The competition in light of the cooperation creates complicated dynamics that can only be addressed by providing choice, control and community imposed direct democracy (count the c’s in that sentence!). It’s why we love our simple slogan, ‘compete together’.

Let’s make 2007 a good year for real estate.

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Shaking things up

This blog has been quiet lately. My excuses? We were down in New Orleans for the NAR expo from the 10 - 13. What a milk run by the way! Because of flight cancellations, delays, missed connections - this was my flight down:

Saskatoon -> Toronto -> Baltimore -> Houston -> New Orleans!

Coming back was only slightly less of a fiasco:

New Orleans -> St. Louis -> Chicago -> Toronto -> Saskatoon!

Anyway, I took a couple of slow days to catch up when we came back. What was our take away from the Expo? Well I can say that there are a lot of companies out there doing some great things in this space. This was the first major tradeshow that Point2 erected a booth. It was so good getting out of the office and speaking with many of our members face to face. I thnk we learned a lot and we receive a ton of valuable feedback.

Brendan giving a chat at the Point2 booth

With so many service providers in this vertical, it's easy to be lost in the noise. There were so many people at the show walking around looking for 'the thing', not know what that thing was. One of the biggest challenges we have at Point2 is communicating what we are, what we provide. Sometimes we try to simplify our message so much just to get people to sign up for free, try us, and then discuver all the things that lie under the hood. Other times we tell a more detailed complete story so we can better communicate to brokerages looking for the total package. But all of the time, we want to be 'the thing'.

This last week we've been planning our next 6 months to year for Point2. I can't talk about our decisions at this point, but I can say that I'm pumped for our release at the beginning of January! With a mere 100,000 members in 84 countries, we're all feeling at Point2 that we need to find the next gear and kick it up a notch.

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Sneak Peak

I can't contain myself. In the next couple of days, we are going to release the biggest single release we've ever pushed. I'm excited, i'm nervous and I really just can't wait to get feedback from our members. I'm going to go out on a limb here post some screen shot of just a couple upcoming improvements.

So the first change you'll notice to the syndication screen is that we will have 1 new partner. I won't say who yet. But the major change is the new look and the introduction of spotlight ads. For this release we'll have a couple of partners participating where you can enhance the placement of your listings.

The next screen shot below is of the advanced reporting for syndication. We've heard from our members that there is nothing as frustrating as syndicating your listing, but not knowing where to find it. So we've developed an API that a couple of partners will be using for this release to a few things. First, here is the screen shot:

Publishing reports are available now so you can see what real estate search sites you have syndicated you listings to, if they have been successfully uploaded, and view them through the url they are published on. If there was an error successfully uploading your listing, an error report will indicate the reason. We will have a couple of partners using this API when we release. Results and feedback will hopefully help bring the rest of our partners on board.

The last screen is of our Listings2Go functionality. It provides some code for you to drop on another website you own and display your Point2 listings. The display settings are completely configurable. The real benefit is that it allows you to have more than 1 website, but keep all your listing stats, prospects and publishing reports in 1 control pannel.

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White Paper Part VIII - Conclusion

Predictive Modeling

We’ve noted that the most important factor to increasing response is publishing better listing content. The most important factor in increasing conversion of inquiries into leads and sales is simply the quality, relevance and timelines of the response. The last piece of the lead generation/conversion story is a focus on generating deeper pipelines.

Let me explain.

Not all leads are created equal. Many generated directly from listings tend to be of hot prospects active in the home search process. Many others are of consumers who are further out in the home buying cycle. A study conducted by HouseValues, Inc. in 2005 indicates that the average consumer spends up to 16 months in the home search cycle. Leads created that are further out in the cycle represent future business for the brokerage, but if they are handled correctly. Brokerages that pay attention to these leads can create long term sales pipelines that before long turn into a regular stream of mature opportunities to route on to their sales force.

Reaching further upstream to consumers early in the home search process can also establish the brokerage as the go to source for research information, a reputation that can boost the company’s position and competitiveness in its market.

The lead incubation process begins with a solid lead capture solution. Your software needs to be able to establish lead criteria such as first visit, last visit, location, home search areas, home search price ranges, repeat view patterns, contact information, financial qualification information, contact history notes and other relevant website or portal activity. This information is extremely valuable in pursuing and communicating with those leads.

Typical lead incubation systems on the market today allow real estate companies to place leads into automated drip marketing systems. Leading solutions however have the ability to operate different campaigns based on a trigger system that places the lead on a relevant drip campaign based on the prospect’s activity on the site. Some of those systems may also allow brokerages to develop their own company specific drip campaigns. A state of the art system such as Point2 goes one more step. It identifies prospects that have been on a drip campaign and have now matured (i.e. they have turned into a hot prospect), as their home search activity increases or specific request for contact or information is registered. Hot prospects are then marked, and notification is sent to the brokerage or agent indicating contact must be made.A state of the art system such as Point2 goes one more step. It identifies prospects that have been on a drip campaign and have now matured (i.e. they have turned into a hot prospect), as their home search activity increases or specific request for contact or information is registered. Hot prospects are then marked, and notification is sent to the brokerage or agent indicating contact must be made.

Future lead management and incubation capabilities under development today will focus on predictive modeling. While current drip systems tend to provide home search notification and static drip campaigns, predictive modeling will take lead profile information and send ultra relevant static and dynamic content to the lead. The goal is to make the brokerage the source of research information right up until the lead is ready to engage a real estate agent to help narrow or close their home search.

Conclusion

With the vast majority of consumers using the Internet in their home search, brokerages need to advertise their inventory in as many ways possible to maximize exposure and leads. Today, this includes focusing on both natural and vertical search marketing. Listings are the most valuable marketing assets brokerages and their agents possess. Better listings (rich data) generates more buyer leads, which increases the chance a company’s listing is sold in-house. The most important step in converting those inquiries is to focus on responding immediately. Because agents are mobile and not sitting at their desk all the time, lead notification needs to become mobile, with text messaging.

Brokerages that focus on developing longer term lead pipelines will maximize the total number and percentage of leads that will eventually transact with someone within their organization.

These strategies are not simply nice to have. They are essential for the survival of traditional brokerage business model during this time of rapid change. Real estate companies that do not develop a complete online marketing and operating strategy will risk losing market share and will squander the opportunity to lead, as new waves of innovation enable better, more efficient and more cost effective marketing and lead conversion strategies.

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White Paper Part VII - Responsiveness

The verdict has been out on this one for a while. The fastest Realtor® to respond to an inquiry, whether it came by e-mail or through the phone, is likely to win the business.

Consumers rate responsiveness as the most important factor in choosing an agent, ahead of qualification, knowledge or commission, according to a CAR (California Association of Realtors) survey published in 2005. Yet, independent industry research published that same year suggests 45 percent of all online inquiries still went unanswered!

Considering that 45 percent of consumers also said they expect agents to get back to them within 30 minutes, there is significant room for brokerages to take advantage of the statistics.

For one, agents are on the road a lot of the time. It’s just part of the business. Many don’t get to their e-mail until the end of the day. Others don’t read their e-mail except once or twice a week. By then, the lead would be long gone. While the computer is a great tool at the office, your team must be able to connect with serious leads as quickly as possible.

While e-mail is not always accessible, unless your agents all carry a Blackberry, they do all carry cell phones. By routing online leads to your agent mobile phones, responsiveness is dramatically increased. And revenue growth follows.

Text messaging works best. It is non intrusive and keeps the agents in control of when and how they respond. They may be with a client at that particular moment, or they may prefer, depending on the opportunity, to respond either by text, e-mail or via telephone. A regular phone call or voice message does not offer the same flexibility.

There are a number of proven wireless lead routing systems on the market today. Considering the importance of responsiveness in the real estate business, the benefits of adopting this technology sooner than later are obvious. What it takes to win is to get to a lead first, and lead routing is an easy way to make this happen. While some brokerages have formal lead response and routing teams, others send inquiries directly to agents, but regardless of the model, brokerages need to ensure inquiries are responded to quickly and, preferably, immediately.

Lastly, brokerages need to recognize that inquiries generated from their listings originate from more sources than just their own website. Vertical search sites and classified websites that listings are syndicated to need to be integrated into their system, to enable text message notification for inquiries, irrespective of the source. This is the only true solution to consolidating the lead management process and optimizing conversion from all the diverse online advertising efforts.

Advanced systems such as the Point2 platform have been able to achieve integration with a number of syndication advertising partners and deliver leads right to the Realtor® cell phones. The initial inquiry is not only sent through email and SMS (text messaging), but the lead information is also added to the Point2 lead capture and profiling part of the platform, for long term incubation and follow through.

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