Mike Sparr, CEO and founder of Goomzee, just wrote great post about the challenges and decisions vendors face in this business. It’s a long post but worth the read.
I’ll add to his advice with a bit of my own. Mike talked about the challenges investing in a sales team.
“Now they could make 400 calls per day, automate the voicemail part, reach 90 people daily, do 30 demos and close 1-2 sales. Agents then averaged 20-22 sales/month, bringing my CAC down to about $135. This means at $20/mo product after 7 months of service I pay for my cost of sales and begin earning revenue for the actual product, support, and ongoing R&D. If I wanted to scale sales of this product, I’d have to set aside enough cash to float realistically the first 10 months of every rep’s paychecks before expecting to break-even. You really want to recapture your investment per rep within 2-3 months. Either raise your prices, lower your wages, or roll the dice.”
I would say that adding a Yearly Plan or Two Year Plan, where the agents pay up-front, can help you finance your sales team growth. I’m not sure if Mike meant this when he stated “raise prices”. Good stuff.
“The industry must be more consumer-driven and quit giving the opportunities to third party sites that don’t have industry affiliations. If real estate technology innovates at the pace that some of the naysayers prefer, the MLS would still be exclusively on paper. If the few loud objections overrule the potential national launch of this tool, it will eventually be mastered by a third party company that has no industry affiliation, no ramifications for not following the rules, and no requirement to follow the Code of Ethics.”
There is such a paradox out there in the narrative about Zillow (Trulia, Realtor.com, etc.) and brokers. Do they love Zillow or do they hate them? Maybe I’m being too general, maybe the question should be split between big brokers and smaller brokers. But where do you draw that line?
But Dan Troup seems to love them, and it sounds like for good reason.
“Dan Troup, director of technology for RE/MAX of Michigan, said: “We are participating in Zillow Pro for Brokers because it is the right thing to do for our associates and their clients. The program allows our Brokers to maintain complete control of their listing data, while ensuring their clients’ listings receive the best exposure on Zillow’s mobile apps and website. We have been very impressed with the capabilities and results from partnering with Zillow.”
When you add Zillow’s milestone to the recent hubbub about The Realty Alliance and MLS providers to me the narrative is starting to get clearer. I think the real issue is that over the years brokers have lost control over their agents. The ironic thing is these same “agent centric” models were created by the brokers(RE/MAX, KW, etc.)
Some brokers are embracing this change, while others (driven by fear) are not. Perhaps instead of threatening and pointing fingers at others many brokers should take a good look in the mirror. As the saying goes, “Haters going to hate, players gonna play.”
I’m at the Tom Ferry “Success Summit” today. It’s being held at the Anaheim Convention Center. This is the second year I’ve exhibited the event. I was amazed at the number of agents he had last year. They have gone even bigger this year, drawing close to 4,000 agents. It really isn’t too hard to believe. Tom is a dynamic speaker with a deep bench of coaches and speakers, and the content is geared to top end agents.
I’m told the average ticket price is around 199.95. You do the math.
Later this month I will be attending and my company W&R Studios will also be exhibiting Cloud CMA at a conference put on by new real estate software company, Reesio. Reesio is a startup less than a year old. They are in the crowded space of transaction management. They felt a good plan get the word out was to put on a conference. The conference is called RealTech SF 2013. Here’s what Mark Thomas, Co-Founder and CEO of Reesio has to say about the event.
“As part of the journey that we as founders of Reesio have gone through with our company, one thing that we’ve noticed is how difficult it can be for real estate professionals to easily find out about new technologies that exist out there to make their jobs easier. In addition, there’s a tremendous dearth of publicity around real estate technology in general, despite the fact that real estate can be one of the more painful processes of any industry. We have 2 main goals that we’re trying to accomplish by hosting and putting together RealTech SF 2013:
1) To educate and highlight to real estate professionals the latest and greatest technology initiatives currently going on within the space that can help them grow/manage their business and enhance their careers.
2) To bring more awareness about real estate technology as a whole to people outside of the industry, and to show that the products that companies are currently working on are solving truly painful experiences that people are currently having to go through.”
The show is only $25 to attend, so pretty reasonable for an agent. The speakers seem to be a mix of industry vendors and brokers. I like the hustle approach Reesio is putting forward, plus Spring in San Francisco? I’m in!
I’ve had many inquires from other vendors asking my opinion on “MLS App Stores”. All of these inquires were either related to FBS’s Spark Platform (“Spark”) or Clareity’s ClareityStore. With that in mind I thought I would put together a post to give a little comparison and insight to both solutions. I do encourage you to get the information for yourself. Both solutions have put up very informative websites:
At this time Clareity has yet to launch a ClareityStore implementation. But many MLS providers on their list are some of the largest in the country. So, I am basing my information found on the above website and conversations with Clareity staff.
In contrast Spark has close to 70 MLS providers (mostly smaller, but some larger) up and running. You should also know that I shared this post with both companies ahead of time to make sure I had my facts right. But I’m sure I missed something so I will be providing updates/corrections as I get feedback.
Some longtime vendors have argued that they already know how to sell to larger MLS providers. In that case the Spark platform might be a good solution to expanded their market. I think new vendors will appreciate all options. Which is why I think there is room for both solutions. Now let’s get into it.
To me the single biggest difference between both solutions is the Spark API. Clareity does not at this time have any solution of integrated MLS data in to your software application. Like many others, Clareity hopes RESO will come to the rescue, at some point, with a data standard for all of real estate. Other vendors don’t care because they already have a method for integrating MLS data in to their app. As said previously, new vendors will appreciate not spending anytime worrying about data integration and instead focusing on creating great software applications. With Cloud CMA we have a hybrid solution that I will talk about later in this post.
Below is a simple comparison chart that highlight the key aspects of both solutions.
Click To Enlarge
*Spark’s revenue share is only 10% if you are using other methods of getting MLS data, not their Spark API.
Other Important factors:
Exclusivity
Neither solution requires you to be exclusive. Meaning if I sign up for Spark or the ClareityStore I can also sell my product through other channels. This is important, if you already have an outside sales force who is successful at office meetings, live presentations, or trade shows they are not required to use this store.
Data integration
While both solutions require you implement a SSO method (Oauth or SAML) in the case of Spark you are not required to use their API for data integration.This was a big misunderstanding based on a lot of my phone calls with other vendors.
ClareityStore has a Turbo Seller Plan, which also offers 10% revenue share but requires 100% revenue share for the first 3 months of subscription.
Use case example: Cloud CMA
In the case of Cloud CMA we continue to use our own RETS integration with our existing MLS customers, even if they have opted for the Spark Platform. With new MLS providers on the Spark Platform, , that our not our customers, we have taken advantage of the Spark API. This hybrid solution has worked well because it lets up tap in to the “long tail” of MLS providers we typically would not have integrated with due to their size/location/time.
Alternative uses for MLS App Stores.
In the future MLS App Stores may also help in decreasing the “friction” of customers signing up for your service. Here are some classic scenarios.
Outside Sales.
What I mean by this is that in any outside or inside sales effort there is always that moment of truth, where they ask the fateful question. “VISA, Mastercard, or American Express?” In an live presentation environment rather than having them fill out a long order form with name, address, phone number, email address, etc wouldn’t it be a lot simpler to direct them to a web page and they just click a single button and “Boom” you’re done? I see a lot of agent bringing their iPads or notebooks to presentations nowadays. Could this increase your closing percentage from 50% to 60%? I think it might if implemented correctly.
Inside Sales.
One of the big factors of selling over the phone is trust. Sometimes agents are very wary of who is calling them, much less giving them credit card information over the phone. Imagine a situation where the rep is directed them to their MLS system (which they trust) and having them putting in a special promo code and clicking a single button to sign up for the service. Boom! Both the trust issue and friction of reading a 16 digit credit card number over the phone has been alleviated.
In Summary
To me real estate software sales is still a belly to belly enterprise. MLS App Stores should serve as a perfect complement to your existing sales efforts. But, you should not solely rely on them. Adoption of these models will take some time. We are still very early in the game. Would I like to pay less than 30%? Of course I would. Everyone’s business model is a bit different so make sure you find the right one for you.
“We recognize that listing status classifications may differ by locale and are subject to local or regional MLS requirements. Brokers should follow MLS requirements at all times. MLS statuses such as Back Up, Contingent or Pending may be acceptable. Ensuring that the listing remains on the MLS until an approval letter is issued will help you show that the property was on the open market.”
This is a bit wonky for Vendor Alley but I know its been causing quite a brouhaha with many MLS providers.
Earlier this year my company partnered with the guys from 1000watt Consulting and launched a new web app we called Nudge. It’s a simple little app that helps real estate professionals answer the age old question, “How’s The Market?” As part of Nudge we came up with a number of cool “indicators”. These indicators were animated graphics that were a visual way of displaying market conditions. Here’s a sample of and indicator showing whether its a buyers or a sellers market.
Agents set the indicators, and send these as a short “Nudges” via email, Twitter, or post them on their Facebook page or blog. The secret to these is they all include the magic ingredients to any successful digital marketing campaign.
1. A bold Headline.
2. A compelling Image.
3. A few short lines of text.
4. A strong call to action.
With Nudge 2.0 we went a step further and also added the ability to upload their own images or link to photo from their Instagram account. So far the response of Nudge 2.0 has been fantastic. Our first webinar for Nudge, hosted by Chris Smith, sold out 100 slots in less than 30 minutes. The ability to add their own images has really been the killer feature we were looking for. Here’s a few samples.
So enough of the shameless plug. Here’s where you come in. We would like to get the word out to agents about Nudge and need your help. So we set up a program, a quick way to make some of that “non-dues revenue” goodness. Here’s how it works:
1. We set you up with special link/promo code.
2. You send at least 2 dedicated emails to your membership promoting Nudge before the end of the year. (We’ll even write the email for you)
3. We pay you $10.00 for each Nudge account that goes to billing (Nudge comes with a 30-day money back guarantee)
4. You’ll be able to track your progress via a special Nudge Revenue Dashboard. (Maybe we’ll post a “leader board” on Vendor Alley)
The offer to your membership will be discounted from the normal yearly price of $149. We will also provide support and host a weekly webinar every Wednesday to help agents get started. Nudge doesn’t require any MLS integration so it will be simple to get started.
Maybe you’ll earn enough money to help fund your Holiday Party. Or take the staff out to a nice lunch. Or buy your favorite Vendor a steak dinner or take them to the ballet.
If you’re interested just email me. If you want to play around with Nudge 2.0 just email me and I’ll set you up with a free Nudge promo account.
But wait there’s more….
I’ve already been approached by some MLS Providers who would like to use Nudge as a tool for communicating with their own members. Here’s what I mean;
Nudge is simple and fun way to send out short messages that your members will read. If you are interested in a Nudge licensing plan for your MLS just, you guessed it, email me.
I’m not sure about you but my list of “go to” trade shows is shrinking. But I was pleasantly surprised last week when I attended MLSLI’s 11th Annual Tech Fair. Jenny Natale and the rest of the MLSLI staff did a fantastic job putting a great show together. Here’s a few take-aways of why I think this show has been around for 11 years.
1. Membership. MLSLI has over 20,000 members. That’s a big pool of agents to draw upon for attendance.
2. Lots of vendors. They even had a guy with helicopter drones for that aerial shot of your mansion in The Hamptons
3. Speed dating for Vendors (not what you think!); It’s a breakfast where agents could sit with vendors and ask questions.
4. Boxed lunch kept agents in the venue.
5. Great speakers for breakout sessions. (BTW: If your MLS or association is looking for someone to help you with a great strategy for Facebook and other social media sites you should really hire Stacey Harmon, she gets it.)
6. An “Appy Hour” at the end of the show where you could demo your latest CMA software over a Tanqueray and tonic. No wonder I loved this show!
Pro Tip: La Parma for Italian food, east on the Jericho Turnpike. Amazing food!
My thanks to MLSLI for all their wonderful hospitality.
