Next generation customers power the real estate market. Are agencies and property portals ready?
A couple of years ago, I went off to college and I remember that to find a rental studio, I had to grab the Sunday morning paper at 9 am sharp because it contained the classifieds section with the latest available rentals. The ads were a mere 5 lines of text describing the property, accompanied by a small image that I could barely make out. Was I looking at the living room? Or was it a bedroom? I couldn’t tell.
Most of the ads didn’t even have images because the “optional image” was more expensive for owners and real estate agents to advertise with.
Cell phones didn’t exist either, and when I wanted to schedule a property inspection, I had to rush to a phone booth.
Needless to say, the whole experience of finding property used to be painful, but I didn’t know any better at the time. I assumed, like many others, that this was just how things were done. And while it may seem like I was born in the Middle Ages, this story illustrates what finding a home was like for myself, and many others, just 20 years ago.
With the proliferation of the internet in the last decade, property portal sites made listings’ information available round the clock. Property portals were the digital version of a newspapers’ classified section. What an improvement and a time saver. The best part was each listing came with images — imagine that!
Digital classified sites made the quest to find real estate easier and more efficient.
This is already 15 years ago, and many recent technological advancements have initiated major shifts in other industries. What about real estate you might think. Well read on…
A new era is dawning on agencies and property portals and this is why:
1. Technological advancements create the possibility of a far better customer experience.
Many industries have seen dramatic changes in the past decade because technological evolution created the possibility of delivering ever better customer experiences.
The iPhone, 10 years ago, launched a mobile revolution by inventing the app-economy.
Social Media has made it possible for individuals and small companies to create their own media and find audiences on a shoe-string budget.
E-commerce offers customers the comfort of shopping and comparing products from the cosiness of their own homes, avoiding traffic, parking, and other headaches.
The opportunities that technological advancements present have been largely ignored by established industry players. They are mostly taken advantage of by visionary companies who understand that by delivering a far better customer experience, consumers will favour their businesses.
This has already resulted in dramatic changes in various industries. For example:
* Retail — Amazon
While brick-and-mortar retailers like Walmart and Best Buy occasionally modify the brands or product range available in stores, the retail concept hasn’t really changed much.
In contrast, Amazon took the idea of brick-and-mortar shops and innovated, finding new ways to deliver product while simultaneously increasing customer experience.
Amazon offers its consumers greater ease. Its superior search and query, recommendations based on past purchases, one-click ordering at check-out, multiple consumer reviews and ratings, and most recently, dash buttons for automatic re-ordering, are key differentiators.
Recent examples of Amazons innovations are numerous, including Amazon’s flagship line of Kindles, Amazon Prime two-day shipping, and more.
Looking ahead, Amazon continues to find ways to make the consumer experience easier with experimentation in grocery delivery, anticipatory shipping, and even delivery by drone. CEO Jeff Bezos said he has a vision of a time when his company can prepare to dispatch a drone to deliver products before you even realize that you needed to order them.
In 2017, many retail giants are struggling. The so-called “Amazon effect” is threatening brick-and-mortar retailers like Macy’s, Sears, and JCPenney.
Some companies that have failed to compete with e-commerce sites were forced to file for bankruptcy this year, including Toys R Us, Radio Shack, and Wet Seal.
Others, like Sears, are scrambling to find solutions in the face of plummeting sales and store closures. More than 6,400 store closures have been announced so far in 2017.
Retailers without the right strategy saw their market caps plummet.
* Television — Netflix
Netflix offers viewers on-demand video entertainment tailored to their taste and on any device.
Netflix didn’t invent video streaming, but used existing technology to create a far better customer experience. For a modest monthly fee, users have access to a vast library of great content.
Having doubled its subscriber base in the past five years, Netflix passed a major milestone in the first quarter of 2017. For the first time, the popular video streaming platform has more subscribers than the largest cable pay-tv providers in the US, combined.
* Transport — Uber
In 2014, cab owners and investors were paying as much as $1.3 million for a taxi medallion In New York City. Today, a medallion’s value has dropped to less than half of that.
Uber is partially “to blame”. Uber is a convenient, inexpensive, and comfortable taxi service.
With the trailblazing ride-share service, users are able to hire a private driver to pick them up & take them to a desired destination with the tap of a button on any smartphone device.
A nearby driver often arrives for pickup within minutes. Not only is this an on-demand car service, but users can even watch as drivers are en-route.
The extraordinary customer experience offered by Uber compared to what taxi companies offer is in large part what drives people to adopt the ride-sharing platform en masse.
Offering a superior customer experience is really key.
In short, companies that can create far better customer experiences by leveraging technological advancements in established industries are able to thrive.
A major shift in the real estate market has yet to happen, but make no mistake. Innovation is paving the way for the future of real estate.
Today’s customers expect the same level of choice, access to great content, and quality service they’ve experienced from other companies applied to all areas of their life.
The modern consumer is continuously shifting their focus between media. They are mobile and tech savvy.
Understanding what this means and adapting to it by tapping into the right technologies to provide a greater customer experiences is key to real estate agents, their businesses, and property portals.
2. Next generation customers are entering the real estate transaction space and they will almost fully power the market within the next 5 years.
The generation that was born with the digital evolution is a generation that is craving for a far better customer experience in Real Estate. This is the generation of digital enhancements, like Uber, Airbnb, Netflix, Facebook, and Instagram.
This digital generation is becoming the driving force of the housing market and will soon be the major power source behind it.
They are considered the generation born from the early 1980’s into 2000 and range in age from 18–38. They are also commonly known as Millennials.
They’re a generation who spends much of their time online, grew up in the digital age, and are not easily swayed by the more traditional advertisements.
According to Google, they’re finally emerging from their parents’ basements and very ready to buy their own homes.
These consumers are approaching the stage in life where they’re considering purchasing homes. In fact, most millennials are often first-time buyers or tenants.
Zillow’s research found that more than half of all first-time buyers are millennials.
In 2017, Millennials represent the largest share of home buyers, making up 35% of all home buying transactions. According to research, this share has grown consistently over the last 4 years.
Attending to and marketing this new generation of real estate customers is a totally new ballgame!
The “new generation” real estate customer
As mentioned, this new gen real estate customer is mobile, tech savvy, and expects a great level of service. This is not just a fancy claim, here are a few recent stats that show how true this actually is.
Let’s look at the following numbers and let them sink in for a minute:
- Internet usage is now far larger from a mobile than from on any other device
- Users spend on average 69% of their media time on smartphones. (comScore)
- 80% of social media time is spent on a mobile device. (comScore)
- 70% of consumers delete emails immediately that don’t render well on a mobile device (Blue Hornet)
- The use of mobile is mainly “in app”
- 58% of home buyers 36 and younger found their home with a mobile application
- 46% of buyers’ age 37 to 51 years found their home through a mobile application.
- 72% of all buyers used a mobile device in their home search (National Association of Realtors)
In this day and age, a business that doesn’t have a strong mobile presence is in trouble
What these numbers clearly illustrate is that mobile usage is creating huge changes in the way consumers relate to businesses…. a real estate business is no different.
A new generation customer will disregard a brand quickly if the site doesn’t look professional or can’t be easily accessed and used on their phone.
This isn’t limited to having a mobile responsive website. This goes far beyond that, and includes the type of content that is made available, the functionality offered and the UX design provided.
Trying to “squeeze” too much onto a small screen won’t keep a customer’s attention.
Listen to what Gary Vaynerchuk had to say about mobile at the Inman Connect fair a few months ago (I couldn’t have said it better).
2. Social Media
Social Media, Facebook being the largest, is by far the biggest media available to consumers today. This is also where the “new generation” customer spends the most media time. A few stats to back this up:
- There are 1.74 billion mobile active users on Facebook
- Worldwide, there are over 2.07 billion monthly active Facebook users
- There are 1.15 billion mobile daily active users. This is hugely significant and shows the dramatic growth of mobile traffic on Facebook.
- 1.37 billion people on average log onto Facebook daily. The Implication: a huge and vastly growing number of Facebook users are active and consistent in their visits to the site.
So in case you had any lingering doubts, Facebook is too big to ignore.
A new generation customer will look to social media platforms for content and thought leadership to determine whether you’re the best option for them.
Being on social media doesn’t mean posting a listing occasionally. Real estate transaction professionals should generate interesting, immersive content on a regular basis.
Throw out some daily real estate tips, advice, and tricks to establishing yourself as a trusted brand. It’s a way to get your name out there and make yourself available to the millennial market as a trusted source.
How-to videos, whitepapers, and dynamic blog posts that display your expertise and thought leadership is what millennials want.
Take the time to create thoughtful and helpful content to gain the respect and trust of this new generation. When you do, that content will spread like wildfire, creating more traffic and more referrals to other new gen customers towards your brand.
Engage with your customers on your social media. This means being available to chat on Facebook Messenger, reply to comments on posts, and so on.
Social media offers tremendous ways to reach customers based on their preferences, their profiles and much more.
Jenkins, a Virginia Beach, Realtor whose team closed $50 million in sales volume in 2016, says his cost per Facebook lead is around $5, compared to over $100 or more per Zillow lead. The difference between the two is that Facebook leads tend to be six months away from transacting, while Zillow leads are much closer to pulling the trigger, he said. source: https://www.inman.com/2017/09/05/facebook-ads-real-estate-golden-era/
Facebook ads can deliver a much higher return on investment for agents than other ad products, he said, but only if they use follow-up systems to nurture leads into clients.
When Mor Zucker became a real estate agent, she was a newbie at a brokerage full of industry veterans. And she was told, this is how we do real estate: Send out flyers, put your ads in magazines and pay $500 to be in the newspaper.
But this puzzled her — “Why would I be advertising where I don’t spend my time?” she wondered. “All my friends are on Facebook.”
Within two months of being a Realtor in the state of Colorado at Kentwood Real Estate, Zucker’s personal website generated more hits than any other agents’ sites in the company. She achieved that by blocking off a couple hours per week to schedule out her social media posts in advance, and to create the perfect fusion between Facebook and her website to build momentum and followers. source: How to launch a real estate career with Facebook marketing
3. Efficiency, ease-of use & immersiveness
New gens are constantly bombarded with attention grabbing tasks, and choose to spend the limited time available when not working to watch cute cat videos on Facebook, share selfies or view others’ stories on Instagram and so on. To this new generation customer, every second of every day counts.
This means Millennials want to use their time how they see fit. What they certainly don’t want to do is waste their precious time on things like waiting on hold during a call, or by being told by their agent that they will call back with the details. Worst, they don’t want to be forced into a loop of endless back and forth emails when they want to schedule a viewing.
They expect access to information to be instantaneous, and prefer a reply via chat instead of phone. They want to be able to book a viewing when it suits them and see visual immersive content beforehand.
A new breed is seizing technological advances to create brilliant customer experiences for real estate transactions
The real threat
In my opinion, the blindness towards the expectations of the new gen consumer is the real threat to established players involved with the real estate transaction sector.
Recent technological evolutions create such enormous opportunities for those who do see its potential!
Telling yourself that continuing to do the same thing because it works is what the taxi industry did until Uber and Lyft came along.
The disruptors didn’t necessarily invent a technology, but they certainly revolutionised industries by leveraging technology to create far better customer experiences, while everyone else was content with the status quo.
Innovators have initially been met with hesitation by big company CEOs. History often proved them wrong.
Perhaps the most striking example of the tendency to dismiss innovative new players was when Apple’s iPhone hit the market in 2007. It was the first example of a smart mobile phone, and it made waves.
Onlookers were unsure what this device would compete with: Would it hurt mobile phone makers like Nokia or developers of handheld planners like Palm, who were also trying to enter into the phone space?
At the time, both companies refused to admit the threat. Here’s Palm’s CEO:
“We’ve learned and struggled for a few years here figuring out how to make a decent phone … PC guys are not going to just figure this out,” said then-Palm CEO Ed Colligan, after news that Apple was developing a phone. “They’re not going to just walk in.”
Here’s the head of strategy at Nokia:
“The development of mobile phones will follow a similar path to that followed by PCs,” said Nokia’s Chief Strategy Officer Anssi Vanjoki. “Even with the Mac, Apple attracted a lot of attention at first, but they have remained a niche manufacturer. That will be their role in mobile phones as well.”
Palm of course is no longer with us. Nokia owned about 63 percent of the mobile phone market at the end of 2007. Today it’s less than 5%.
Airbnb overtook major hotel chains in total guest bookings, but hotels are still reluctant to speak openly about the Airbnb threat.
“Our guests don’t want the Airbnb feel and scent,” said Christopher Norton, EVP of global product and operations at the Four Seasons, speaking to Fast Company a couple of years ago. He went on to explain that his customers expect a “level of service that is different, more sophisticated, detailed, and skillful.”
“We have not seen a direct effect [from Airbnb] in any of our hotels … We don’t feel it’s having any impact on our results or that it has hit our radar as of yet,” said Richard Jones, senior VP and COO of Hospitality Ventures Management Group, in 2014.
Perhaps more than any other internet company, Amazon has embodied internet-based challenges to traditional business and commerce. From the moment it began shipping books and threatening brick-and-mortar book chains, CEO Jeff Bezos has set his sights on transforming industries with Amazon’s customer focus and obsession with efficiency and logistics. But also from the beginning, Amazon has been underestimated by incumbents.
Here’s IBM’s chairman minimizing how Amazon might transform retail and internet sales all the way back in 1999.
“Amazon.com is a very interesting retail concept, but wait till you see what Wal-Mart is gearing up to do,”
In August 2017, as news built around the wave of retail bankruptcies and the “retailapocalypse,” Footlocker’s CEO and chairman Richard Johnson claimed on an earnings call he wasn’t worried about vendors going directly to Amazon to sell expensive sneakers.
“We do not believe our vendors selling product directly on Amazon is an imminent threat. There is no indication that any of our vendors intend to sell premium athletic product, $100-plus sneakers that we offer, directly via that sort of distribution channel.”
In 2017 Foot Locker shares had already fallen nearly 33 percent.
Video streaming service Netflix launched as a potential threat to Blockbuster with its DVD mailing service. Not only did it completely kill the video renting industry, it now has its eyes set on broadcast television. And leaders in both industries were reluctant to admit that Netflix was any threat.
“Neither RedBox nor Netflix are even on the radar screen in terms of competition,” said Blockbuster CEO Jim Keyes, in 2008. “It’s more Wal-Mart and Apple.”
Blockbuster went bankrupt in 2010 and Netflix is now a $28 billion dollar company, about ten times what Blockbuster was worth.
Here’s Time Warner’s CEO:
“It’s a little bit like, is the Albanian army going to take over the world? I don’t think so,” said Time Warner CEO Jeffrey L Bewkes, in 2010.
The disruptors are already here
Visionary agencies or brokerages have realized that the gap between the new gen customer expectations and the service conventional actors have been providing created an opportunity they could fill by leveraging technology to create extraordinary customer experiences.
Compass in the US, Purple Bricks in the UK, Proprioo in France, WeInvest in Brussels are just a few.
Compass just raised 100mio$ at a 1.8$Bio valuation and continues to expand in the US and attract top agents from competitors. It plans to allocate this money to expand its sales and rental listings service to every major city in the U.S. Its competitors curse it, sue it, and predict its untimely demise.
Reffkin, Compass’s CEO says:
“Compass is able to deliver an experience to consumers that’s better than any other company.”
More will pop-up, starting with area’s where competition between brokers is the fiercest and where real estate prices are the highest.
Understanding that a new generation of customers are shaping the future of the housing market and adapting to it by tapping in to the right technologies to provide extraordinary customer experiences will be, in my opinion, the key to succeed in the real estate transaction space.