Has the Real Estate Industry Forgotten About Business Differentiation

Everyone I have ever talked to who has successfully started or operated a business has focused on one overriding thought: what makes my business different from the competing business down the street, or in the same area?

I heard this yesterday during a business meeting with fellow CEO peers as one member in our group was processing a business opportunity, and this was the prevailing question being asked of him by the group.

I had two primary "professions" prior to doing tech full-time. My first real "profession" was running a bicycle shop while attending college. During the first year of running the bicycle shop, I was ultimately able to grow the business' revenue by over 400% for the owner. Thinking back, it was quite simple to do yet those 'simple things' were so elusive to the person who was running the business before, and to the competing bicycle shops in the area.

What I did that set that bicycle shop apart and led to the growth of the business was three simple things:

First, any bicycle repair, no matter how busy we were, would be completed within one calendar week. I thought it was crazy to be telling someone that wanted to simply go for a bicycle ride when the weather got nice in Ohio that they had to wait upwards of one month to get their bicycle overhauled to ride. Yet, this is what the previous operator and competing bicycle shops in the area would tell people. In my mind, competing shops were ultimately punishing the customer because they didn't make the effort or have the ability to manage their schedules and business seasonality effectively. This change alone permitted our shop to take significant market share.

Second, I decided to keep as many bicycles built and ready to roll as possible. To me it was simple: when someone wanted to purchase a bike, they wanted to take it with them so they could go ride. They didn't want to wait a day, or several days, to get the new bicycle that they had just purchased. When I started running the bicycle shop it was standard procedure to only keep at least one of each bicycle model built and ready to be sold, and the remaining bicycles would be kept in boxes. This was primarily done due to space constraints, but I felt those constraints were mine to figure out, which I did, and I kept nearly all the bikes built all the time. If a sold bicycle wasn't built, I would have it ready later that day or the next day. Again, this was a simple change, but something different that other bicycle shops weren't doing.

Third, I stocked a significant number of accessories, which was something no other bicycle shops in the area did. A big part of bicycle riding is the accessories: clothing, helmets, shoes, bicycle racks, upgrades, lights, computers, etc. Additionally, most of these accessory purchases would be impulse purchases which meant if you had it, you could sell it! So, I made sure we had the accessories, especially some women's clothing, which was popular. The best part about the accessories is that the profit margin was much higher than the profit margins on bicycles and the product turns much quicker. It wasn't uncommon for me to sell a bicycle and sell more in dollar volume in accessories than the bicycle purchase, which drove significant profits.

There were other things that I did that were different from my competitors, but these were the big three that were done to significantly increase revenue, take dominant market share, and put two of the three competing bicycle shops out of business.

So, how does this story of a bicycle shop's success relate to real estate?

There are anywhere from a few dozen to a few hundred other sales associates competing for business in your hyper-local market. And, if you serve a large market, you are competing against thousands of sales associates for the same business. So, what makes you different?

You need to have a list of "things" that make you different and more desirable to do business with than the other sales associates in the marketplace. And, it has to be something different than simply being different in price! Being different on price is a losing game.

Here are some questions that may help you figure out what makes you different.

What is an unmet need in the market?

Are people in your market looking for something in, or during, their real estate transaction that is not being provided at all or adequately? Sometimes the best way to figure this out is to listen to the customer and the answers you give them. Are there repetitive questions? Are you able to meet the needs or provide the service being asked of you? This can give you amazing insight into the things that you can hone in on and take advantage of.

What knowledge could I possess that is different and valuable to clients?

Information is powerful. Are you an order taker or a true consultant? If you are an order taker, then the price will always be an issue (your fees). If you are a consultant, people will gladly pay for the consultative relationship and, because you met their true needs, they will refer more people to you. You need to intimately understand all aspects of the markets you serve. And, once you have done that, you need to package that understanding for your clients.

What can I be doing that makes me different?

At the end of the day, you need to be a leader in the market you serve and do things differently in a manner that not only makes people want to do business with you but makes them want to send their closest friends to you after doing business. So, what should you be doing to differentiate yourself?