Lessons from HMV
In 2002, the board of HMV were told by Beechwood, their marketing agency: “The three greatest threats to HMV are, online retailers, downloadable music and supermarkets discounting loss leader product”.
HMV’s managing director replied: “I accept that supermarkets are a thorn in our side but not for the serious music, games or film buyer and as for the other two, I don’t ever see them being a real threat, downloadable music is just a fad and people will always want the atmosphere and experience of a music store rather than online shopping”.
If I was your marketing agency today I’d tell you and your board: “The three greatest threats to traditional estate agency are, new EA models, the gap between customer service expectations and current EA service delivery and discounting fees”.
My concern is that too many estate agents might reply: “I accept that discounters are a thorn in our side but not for the serious home mover and as for the other two, I don’t ever see them being a real threat, we deliver a professional service and people will always want the atmosphere and experience of an estate agents office rather than online shopping”.
HMV went from a valuation in excess of £1billion to near bankruptcy in a decade. I’ve considered what they could have done and then applied the ideas to estate agency:
- Accept that the new models are here to stay. Their structure, financing, time table are all different, and hard as it might be to understand how a company yet to make a profit can be worth more than the top three public estate agents combined, that’s the world we now live in. To quote one of our speakers, Paul McGee, “SUMO – shut up, move on!”
- Look at the likely trends for the next 3-5 years and design a model that delivers to the modern consumer expectation.
- Recognise that people want things NOW, immediately, this minute. They want to book a market appraisal online, a viewing online, get feedback online, do anything they want online.
- If your online experience offers nothing more than they can get on Rightmove or Zoopla then that’s where they’ll stay. You must give people a reason to come to your site and to keep returning.
- The wisdom of management gurus through the years is that there are three customer propositions, and only three: Innovation, Service, Operational Efficiency (often known as cheap). And you can only pick one to direct your key point of difference. In estate agency there’s perhaps just two, Service or Cheap – which one will you pick? (You can’t do both, for confirmation of this look at the recent history of Countrywide).
- Having found an answer to 5. above, then work out who your customers are and who they aren’t. You can’t please everyone.
- Make sure that your proposition really appeals to your core target audience – and that isn’t you, your partner, your parents or mates in the pub. It’s your ideal customers.
- Stand for something. Be different for the right reasons. Have a purpose that appeals to the team, customers and shareholders alike.
- Only have team members that totally get what you’re about. You can’t afford to have people with a foot on the brake or pulling in a different direction.
- Be constantly aware of new developments/innovations/services/price points and be quick to assess and adapt as necessary.
In order to flourish, traditional estate agents must adapt but so too the new models – they can’t rest on their laurels either. In simple terms, the battleground will be won at the point where the customer’s expectations are delivered at a price point that she feels is good value and worth it. And neither model, traditional or new, has, for the most part, found that point yet.
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