Minority Report

I know from my experience of working with The Conservative Party in 2005, that the outcome will be determined by a small yet very powerful minority.Five years ago, Lord Saatchi organised a competition for creative agencies and individuals to create a campaign for the Conservative Party.  Several thousand entries from some of the most talented people in the communications industry resulted in a shortlist of 100 ideas, which included three from my colleagues, one of which went on to win.  Part of the “Let down by Labour” campaign and parodying the film, our poster titled “The Blair Which Project?” was duly unveiled in front of the cameras, made the headlines in the papers and subsequently was forgotten as Tony Blair succeeded in being re-elected in preference to Michael Howard.  During the campaign we met with Lynton Crosby, the Australian brought in to mastermind the Conservative effort, who showed me what really matters in a general election campaign and I remain to this day both amazed and shocked by how few people actually count.

The “swing voters” from the constituency of Houghton & Washington East (64.3% Labour) and Richmond (59.1% Conservative) don’t count - it wouldn’t matter who stood – even a Tory with a duck house would be elected in Richmond.  The majority of seats, around 380, are safe – they will almost never change hands (the Hamiltons of Tatton prove the exception to the rule).  Then there are the 40 odd seats that are likely to change to whoever gains power – the highly marginal who will almost certainly elect a Tory this time round. There are roughly 80 seats which actually matter, the ones needed to be won to form a majority. Within these constituencies, applying the national average, just 61% of people will vote and therefore around 3 million people in theory determine the outcome of the election.  But this number is reduced still further, indeed dramatically, when you consider that the vast majority are fixed in their voting habits so the only people who really count, the vital minority, are the swing voters in those constituencies which are only possibly going to switch.  We’re talking a very small number of people, perhaps less than a million, who really hold the power.  And we pride ourselves on living in a democracy!

As with politicians, the success of many estate agencies depends on influencing a handful of significant people – those looking right now to sell or let.  So why then, do the politicians spend so much time appearing to be concerned with the majority opinion and why also should you continue to appear to be seeking to engage with a wider audience than you truly need to?
 
For the politicians, Lib Dem’s apart, the first past the post system helps secure power – typically one or other party has it and this is a better outcome for either Labour or Conservative than the prospect of having to form a minority government with other people.  Again this principle can be seen in the business world for many of us – rarely have I been asked to share the marketing of a property with a competitor – we either win or lose the pitch, there’s seldom a draw.  So one reason the politicians continue with their pretence that we all matter to them is not to let the secret out that we don’t!  But the main reason for the national advertising, the billboards, the high profile interviews and so on is that whilst they appear to be communicating with the majority in fact they are addressing the vital minority. The swing voters in the key marginals are researched continuously, literally every day, possibly not realising that they are so significant and imagining everyone else is asked by professional pollsters 7 times a week their opinion on this issue or that which are then translated into the message communicated within the next 24 hours or so. 

You too should be careful to target your key audience, the real decision makers, the home owners who are looking to sell or let their property, yet recognise that whilst specific messages to key individuals are powerful these are amplified when they are seen to be communicated more widely – so if you’re looking to influence Mrs X and target her directly then make sure that your web site is reinforcing your message when she visits.  Indeed, all your communications should be considered through the lens of your vital minority and not be seeking to influence everyone – as everyone doesn’t matter.

Luv the Lettings

The people over at Luvthecity.com were kind enough to interview me last week to get my views on what's so special about Letting Agents and in particular, Award Winning Letting agents.

The interview was to promote entry to the forthcoming Letting Agency of the Year Awards in association with The Sunday Times. Entries close this Friday and so agents wanting to benefit in the same way that Young London have, must get moving asap.

The entry process is really simple – register your entry online , fill in and submit a simple questionnaire before Friday 23rd April and then you will be called for a telephone interview.  

Any agents working with our sponsors as listed to the right will be able to benefit from a reduced entry by asking them for their voucher code.

You can read the interview here.

You can enter the awards here.

An Undecided Vendor

I was having my house valued last night. We moved 13 years ago and although we've thought about it a couple of times since, we really do need somewhere new despite the financial conditions, so we had 3 agents round to give us a valuation or "market appraisal" as they call it.

The first one; the red agent, was from the same company we chose last time. It wasn't the same chap as we dealt with before though; he was a charmer! This one was rather more serious, but knew his stuff. He had a report from Rightmove which showed lots of similar properties and stuff he’d sold before. I got the sense that he was claiming glory for sales that had little do with him and it was clear that he's more used to dealing with stuff on the northern side of the town. He said they are the market leader, but he seemed more concerned about discrediting his competitors than talking about the benefits of his own service. He also told me his wife gets involved in lots of charitable things and goes on Twitter a lot, but I don't quite see what that has to do with anything.

The second; the blue agent was clearly very passionate about what he does. He spent a lot of time talking about the feedback he'd had from other people moving (a lot of them with the red agent) and was keen to do things differently. He said that they don't advertise in the newspaper any more as it is a waste of money and means they don't have to charge as much. He was keen to stress that their approach is more consultative than red, but I got the sense that his pitch was rather too polished.

The third; the yellow agent was the most surprising. I hadn't really wanted to bother getting 3 of them round, but my therapist said that she'd used them and was very impressed. He's obviously been trying very hard to build his business to compete with the other two and has plans to open several new offices. He was at least able to give more direct answers to some of our questions. He did have some different ideas about marketing the place, but couldn't really show me where he'd done this sort of thing successfully in the past.

In essence, all three of them seem to offer relatively similar services and although there was a lot of detail in what they had to say, there wasn't anything tangible which would make me choose one over another. One thing the blue and yellow ones said is that I didn't need to worry about a HIP whereas the red one was very keen to point out the virtues of them. The way he went on you'd think he'd invented them. Perversely, I got the impression that the blue one was offering a better service in some areas for a lower fee, when I thought he would charge more considering he deals more at the top end. You should have seen the property he'd sold with the duck house and a moat! The yellow one, I was tempted by, but he said that we'd have to see his financial adviser too if we were to really appreciate the service that they provide.

The valuations they gave us were quite different and none of them could really give me a straight answer as to why their price was a realistic one, although they're all going to confirm it in writing.

I suppose it comes down to the credibility of the individual more than anything. Who should I trust to sell my most important asset? No doubt this will be a topic for further debate...

Getting the right balance

 

I recently predicted that sometime in the next 10 years Lettings will become the equal of Sales if not the most important part of an agency’s business and the recent £48 million MBO of Leaders suggests I’m not the only one to see the value in the rental side of the industry.

Unlike Sales, where the “work in progress”, other than new homes, is no more than three months pipeline, Lettings has the huge benefit of renewal income and it’s this near guarantee of future revenue which is causing such significant business valuations – Leaders is worth £1.1million per office or more significantly around £3,200 per property under management.

I’ve long held the view that Lettings value is found on the balance sheet whereas Sales is much more to do with the P&L account.  Both are important as most business owners will appreciate but I wonder how much time and resources are invested in balance sheet items compared with initiatives to drive immediate profits?

I know from when Jackson Property Services was sold to the Halifax for £25million in 1988 (incidentally also for a figure of around £1million per office) that the value we achieved for the business had much more to do with balance sheet items than the profit, and no, I’m not referring to bricks and mortar – most of our offices were leasehold, and a number of these were quite short. The reason Halifax were so keen to get their chequebook out was the brand they were acquiring – that and the key territory of South East London where no other single business had such penetration and market share. Placing a value on a brand though is very subjective and consequently overlooked by many agencies.  However the Foxtons deal surely confirms how valuable a brand can be and why it is so important to care for it, develop it and invest in it.

In agency, for both sales and lettings, the balance sheet items which will ramp up a company’s value, are brand, market share and people.  Any potential acquirer will pay a premium, sometimes a considerable one, for a business which has these three in place.  That’s why I believe the best agencies are more focussed on maximising their market share and revenue per office than the total number of offices – which would you rather invest in, a business with six offices averaging £1.5million turnover or one with 12 averaging £500,000 each?

We’re working with some of the best estate agencies in the UK with individual offices turning over in excess of £2 million and have seen how significant Lettings has become, and not just financially.  Lettings has much higher regulation and compliance issues which in turn necessitates better trained people and more robust systems.  Also, as Lettings value is in the repeat business, the need for a decent Customer Relationship Management (CRM) programme is essential and whilst this is still yet to be delivered by most of the very best sales agencies it will be sooner rather than later.

At Lettings LIVE on June 15th many of the seminars will be focussing on the balance sheet items such as brand and CRM – places are extremely limited and priority booking will be given to entrants to The Lettings Agency of the Year Awards in association with The Sunday Times – visit www.lettingsawards.co.uk