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Truth, Damn Truth, and Consumer Reports

Consumer Reports has released a survey that shows that the national RE companies have successfully wrung every drop of meaning out of their so-called brands.

I haven’t had a chance to read the report, but there is enough on Inman today to get the gist:

  • Even though Indie agents were said to offer fewer services, “…sellers who used them were just as satisfied” as the sellers who used name-brand agents.
  • Customer satisfaction scores for Real Estate companies ranged from 79 to 81. A 3 point spread. Homogenization complete.

Translation: Sellers don’t mind when an indie agent fails to show up with a folder full of Home Warranties, and they don’t care which logo adorns the business cards of the brand-name agents who do.

I am looking out my window at a Hostess delivery truck with a picture of a split-open chocolate cup cake next to the Hostess logo. I want one. I want to peel the frosting off, set it aside, eat the decapitated cupcake and chase it with the frosting just like I did when I was 10. I have an emotional attachment to Hostess Cupcakes that started the day my Mom brought home a box from the supermarket, and its been reinforced every time I have had two (you have to have two) ever since.

Every time I open that cupcake wrapper, I know what I am going to get: The plastic peels off of the frosting even (usually) if the package is warm and they taste *exactly* the same every time, even if they have been sitting on a shelf for six years. Mom brought home cheap, store brand chocolate cupcakes once….Once.

That’s how branding is supposed to work. The ad man Jerry Bulmore said that “Consumers build an image [of a brand] as birds build nests. From the scraps and straws they chance upon.” Bulmore’s sticks and straws are interactions, and what he left out is that the strongest nests are built when the building materials are consistent.

Branding a service is inherently difficult. Unlike cupcakes, its a lot harder to control the quality of the end product, and something as fragile as the emotional connection a consumer feels towards a brand is no match for a bad personal interaction with a representative of said brand. Considering the current industry “standards” for agents, that fact alone makes Real Estate branding on a national level  all but futile. Maybe that’s why the Real Estate brands long ago decided that recognition=branding, because, really, what else can they do?

They certainly aren’t interested in creating any real differences between the services they offer consumers. Look at Realogy: What’s the difference between a 5% commission contract from ERA, Century 21, Coldwell Banker, Sotheby’s or the new Better Homes and Gardens except for the logo in the corner? Even when they use the name of a brand that has a firmly established reputation for high-end quality, there is no logical attempt to capitalize on it. How often does a Sotheby’s sign go up in front of a shit box?

And while I’m on Realogy, let’s look at the concept of a branded franchise. There is no difference between the brands as far as consumers are concerned, but consumers aren’t really the national brand’s customer. Brokers are the customer, so they must be the real target of the brand managers. Surely the national brands take care to preseve the value of brand recognition for their brokers, since that’s all they’ve got, right?

As it turns out, not so much.

I used to wash down my Hostess cupcakes with a glass of milk, but now that I am all grown up I prefer Dunkin Donuts ice coffee. D&D is omnipresent in my hometown as they are all over New England, and I frequent at least 5 of them, but not even D&D would allow me to purchase a franchise, open a store across the street from another franchisee, and then offer the same ice coffee and donuts for half price.

Enter Century 21 Clickit, Inc, “Your Flat Fee MLS and Sale by Owner Partner”. They are based in Atlanta, but they are taking listings in four other states, including CT where I have a competing Century 21 franchise as a client. Friendly competition between Century 21 franchises is nothing new, but competing against an out-of-state broker who is plunking down signs with the C21 logo on them in my client’s backyard to advertise flat-fee and FSBO listings sure as hell is. So what did Realogy do about it?

Reward them. Repeatedly. Along with Inman.

Where’s the Tylenol?

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  • 13 comments

    13 Comments so far

    1. Will August 5th, 2008 12:22 pm

      Interesting post though you ramble at the end with coming to a real conclusion tying in to your original premise.

      That the big brands fail to deliver over the options out there is certainly not news to us agents… especially those of us who have already left big brands for smaller ones or ventured out on our own. However, there is a large segment of the marketplace who still do not understand our industry and its structure. Take my mother, for example, who was just here and went on remax’s wesite to find a listing in her neighbourhood because it was listed by a remax agent. It didn’t show up on the site. I found it for her on the Canadian realtor.ca site in a few clicks. She thought it wiser to go straight to the horse’s mouth for the info and considers remax to be a very good company to work with as it has a large base worldwide.
      Contrast that with a completely other situation up here in BC where it is reported that the president of a major real estate company here, with many, many successful agents, just listed his house with a former Remax agent who has gone indie (and been very successful at that). What does that say about this president’s own belief in his agents or that brand?
      Me? I left my big national brand and have had very few chances to overcome any objections to working within a local, smaller, yet increasingly more reputable firm. Most, just as consumer reports suggest, simply do not care about that logo (thank goodness). Besides, we’re all independent contractors within our respective brands and really, we are all our own brand recognition. Smart agents get that.

    2. [...] Truth, Damn Truth, and Consumer Reports – The Bloodhound Blog presents a fascinating article about branding.  I love things that make me think. [...]

    3. Soho Estate Agent August 5th, 2008 8:53 pm

      People only buy from people. The corporate agents have the advantage with a larger marketing spend but vendors in London are starting to demand the more personalised service that only the indie agent can give.

    4. Greg Cremia August 6th, 2008 5:07 am

      After 10 years with remax I left and went with a small company located in my spare bedroom. The only people who noticed were other agents who don’t understand how you can be successful without a big name brand.

      Consumers have not ever questioned our brand or lack of, but then those who need to work with a big brand are probably not contacting us. In my 10 years as a balloon head I could count the clients on 1 hand who chose me because of the brand.

    5. John Rowles August 6th, 2008 5:48 am

      @ Will: I meant C21Clickit’s cannibalism as an example of how the national companies are homogenizing their brands, but I could have tied that together better.

      @ SoHo: I’m sure the big marketing budget has some impact (my clients believe its worth the $ they kick to corporate), but it is no where near what it could be if they had a meaningful proposition behind the brand based on tangible differences from any other RE brand.

      One advantage of a national brand is the built-in referral network, as in “We will have your first open house next week. Where are you moving? East Nowhere? We have an office there, would you like me to give them a call?” But even that slim plus is easily overcome by an Indie who knows his way around this series of tubes we call the Internets.

      @ Greg: So 1/2 a client a year, at best? Now we know who needs all those 1/2 baths…

    6. Kay August 6th, 2008 9:14 am

      John – Your blog is the first I have heard of C21 Clickit. I can understand your frustration with C21 promoting FSBOs, but it would seem to me that C21 must see the value in this new business model. Are their signs popping up in lower-end areas or are they showing up in all price ranges. There has been quite a bit of talk about what the “new RE office/company” will look like. What are your thoughts on this C21 business concept? By the way, did you read the FSBO debate on US News & World Report blog between ForSaleByOwner.com VP Greg Healy and AZ RE Agent/Blogger Jay Thompson? http://www.usnews.com/blogs/the-home-front/2008/07/24/healy-wins-housing-rumble.html

    7. John Rowles August 6th, 2008 11:49 am

      @Kay: C21 didn’t see the value in that model, C21ClickIt’s owner or owners did and good for them. To answer your questions, they have listings across the price spectrum in CT, and what I personally think of the arguments Healy and Thomspon made doesn’t really matter.

      What matters is the people who voted on whether or not Agents are necessary picked FSBO/Healy in a landslide (66% v. 34%). You ever walk into a train tunnel and think you see the other side, but it turns out to be the headlight on a train that is coming right at you? That’s the traditional industry as it tries to pick its way through the dark tunnel of this downturn, and that result is the sound of that train getting that much closer.

      Back to C21Clickit:

      If Realogy sees value in the model and wants to dabble in Flat Rate/FSBO, then why not overhaul one of their existing brands or start a new one (“Eat Your Own Real Estate, Inc”?) with the tangible difference of that business model as the centerpiece? Why allow a franchisee to muddy the waters and confuse people who see the C21 logo on the sign, but not necessarily the name in white letters beneath it?

      One of my C21 clients tried to explain it to me, and while I still don’t understand it, the gist of it is that, apparently, there is nothing in the C21 franchise agreement that Realogy could use to put a stop to a franchisee adopting any business model they like.

      They do, however, police franchisee web sites to make sure we are using the latest version of the logo, because THAT’s important for brand integrity. It would be funny if someone made it up.

      I need another Tylenol.

    8. Judy Orr August 6th, 2008 12:10 pm

      I switched from a national franchise (22 years there) 3 years ago and have never looked back! My little indie brokerage is run more professionally & I have had record years since joining them. In fact, when I joined there was only a few agents. Now we’re over 100 and most of our very experienced agents are from all of those popular franchises.

    9. Kay August 6th, 2008 12:23 pm

      Got it – your point is clear and well said. Thanks!!

    10. Vance Shutes August 6th, 2008 3:08 pm

      John,

      Sean Purcell’s series on disbrokeration is an excellent precursor of your article here. In 14 years of full-time real estate service to my clients (through 3 logos on my card), not once has a client made their decision based on the logo. I’m sure that’s true of most agents – their clients hire THEM, not their company. Oh, sure, it’s nice to have a distinctive sign out in front (especially Greg’s most recent signs!!!!). And while the sign is nice, most of us in the REnet have our webs woven so extensively that it doesn’t matter what company website with which we’re associated. It all comes down to our individual efforts at promoting our clients’ best interests. And that is something we bring about – not our branded company.

    11. Denver Home Refinance August 6th, 2008 8:39 pm

      I cannot believe that C21 would do that. The whole idea is contrary to their main business. It will be interesting to see how it plays out.

    12. James Boyer August 7th, 2008 12:27 pm

      I live about 3 miles from the Realogy Brain Trust. Before they were separated from their former parent my partner was a director in another division of the company. His comments, Realogy home of the brain dead corporate management. Worse then GM of the 1980′s.

    13. John Rowles August 7th, 2008 6:01 pm

      @ Judy, @ Vance: It’s clear that consumers do not distinguish between Indies and Brand-Name Agents. My beef is the wasted opportunity that represents, and my question is, what role will branding play as we move forward?

      I see strong signs here that smart people will fill that vacuum and create strong, local brands based on something tangible. Here in Newport RI there are well-known boutiques that specialize in the high-end of the market, but that’s a no-brainer.

      What will be interesting to see is whether or not strong local and regional brands can step up and eat the national brand’s lunch by actually controlling the quality of their cupcakes.

      @Denver: I didn’t believe it, either. Still don’t.

      @James: You would think that private equity would put in some ass-kicking Mgt. a la Chrysler, but so far it looks like business as usual from what I can see. I mean, Better Homes and Gardens? What’s the point? It’s like starting a new buggy whip company 10 years after the Model-T came out.