Dating back to the 1980s, when most owners and directors of estate agency started out in the industry their focus was Residential Sales – servicing the needs of people who wanted to buy and sell property. Transactional based estate agency in a pre-digital world. Someone wanted to buy and/or sell a property, their details and that of any deals was recorded in a folder on bits of paper. When the deal completed, this folder usually went into archive boxes in the basement never to be seen or opened again. This was in the days just as private developers were starting to take up the mantle of building houses in lieu of the government’s social housing boom of the 1950s-1970s, so private house building or “New Homes” was in its infancy and lettings basically didn’t exist. This was pre the 1988 Housing Act and the introduction of Section 21 that started the Buy to Let boom. The point being all estate agents were Masters of one component part of what we see in modern day estate agency businesses – Residential Sales.
As time passed, many of these business owners and directors tended to gravitate towards “Land and New Homes” as their day jobs and they brought in additional staff, including senior people to take over the Residential Sales business. As lettings became to evolve in the mid-late 1990s these same residential salespeople dabbled in a bit of lettings, but this was when it was a new cottage industry. There was very little administration, very little compliance, but as we moved into the 2000s a new industry specialism was borne, dedicated lettings staff, property managers, accountants and the management team needed to oversee its function. “Resi” people generally couldn’t abide how quickly complicated and highly administrative lettings had become, compliance was a headache, better that they had specialists in house to deal with it instead. Many Agencies chose to not do lettings at all for this reason, and while it became a necessity in 2008 to stay solvent, many agencies even today still don’t really like or embrace lettings and property management as a key part of their business and do it through gritted teeth.
At the same time, in 2000 Rightmove was launched, the digital world had begun in the industry. Soon each member of staff had a PC and email, CRMs were born about the same time, the Cloud as we know it was commercially available and understandable in about 2005. These technological breakthroughs opened up unimaginable possibilities for these Agencies to use their data to their advantage, but several obstacles stood in their way then and still do today, but is that about to all change for those other than the very few who spotted the opportunity early on?
So, early on, estate agency operators had become pigeonholed into specialist areas by choice and circumstance, starting in the 1980s and that trend has continued through until the present day. Don’t get me wrong though, many of these people were masters of their trade, experts at what they did and still are but it was in one discipline generally. Your career path followed one of the following. Residential Sales or Land & New Homes or Residential Lettings or Property Management. You sometimes get agents with experience in 2 of the 4, fewer still with 3, those with all 4 are like unicorns.
My Agency business plan and conclusion to this blog will become clearer when I tell you that I was developed into a unicorn by my seniors and leaders during my career (very reluctantly at times) and have many years shop floor and Board level experience in all 4. There are other unicorns of course, they aren’t fantasy as stories would have you believe, but they aren’t huge in number. It doesn’t make them better operators necessarily either in any of the 4, but what being one affords you though is vision and understanding of the bigger picture because you have experienced working with clients and customers in all 4 spheres and here is the epiphanic part. They are the same people…
Consider this. Most of us have a solicitor for example, I have been with mine since I last moved house about 16 years ago for one simple reason. He has given me no reason to go anywhere else. Same for the local garage that services my car, or my doctor. They all cater for all the reasons I might want to use them, and to differing degrees offer me services that might be of interest to me. My solicitor deals with property, litigation, wills, probate. My doctor will see me about any ailment or illness I may have. My local garage can do anything that needs fixing on my car. At no point has any of them said that there is a particular legal matter, health issue, or mechanical fault that they cannot deal with or handle for me through a third party. For example, the garage doesn’t do MOTs, but they organise it and have it done for me with another business.
The point being it’s easy for me, I don’t need to go and speak to someone else, and that’s what they want to avoid. If I start speaking to another garage about an MOT or another solicitor about a particular legal issue, there is a good chance I might become a client of that other business and they will lose my custom. I am not yet a client for life after 16 years, but I am well on the way to being one, and the revenue they have generated over that time from me and others would have been considerable. This is the Holy Grail for any business – a client for life but so many don’t embrace it for so many reasons.
So, the Holy Grail for estate agents and lettings agents is being the go-to for their clients for anything to do with property. Make it accessible and easy for them, upsell as you go. Give them no reason to go and speak to another agent which is a tragedy that happens every day in estate agencies up and down the land. I have heard in offices too many times to count, “Sorry Sir, we don’t do X, Y or Z”. I have even heard some recommending agents that do offer those services! Having been appointed MD of an Estate/Lettings Agency in London briefed with transforming its fortunes after a few years of neglect, this was a core part of my business plan. I used to call it cross pollination or cross selling at the time, but essentially grasp the nettle of being indispensable to my clients and look for that client for life. Not only would my revenues and profitability increase as they did from each relationship retained and extended, recommendations would also quickly follow. "No" was never an option if it was property related, so it took some years to culturally change the view of the business internally, get the message and belief right, get the right people in, get the fun and reward in place, compliance and training before then boom, off we went. Sounds simple, but it's not.
I heard a statistic at the time that chimed with me, that if there are 4 customer types, seller, buyer, landlord and tenant, your clients (at that time) were 2.3 of those in any given 12 months, or heavily involved with a close friend or family member the same. It rang true with my own experience of working with the same people in different departments. Landlords let, they buy, they sell, they rent and they need lawyers, mortgages, gas certificates…the list is a long one….
I remember going to see one agency in the Thames Valley for a first meeting to see where I could help them increase their revenues. My starting point at a first meeting with any new client is to study their Resi and Lettings T&Cs. Codes of practice dictate all charges have to be included in their terms now, so it’s an easy place to start to spot opportunity to make an instant difference and justify why their faith in using a consultant is worthwhile. I asked them why they didn’t offer to arrange for their landlords, X, Y & Z, sellers, A & B. They answered that it was simply easier to get them to do it themselves. I explained my solicitor analogy above and did some quick calculations based on their KPIs as to what that meant in terms of opportunity even at low conversion rates at which point, they crashed head long into the Change Curve. To be fair, they crawled out in about 10 minutes, as it was a no brainer. Shock. Denial. Anger. Depression. Understanding. Evaluation. Acceptance. 3 months later they had £20,000 of extra revenue and more importantly their client retention rate had increased, their staff were earning more commission, they were very confident they could develop this quickly to other areas. What’s not to like? In my own business, I had established when I started out that these additional lettings services for example, over doubled my fee to let the property in the first place, when my clients were already buying these services from other providers, but before then we had effectively been forcing them into the hands of the competition and forsaking the revenue ourselves - a 6 pointer in football parlance.
So why aren’t more Agencies looking for the Holy Grail? Well some don’t know it even exists for a start. Some do but are content with the business as it is. Others can’t be bothered with the extra resource and work required. Other know it exists and have set off looking for it alone but have got lost. A select few want it and have set off in the right direction and are making good progress, but I am not convinced anyone has made it yet, it’s a long journey. I know I was on the right path and would have got there one day, I simply ran out of time combined with a lack of shareholder investment that could have got us there more quickly. To be fair, coming full circle, there are many obstacles that make its achievement unlikely.
There is the pigeonholing I started with. If you don’t have the experience in all 4 disciplines and believe and understand the opportunity, why would you go looking for anything you don't know exists?
Those that do get it, don’t have the resource perhaps, their life stage won’t allow the time commitment to make it work, or they simply don’t want to climb the mountain, and that’s what it is. It’s not about adding a few services to your website. Firstly, it’s about a cultural reset first, define the vision and articulate it.
Secondly, build process, recruit, get the best people who share your passion to get there.
Thirdly, with reward and recognition controlling most people’s behaviour, most Agencies struggle to provide the right conduits to encourage their teams to pass the leads, or don’t buy in the right IT or proptech to make it easy for them of their customers. Customer journeys need to be decided, nurture programs developed with that IT; timing is important.
Fourthly, compliance and training will give them the confidence and belief to do it, even if they are being incentivised and the IT is in place. Telling them to do it won’t work, and the greatest challenge that has ever faced Agency is asking for the business. People don’t like doing it. It was difficult enough at the start getting negotiators to ask sellers whether they were a landlord, let alone then at the right time trying offer people any one of another 60 or so products or services.
Lastly, build an engaging incentive program for clients and customers to earn rewards for recommending you to others.
There are quick wins to be had, but if you want it to be sustainable, adding capital to your business even when you are not there, as with any house build, start with strong foundations and maintain them.
Consider then your own property activity as a seller, landlord, buyer or tenant and those in your bubble who look to you for support and advice. Think about all the things that need to be organised. There are the obvious ones. All Estate Agents usually sell and let, buy and rent. Many offer financial services, and legal solutions. Then there are about 40 or so lettings related products or services you may need or want from insurance to EPCs, to Electrical Inspection Condition Reports to NRL submissions to furniture packs. What do sellers need? Staging advice perhaps, it’s a common enquiry I receive. Who changes your address when you move? Then there are utilities, new doctors & dentists, TV, broadband, removals, DIY, locksmiths, the list goes on and on. Imagine if one company could deal with all that for you, could deal with anything property related for you, anthing that came from moving home, without the need to ever go anywhere else again.
So, why do so many agents only sell or let homes? Why not step into the shoes of your customer, and then cater for all the things they are going to need while you are performing that initial transaction? Historically it has mainly been the work involved for the size of the fees, and still is for many. £3,000, £8,000, £12,000 for one transaction which makes sweeping up on the extra services for a few hundred pounds pretty unattractive. For others capability or confidence.
The value is however not the point. If you focus on one big infrequent transaction at a time, you have no relationship with the client in the intervening 5 or so years, and who then is appointed to conduct their next transaction essentially becomes a lottery. Remain front and centre in their lives when they need a property service, and not only will your strengthen that relationship and earn revenue on the way, even if some of it isn’t sexy, you also pretty much remain the favourite for the next sale or let when they happen. Then there are the recommendations that will happen if you get it right.
Some had thought that maybe Rightmove was going to tackle this, but it thought better of essentially betraying its own customer base, but then perhaps they too hadn’t considered the right model. Most Agencies will never find their Nirvana, their Promised Land, their Mecca, or Holy Grail on their own. What if a business however, worked with them and got them there instead, used their data to build customer retention and convert opportunities? It didn’t have to be them or us, why not a collaboration? Home and Property Services of which selling and letting feature but are 2 out of many more. No one has done it yet. The IT exists, so does the funding. The UPRN (Unique Property Reference Number) database is starting to be opened up by government. Is this all to dovetail with that to create property services tied to a digital property identity or passport? Is this something that the new emerging disruptor portals have planned?
Even if they have, it will take many years to put into place. In the meantime, don’t be put off setting off on your own journey, and don’t be put off by the experience of those that have gone before you and failed, put off by the intolerable taunting en route by those who don’t want you to succeed. "Go and boil your bottoms, you sons of a silly person” and “Your mother was a hamster and your father smelt of elderberries” are two that derailed one particular quest.