A solid and accurate definition of “market” is the foundational premise of building a working and profitable business.
If a brokerage firm has a deficient or innacurate definition of its true market all of the outcomes will be impacted by this inadequacy.
What is or, what should be your market definition. Is is only geographics or does it include other dimensions such as consumer behavior, business trends and other factors.
The following e-Partner Podcast puts a spotlight on the importance of market definition to a real estate brokerage firm’s business model and bottom line.
Need help with your Internet business model. Call e-Partner toll free at 1-877-380-1000 or use our contact form.
Syndicated from REALonomics
In the post Unlocking Franchise Economics – Part 1,we opened the door to asking relevant questions that will help owners analyze the economics of real estate franchising.
In this series of posts e-Partner has one primary objective it would like to accomplish on behalf of owners and that is as follows:
…to help owners unlock the door to franchise economics so that gain an understanding of the substantive value propositions that exist and how a franchise name and associated promises can be quantifed in real dollars that are converted to a profit equation that is greater than it would be if the brokerage firm operated without the franchise.
Franchising is an Add-On Toolkit, with Limitations
At its most fundamental economic level a real estate franchise is a brokerage toolkit. Yes, there are all sorts of issues such as marketing, relocation, referrals, training, conventions, etc. But for now, we are setting those aside. A real estate franchise is an economic toolkit, at least it should be.
Franchisors spend a great deal of time butter-balling brands, numbers of offices, growth, name recognition, relocation, referrals, etc., and that is how most franchise sales people will present their proposition to an owner. It’s the owner’s responsibility to translate the presentation into real economic reality and performance and to insist that the franchisor do the same.
As a toolkit, there are some things a franchise can do, there are many things it cannot do and there are more things it does not want to do for a brokerage firm because to do them will harm the franchisor’s bottom line.
Let me be clear on this last point. At some point in the franchise relationship, an owner may find the franchisor a competitor for market territory, referrals, relocation and even local business.
Hungry? Read more and comment…
Profitability challenges have never been greater for Broker/Owners. As the markets have shifted operating models are being refined.
There is a demand for more assertive market management models and of course, streamline, cost effective operations.
Still, despite all that has been said and done, more has been done than said. Most brokerage firms have not adopted the technology and Internet applications that are available to them and that can curb overhead and bring consumers a more pleasant real estate experience.
For a number of years e-Partner has predicted that market management coupled with streamlined operations and recruiting of agents to fee-based models would become the solution to Broker/Owner profitability.
We believe it more than ever!
It’s our intention to help Broker/Owners with the management of change that is taking place within our industry and to deliver to them operating solutions that not only make them more competitive in their core market(s) but explode them into multiple markets.
Real estate company owners are at the forefront of perhaps the greatest economic opportunity in decades.
At e-Partner we believe that companies can leverage technology, the Internet and the new market realities to transform themselves into effective and profitable organizations.
While the market rocks and reels, Broker/Owner have the unprecidented chance to redefine themselves, rather than wistfully yearn for the return of the “good ol’ days” which we don’t believe is ever going to return.
Unlocking Brokerage Power involves at least three things:
- Redefining the notion of “market”
- Implementing new recruiting models
- Developing consumer-centric methods
Redefining our Notion of Market. Our market used to be defined as a city, a zip code, or perhaps and Effective Service Area or Market Service ares. Such notions benefit the definers and not Broker/Owners.
Vertical market definitions, whose primary expression of presence is a bricks and mortar building is not only inadequate for ROI and sustained profitability, it is antithethical to consumer desires and behaviors related to real estate and relocation.
Let me make it simple: No one cares about our buildings, which are simply monuments to brand ego and a deceptive illusion that drains capital at the expense of a sign, agent loittering and ongoing overhead associated with personal guarantees.
e-Partner can help Broker/Owners eliminate outdated market definition, reduce retail overhead and yet increase their potential for recruiting, mergers, acquisitions and ancillary revenue within a larger playing field.
Implementing New Recruiting Models. Broker/Owners have largely lost the commission and overhead battle and therefore, they have in many respects forfeited any hope for sustained profitability and adequate ROI.
In order to regain a foothold on profit, Broker/Owners should look at market expansion where the demand for overhead is dimished. e-Partner provides Broker/Owners with workable alternatives to cost-intensive business models that insure agent survival at the Owner’s expense. Ask us how!
Developing Consumer-Centric Methods. The age of “build a website and they will come” is over and DOA. Our industry requires more transparency in our online business models and this can only be accomplished when we reject the notion that consumers consumers want to be regarded as a “lead.”
In addition, we are seeing a powerful shift from passive Internet surfing to transparency that gives in order to get and where we engage the consumer s a content partner, not a commodity.
e-Partner delivers market platforms that incorporate opportunities for consumer partnerships through blogging, commenting, authoring, remarking and many other mechanisms.
Our industry has changed. The consumer is driving the profitability train and yet we, if focused and dedicated, are now in possession of the tools that can deliver new profitability to Broker/Owners who are willing to reinvent their companies.