Competitive Intelligence Sharpens Your Business Plan
By
Jeremy Conaway
Word Count: 1355
The information today’s brokerage needs to remain a player, and the
methods it uses to collect that data, are a far cry from those of its
traditional forerunner.
Indeed, “information” has become the very life’s blood of the leading
edge brokerage. To satisfy this hunger for relevant data, the act
collecting of information must evolve from a casual, agent-centered
function to a much more sophisticated and complex process.
Critical market and business practice data now must be coordinated,
analyzed and distributed to key management players on a real-time
basis.
But what kind of information are we talking about? And, how do you
sort it all out and use it?
Classifying the vital information management needs begins with the
two broad, obvious categories; internal and external. Internal relates
to the “numbers side” --the operational and financial performance of
the brokerage itself.
External refers to 1) the information a brokerage must have about the
types of transactions it seeks to solicit and 2) the business and socioeconomic environment in which it operates.
It’s this last category, known as “competitive intelligence”, that is the
focus of this article.
For the purposes of discussion, competitive intelligence includes:
Data and information about evolving industry trends and practices
Local market dynamics including demographics, marketing statistics,
and consumer behaviors
Information about the operational characteristics and practices of the
brokerage’s immediate competitors
The challenge here is that intelligence gathering has never been a
critical function of traditional brokerages. For most of the past 40
years, real estate companies operated in a climate of stability and
predictability.
In essence, everyone was doing pretty much the same thing. Change,
when it came, made glaciers look fast by comparison.
Trying to differentiate your brand and your unique style of business
and customer service was largely ignored. Rather, competition
centered on a system of unrestricted raids on the ranks of other
brokerages’ best foot soldiers, and was characterized by a minimum
level of orientation and brokerage-specific training.
This success of this “take no prisoners” approach was measured by a
firm’s ability to install, by four o’clock in the afternoon, an agent who
had been recruited from a competitor at breakfast that morning.
Today’s leading edge brokerages are changing this long-standing
model in several ways. From the broadest perspective, most now are
focusing on shifting from being agent-centric to a company-centered
model.
Brand differentiation is becoming a key element in establishing a firm’s
competitive advantage, now seen as a critical factor in reaching profit
and performance objectives. The company’s ability to create and
maintain relationships directly with the customer (translation: not
through their agents) is being touted as a key element in sustaining
long-term business stability and return on investment.
Each of these critical functions must be constructed and then
maintained on a firm, ongoing foundation built on competitive
intelligence.
An even more critical environmental factor that underscores the need
for competitive intelligence is found in the fast-changing business
practices and brokerage ownership patterns now prevalent in most
marketplaces.
Recent national statistics show a dramatic shift to stock-held
ownership vs. family ownership of brokerages. The need for many
brokerages to now answer up to stockholders and investors is a huge
driver behind these rapid changes.
For decades the traditional brokerage community was a much more
homogenous and less contentious group. Their business practices
were staid and predictable, and their business options were much
more limited.
Today’s real estate industry is creating a business model that will
produce consistent profits and a market quality, long-term return on
investment. This “new” real estate industry will become more
situation flexible, market responsive, and above all, much more
competitive.
Firms that can capitalize quickly on emerging market trends will create
an immediate competitive advantage. Firms that don’t see the
opportunity within moments of its creation will find themselves at a
competitive disadvantage.
A key to success in these efforts will be the now-evolving role of the
MIS (management information systems) function. Since introduction
of computerized processes in the early 1990’s, this task has been
allowed to become largely technical in nature.
That must change. In fact, management information’s place in the
corporate scheme must quickly evolve from a historical concentration
on the systems that store and distribute the information to the
methods by which critical information is identified, collected, classified,
analyzed and injected into daily brokerage operations.
Here’s an example of that same change in another industry. In 1958
the television industry was totally focused on the challenge of
providing a useable signal that could be processed by the rudimentary
television sets of that era.
By 1960, however, the industry had mastered those technical
obstacles and could now focus its resources on competitive
programming and attracting outside sponsorships (read: commercials)
that would underwrite the costs of the network operation and build
long term profits.
What kind of information will be required to build a useful competitive
intelligence function in a brokerage?
The base level is “market performance intelligence”. Demographics
are the key here. Who are the people that make up our marketplace?
How much money do they have? What are their values? What’s
happening in their lives? What are their aspirations?
These and a hundred more questions must be answered if the firm is
to employ the correct competitive product and service menu.
The challenge here is that the demographic profile of most North
American markets is changing rapidly, while the service focus of too
many brokerages remains locked in the “Father Knows Best” era.
Real-time market data will become the marketing soldier’s most
important weapon. What kinds of properties, in what price categories,
and in what neighborhoods, are being listed and sold?
What market impact is being felt as a result of today’s events? Market
performance data must be collected and evaluated continuously on a
real time basis. Monthly reports arriving 15 days after the month
ends, along with quarterly recaps, are “history lessons” -- not effective
applications of competitive intelligence.
National level information on changing brokerage practices will be
critical, especially in an industry that is historically reticent to make
vital operational changes. Your competitors’ business practices
concerning service options, programs, products and fees are changing
at an every increasing rate. Firms without a system to capture this
intelligence data will lose critical time in even considering changes,
much less making them.
Finally, information regarding competitors’ changing business practices
in your immediate market will be essential if the company hopes to
maintain even a middle-ground competitiveness. While many firms
will elect not to take the lead in changes, few want to be the trailing
player.
One of the realities of the New Millennium is that business practice
decisions that will control and mold most local markets are being made
outside those markets -- by individuals unseen and unknown to those
whose livelihoods are being affected.
The failure of a firm to intercept and respond to these changes can be
costly at the very least, and at the very most be fatal to their
competitive edge.
Companies hoping to maintain their current competitive position must
move now to incorporate competitive intelligence into their day-to-day
operations. Specific data collection responsibilities, assignments and
outcome measurements must be created.
A vastly different real estate industry, one with new formats,
procedures and branding programs, is rising from the events of the
past five years. Those companies wishing to play, and more
importantly, to remain competitive, in this new space must be ready to
engage the future under a whole new set of rules.
And the first “rules-among-rules” will be staying on top of exactly
what’s going on in the market every minute of every day. Now, if that
seems inconsistent with a maintaining a balanced life, then notice has
been given.
Jeremy Conaway is the President of RECON Intelligence Services. He is
a recognized expert in the fields of brokerage and association design.
His company is currently a leading source of strategic and tactical
ideas and applications for the leading edge of the real estate industry.
He is a nationally known lecturer, author and facilitator. Copyright©
2002, Jeremy Conaway. All rights reserved. For information regarding
Jeremy’s speaking, consulting and facilitating, please contact Frog
Pond at 800.704.FROG (3764) or email Susie@frogpond.com;
http://www.frogpond.com