Client Engagement Software as a Competitive Advantage for Real Estate Boutiques
Level the playing field and provide maximum value
Why Now is the Time to Invest in Technology
At the recent Inman conference in New York, there was lots of talk about technology. Companies such as Compass are promising the first ‘modern real estate platform’ that challenges traditional business models within the real estate sector. Large companies like @Properties in Chicago focus on developing proprietary software alongside acquisitions and integrations to provide their agents a competitive advantage in the marketplace. Where does this leave the boutique firms and agent teams who try to differentiate through niche offerings, hyper-local knowledge, or client service?
Over the past few months I’ve spoken with a dozen managing brokers here in Chicago at firms that would qualify as small-to-medium sized (by number of agents) and one thing is clear: they’re investing in technology to keep par with the big boys (and their R&D budgets). Brokers and agents who can quickly adopt value-add technologies will benefit in a survival-of-the-fittest environment.
Compass’s private valuation in excess of $2B (larger than Redfin’s publicly traded market cap) verifies the fact that there is substantial value in technology. Anyone in the real estate space agrees unanimously that, “our technology historically is about a generation or two behind everyone else.” There can be arguments across the board as to why that is, but the fact remains it is both a problem and an opportunity for risk-taking brokers.
Additionally, many of the brokers I’ve spoken to admit to the Pareto principle in real estate: 20% of agents are reaping 80% of of the benefits. Put less kindly, a lot of agents don’t bench their weight. Technology that assists agents proving value to prospects or makes their clients’ lives easier has the opportunity to boost the under-performers within a firm while simultaneously adding value to top producers. Real estate will benefit from technology-powered products that blend on and offline experiences. Firms that do not adopt rapidly will face disruption. I refer to these as client “engagement” tools, as opposed to traditional client management software.
Be Selective When Adopting Technology
Brokers and agents are spammed daily with offers and notifications for new technology. Massive amounts of investment capital and excellent timing with low barriers to entry for tech development mean this isn’t going away anytime soon.
Here’s how to identify accretive technology to your firm:
Focus on the funnel: Where are your weak points in lead conversion and do you focus and measure too much on generating leads or closing deals? Where does your technology let you down and where could you benefit more?
Understand your conversion source: Of leads converted, what are the sources? Referrals tend to be the best source of an actual client, so should your firm invest in better client management technology as opposed to drip campaigns and lead generation?
Who built it and how? Was the technology crafted by or with brokers and agents?
The more integrations the better. Is there a steep learning curve to using the technology? Can it be flattened through integrations with existing tools to maintain an already-working workflow?
Replacement Cost: Is the cost less than what it would take to build on your own? Is it cheaper to build it yourself?
Is it something your clients will love using (if it’s client-facing)? Is it broker branded?
Technology always represents a risk. Agents should refuse to put anything in front of a client they don’t stand behind. In a world of increasing speed to data, many agents feel threatened by technology as a replacement for their roles. It’s far from happening:
What will happen in the next five to ten years is a war of attrition that requires agents to provide value through education, advisement, and management, not sourcing leads and sending mass marketing, low-fit content. Real estate is a relationship driven business, and technology should fit to that, not the other way around.