Value Propositions of Estate Agents: Part 2
In the second instalment of our two-part series, we show you how to identify those aspects of your business that form its major selling points for attracting and retaining clients.
In the first part of this series (Property Professional March/April 2015) we introduced you to the work of Robert Kaplan and David Norton and their term “value propositions”. We explained that “the value proposition statement summarises why a customer should buy a product or use a service” and that “it should convince a potential customer that one particular product or service will add more value or better solve a problem than other similar offerings”.
We now turn to the next question, namely, how do you determine the major value propositions of your business?
The Major Value Propositions
According to Kaplan and Norton (2004), a business strategy should be based on a differentiated customer value proposition. Satisfying customers is the source of sustainable value creation. The five major generic value propositions identified by Kaplan and Norton are:
• low total cost
• product leadership
• complete customer solutions
• system lock-in
• relationship management.
Each of these value propositions clearly defines the attributes that must be delivered if the customer is to be satisfied. Michael Treacy and Fred Wiersema, authors of The Discipline of Market Leaders, a 1995 book which discusses competitive business strategies, also contributed to the literature regarding value propositions. According to Treacy and Wiersema there are four types of value propositions, namely:
• “Our prices are the lowest.”
• “Our product is uniquely better.”
• “We make things easier for you.”
• “We take ownership of customer results.”
The authors of Creating and Delivering Your Value Proposition (2009), Cindy Barnes, Helen Blake, David Pinder emphasise the importance of identifying value propositions to create customer profit. Choosing the value propositions should be the central element of any estate agent’s marketing strategy. The ultimate definition of success for an agent should be the strategy’s ability to achieve its objectives. By studying different authors on this subject, we see that the identification of value propositions can enhance focus, manage output areas and establish a platform for performance management. According to Kaplan and Norton (2004), choosing a value proposition is “the central element of strategy”.
Let’s briefly explore the various value propositions…
1. Best total cost:
This value proposition includes the “best buy” concept. The objectives for a best total cost value proposition should emphasise attractive pricing of products, excellent quality, short lead times and ease of purchase. Competitive pricing is the main reason why some of the purchasers out there will buy a specific product. If the perception exists that overcharging without adding value to the buyer exists, the selling process will not get off the ground. The problem in the property market is that houses are listed at the same price, by various agencies. In fact, the buyer cannot get a “sweeter deal” at one agency over another. The value you add as an agent, however, will distinguish your service delivery from that of others.
Time becomes an important component in this value proposition. You, as agent, are sometimes pressed for time and need to deliver the suitable property in the shortest time available. To achieve this, agents must have a solid knowledge of the technology they will use to assist them in satisfying their clients’ needs. To deliver on the value proposition of best total cost, agents need to manage their own costs. Companies and agents that pursue best total cost need to be capable of replicating the innovations produced by product leaders in order to prevent their services from becoming obsolete. These types of companies and agents must also pursue a strategy of insourcing, alliances and partnerships, to ensure compliance to the value proposition of best total cost. Consistent high quality is not negotiable. Highly efficient processes that convert input from all the parties involved in the purchasing process into outputs for the customer are core to the successful achievement of this value proposition.
2. Innovative culture:
The objectives for this value proposition emphasise the particular features and functionalities of the products/services that comply with the customer’s specifications. To achieve success in the delivery of this value proposition, a research and development and marketing attitude is crucial. The strategic objective of this value proposition includes outstanding performance along dimensions such as speed, accuracy and size. Agents should focus on identifying changes in the market early on and must immediately adapt their approach to the research, development and marketing functions. To achieve success, an agent must excel in anticipating customers’ needs and discover new opportunities for superior service delivery.
3. Complete customer solutions:
Before any intervention is suggested, a proper assessment of the situation should be conducted. This assessment should add value to the appropriateness of the suggested solution. For this value proposition, customers should feel that the estate agent understands them and is capable of providing them with products or services that are tailored to their specific needs. Agents who offer such a value proposition stress objectives relating to the completeness of the solution, and they offer exceptional service that includes point-of-sale and post-sale service. Agents should develop a deep understanding of their customers’ values and bundle existing products and solutions into individually customised solutions to assist in the customer’s profitability. Again, the research function is aimed at understanding the customer’s future needs and preferences, rather than at fundamental product innovation. Engaging the customer in the total process will ensure customer retention.
4. System lock-in:
The objective of this value proposition is to create a very high switching cost for the potential buyer. The switching cost can arise in different ways. The agent must create such a service experience that the potential purchaser will think twice before moving to another agent to deliver the same service. This value proposition is linked to the previous value proposition of providing a complete solution. Suggesting a process approach as a solution can be a system lock-in value proposition. Offering electronic feedback or databank services or even post-sale services could be a system lock-in strategy. The rewards from pursuing such a strategy can be enormous. Involving the customer in the total buying and registration process is both a “complete customer solution” and a lock-in value proposition. The availability of appropriate information of market trends and possible future movements will be valuable to the customer, while the availability of a stable technology platform will enhance the lock-in value proposition.
5. Relationship management:
Any agent must build long-term relationships with her customers. The objectives in this value proposition include the basic understanding of the most preferred range of products and services desired by the largest segments of customers, and the retentions of customers. This value proposition also includes the collaboration and partnering strategies of agencies and agents. Agents should have a very clear and understandable partnering strategy. To satisfy the value propositions of all customers, agents and agencies should be able to enter into strategic partnerships and collaborations in order to increase their delivery scope. Long-term relationship with suppliers should also include the robust evaluation of suppliers in terms of their products and services, as well as operating processes. The assessment of performance by the customer will ensure long-term delivery of quality.
Value Propositions of an Estate Agent
To develop a value system for yourself, you must take all the relevant information into consideration and modify it to suit you. The final value proposition statement is not a one-size-fits-all solution. Your own set of value propositions could be as follows:
1. Best total cost:
Your mantra can be: “I accept that the cost factor is very important to my buyer or seller. Especially cost in terms of time. Buyers want their needs satisfied in the shortest time available. Also cost in terms of my own.” As an estate agent you need to manage your own cost; therefore it should be within your budget to drive buyers around to all possible properties until they are satisfied. It should be within your budget to do all that is possible to sell the client’s property by means of additional actions such as flyers, advertisements, showing the property and so on. By managing the time factor and your own cost, you can increase the customer’s profitability.
2. Complete customer solution:
This indicates several important factors. First of all, it encompasses the anticipation and internalisation of the customer’s needs. Second, this needs to be aligned to your actions as an agent and to the possible properties that will satisfy the client. A complete customer solution includes a strategy to retain your client for future referrals or business. This is called a “lock-in strategy”.
This value proposition could be the most distinguishable proposition of them all. Integrity consists of the following integral parts:
Loyalty means that you as an agent will stay loyal to your clients whether you are selling their property or researching a possible property for them to buy. You also want your clients to stay loyal to you. In a world where your competitors are only a click away, customer service really is the new marketing. All your buyers and sellers have access to all the information they need, and research has shown that they are ready and willing to stop shopping around and to stick to individuals and companies who will go above and beyond the expected service standards. Honesty refers to a facet of moral character. Research has shown that, often, people lie to make themselves look better. This can take the form of the tall tales we tell others about ourselves. People also lie to avoid embarrassment. Honesty includes the peace of mind that your client will have in all your dealings, including the advice or opinions that you give.
It is said that trust can easily be lost but is very difficult to regain. People form impressions about you based appearance and attitude. When it comes to building trust and rapport, there is nothing more important than making a favourable first impression. In most cases your client’s first impression of you will be made over the phone or from a voice message you leave. It is important to show up on time and be well prepared, maintain a well-groomed appearance and dress appropriately for your market.
Words: Dr Johan H Vermeulen