We’ve been working with two different real estate businesses over the past few months that offer a great case study on maintaining success in real estate. In 2005, both had market share in excess of 35% in their core markets (they operate in two distinct areas and don't compete with one another). By 2011, one had 45% market share (Business A) and one had 15% market share (Business B). In both cases key staff have stuck around and neither is what we would consider a powerhouse in marketing. So why the radically different performance?
On the surface, much of the change can be attributed to an aggressive new entrant in Business B's marketplace. The new entrant built a strong team in an adjacent suburb and then launched a focused and sustained attack on Business B. However, many companies attempted to do the same in Business A's marketplace, but Business A managed to grow from a very strong base and fended off this competition. So what made Business B's response so poor and what made Business A's response so successful?
After spending a few months working on the problem, we’ve come to a couple of conclusions:
1. Business B spent the first interview explaining to me about their major competition. At no point did they mention the new entrant in the marketplace. It turns out that Business B had defined their competitors in 2005 and hadn't changed even since. This is similar to HP focusing on its main competitor Dell and then allowing Apple to take over the world laptop market.
The lesson? Measure your market every quarter and never never go by gut feel or history. Ignore the data at your own peril.
2. Business A has made sure that younger sales people have a clear path to equity ownership. This has been unwieldy at times (lots of cooks in that kitchen), but it has also meant that they are always market oriented.
The lesson? Younger staff don't have assumptions about the market and competitors. If they are given a stake holding, they will bring a lot of value.
3. Business B looked inward for talent while Business A looked outward. Business A recruited the very best talent regardless of where it came from. Business B groomed its staff to have the same prejudices as the directors.
The lesson? Fresh blood helps revitalise a real estate business. Further to this point, in order to attract new talent, it forces an agency to adopt best practise and be on the cutting edge to appeal to staff from other companies--this is positive in and of itself.