Read My Lips - It's Not the Number!

Beginning with a Trulia consumer question, moving through the Consumer Reports survey results, and ending up at their abbreviated 3% vs. 6% chart, one would think that the consumer is analyzing commission percentages and we need only get our act together in packaging and selling full service to keep the top dollar rolling in.

Sorry, but that's just not going to work long term. Backing up from a number and producing service lists to justify it is simply sticking your head in the sand. In a previous career, I worked in formal Quality Improvement Processes in several companies. The very first thing you do is to survey your customers and prospective customers. You ask them what they want, and if past customers, if you delivered it and how well. Once you know what the consumer wants, and I mean precisely, you create your product or service to provide precisely that. Then you follow up forever with surveys to check your delivery for quality...how did you do? And you also continue to periodically survey them again to see if their needs and desires have changed.

If you really READ the material at the links, there is a theme of asking consumers what they received, what value they placed on it, and their satisfaction levels. However, it looks like most of the survey questions were from our Realtor perspective. When you're asking "Did you receive a CMA, and what commission did you pay?", you're not really getting information that will help you to prosper in the future. You merely asked them what happened, not what they WANTED to happen.

American business history has proven that serving an existing need or desire in the way the consumer wants it served will bring huge business success. If Michael Dell had just advertised computers at top dollar prices, stating "This is how we must charge, because building a quality computer works this way," you might not be reading this today on your very powerful and inexpensive machine. If we will stop backing up from a percentage amount that will pay for the services we provide, and start working from the other end, we may get it right in real estate. In other words, it shouldn't be "Here's what we do for you, and you need to understand that we need x% to do all of this, whether you think you need it or not." You can see that theme clearly in comments from real estate agents to the Trulia post. While it's been proven over time that consumers will accept the "this is what is good for you" theme from a health care provider, they are not so inclined to do the same when purchasing products and services that aren't life-threatening.

It should begin with detailed surveys asking what the real estate buyer or seller needs, wants, and would expect from a real estate professional. THEN we can ask them what they think the services they mentioned are worth to them. THEN we look at what it will cost us to provide them, mark them up for profit, and that's how we go to market. Whether that delivery is a flat rate, hourly billing, or a commission percentage is the very last step in the process, not the first. And, we'll probably find that the billing method really doesn't matter to them as much as we think, as long as they get what they wanted at a price they can afford. You might even find that the number comes out to that magic x% you wanted in the first place!