Editor’s note: This series details business strategies employed by a range of brokerage companies. Read previous columns in this series: "A case study in cost competition," and "@properties: It pays to be different." This column — the first of two parts — focuses on the business strategy in play at a small, independent real estate brokerage company. Read Part 2: "Coaching, productivity are keys to GoodLife."
Earlier, I highlighted two real estate companies that are using "cost leadership" and "differentiation" business strategies, as defined by Michael Porter in his 1980 book, "Competitive Strategy: Techniques for Analyzing Industries and Competitors."
The third major strategy described by Porter is focus: "This strategy is quite different from the others because it rests on the choice of a narrow competitive scope in the industry. The focuser selects a segment or group of segments in the industry and tailors its strategy to serving them to the exclusion of others."
Focus is itself split into two sub-strategies: "cost focus" and "differentiation focus." Basically, the focuser applies either of the generic strategies, but to a segment of the market, either to be the cost leader for that segment (even if it isn’t the overall cost leader for the entire market) or to offer a unique value to that segment.
One example of a "differentiation focuser" is The GoodLife Team, a small, independent real estate brokerage based in Austin, Texas. (A note: I have no business relationship of any kind with The GoodLife Team.)
The company, in brief
The GoodLife Team was founded in 2008 by Krisstina Wise (My thanks to Wise for her time and for generously sharing information about her firm.)
Prior to starting GoodLife Team, Wise was one of the top performers in Keller Williams Southwest Marketcenter, one of the largest firms in the U.S. by agent count.
GoodLife Team ranks among the top teams in the Greater Austin metro area by units, with 91 units closed in 2009 — the company believes "agent team" comparisons are the most relevant to the company because of its particular segmentation focus.
GoodLife Team has one office, located in East Austin, and has six full-time agents. It does not hire part-time agents, as that is part of the company’s philosophy and segmentation strategy. As a small independent with only two years in business, GoodLife Team is not part of any national franchise or marketing networks.
The product
Whether "focus" or "general" in nature, by Porter’s definition, differentiators seek to provide unique value to their clients. In some ways, GoodLife Team is similar to the @properties model discussed in an earlier part of this series, in that the strategy is to provide value for which the buyer is willing to pay a premium.
The strategy of GoodLife Team is remarkably similar to @properties in many ways: high service, high support — at high cost. For example, both @properties and GoodLife Team have a full-time head of technology on staff.
The difference is that @properties is a large brokerage with more than 800 agents, while GoodLife Team has six agents.
Technology and marketing
The centerpiece of the GoodLife Team system is a technology system built on top of a database, data analytics, and a Salesforce-based customer relations management (CRM) system customized to GoodLife Team’s processes. …CONTINUED
The chief technology officer of GoodLife Team, Jack Miller, is a specialist in CRM systems and has counted companies like Top Producer amongst his past clients.
Some of the things that the GoodLife Team system enables the brokerage to do:
- All showing data — agent feedback, price, and condition feedback — from all of GoodLife Team’s properties are kept in a centralized system, enabling reporting on a property-by-property or aggregated basis.
While many other brokerages throw away this data after the transaction is complete, GoodLife Team keeps the showing data perpetually for future reports.
- Using the data archives, GoodLife Team can compare properties it is listing vs. the average, and explain variances by using the showing data. Miller said he believes the detailed reporting on listing performance provides a competitive advantage.
- Mass e-mail communication, powered by the GoodLife Team’s Salesforce CRM system, allows each agent to send regular e-mails to clients, past clients and prospects on a customized basis.
- The GoodLife Team system also connects to social media applications that were built in-house at GoodLife Team. Jack Miller wouldn’t discuss details about the proprietary system, but suggested that it connects automated messaging, reporting, listing data, video and other content directly to each agent’s social media profiles on Facebook, Twitter, custom blogs and elsewhere.
- For buyer clients, GoodLife Team tracks customer preferences and interests, showing notes and customer reactions to them, etc. This data enables the company to personalize follow-up marketing materials and future showing plans to its customers.
- Newsletters are customized based on the consumer’s interest; the lead generation system or the agent who is working with the consumer enters certain pieces of data about the consumer and the system incorporates demographic and psychographic data to create the electronic newsletter. Renters, for example, receive different materials than homeowners or investors.
- The system automates much of the "farming" of a neighborhood, and leads are captured and scrubbed.
- Additionally, every agent at GoodLife Team receives an enterprise Google Apps account with e-mail, calendar and contacts synchronized to mobile devices. Interestingly, where @properties — with its larger size and budget — can afford systems like BlackBerry Enterprise Server, GoodLife Team achieves similar benefits by using the far-less-costly Google Apps program.
The brand
One of the things that a unified, tightly controlled enterprise CRM and technology system allows a brokerage to do is to create a strong brokerage brand. GoodLife Team takes full advantage of it.
Unusual for some small companies, GoodLife Team has an in-house marketing department. And the GoodLife Team brand dominates everything that the company produces.
As Wise explained it, the brokerage (and its brand) is front and center. While the company’s system does allow for customization, all of the customization is around the consumer — not the agent. …CONTINUED
The GoodLife Team brand then plays into the automated lead-generation efforts, the social media, the farming efforts, and the outbound marketing efforts.
For example, lead-generation activity is centered around the GoodLife Team brand. The brokerage is the subject of the marketing, and the company Web site draws in the traffic. Leads generated are scrubbed, cleaned, screened, then managed until the prospect is ready for an actual appointment. Those appointments are passed along to the agents.
Administrative support
GoodLife Team administrative support is surprisingly deep for a company its size. With only six agents, there are three salaried staff: a full-time listings manager who handles all of the listings, listings marketing, and also serves as the company’s marketing director; a full-time transaction manager; and the chief technology officer.
In addition, the two co-owners, Wise and husband, Garry Wise, spend much of their time in administration and training.
The goal, as in other companies that utilize differentiation strategy, is to take as much of the administrative tasks off of the agent so that she can focus on sales.
The price
The GoodLife Team is not a bargain-basement brokerage. Cost competition is not a part of its competitive strategy. In fact, while GoodLife Team declined to elaborate on specific agent splits, the answer was fairly interesting.
GoodLife Team’s approach is to focus on the agent’s take-home income, what they call the "Good Life Number." Rather than talking about splits, the agent is asked how much he or she would like to make to live a "good life," along with discussions about what constitutes a good life for the individual agent.
Then, the company works backward from that number, showing how many transactions at what price the agent would need to do in order to make that number, how many appointments are needed to do that many transactions, how many leads are needed to get those appointments, and so on.
As Jack Miller said, "By the time we get to splits, it’s a non-issue because we focus on the agent’s income."
The splits are, according to GoodLife Team, comparable to high-end traditional brokerages.
In addition, each agent is charged a $100 per month technology and marketing fee, as well as a $300 transaction fee. The transaction fee covers all of the marketing programs for a listing.
Next: A discussion of recruiting and training as they relate to GoodLife Team’s "focus" strategy.
Robert Hahn is managing partner of 7DS Associates, a marketing, technology and strategy consultancy focusing on the real estate industry. He is also founder of The Notorious R.O.B. blog. You can reach him on Twitter at @robhahn.
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