WAV Group spends a lot of time consulting with brokers on how to re-margin their business. We published a paper in 2013 called Harvesting Business From Broker Data. That paper characterized the methods that we developed with a number of brokers to harvest business from across the enterprise of title, mortgage, residential, relocation, insurance, commercial, and property management businesses. It has worked very well for many brokers to recapture repeat transactions and new business though cross sell.
In many ways, the rethinking that went into the thesis around harvesting business across the enterprise was the first intellectual break from the linear approach of Advertising for Lead Generation to Lead Maturation to Lead Conversion. Brokers were spending too much time trying to onboard new customers and far to little time staying connected with customers they have already won.
Strangely, there has been a shift in advertising dollars away from the broker and more toward the team and agent. This shift is largely reflective of commission economics. But also driven in big part by Zillow remodeling their brokerage platform. If top producing agents and teams are capping out and getting 80% to 100% commission, there is no contribution to broker budgets for advertising.
How does the broker get commission margin back? Referrals!
WAV Group is now in a position to support brokers to re-margin their business with big data programs that we have been maturing. The programs key off of the relocation and referral commission programs that brokers retain about 35% commission on. Brokers who increase their referral business stand to reap greater margin rewards.
Brokers are in a position to purchase big data solutions that use predictive analytics to generate leads for consumers upstream of Internet leads from websites or portals. CoreLogic, SmartZip, Opcity, and a host of other companies are framing up these solutions for brokers today. WAV Group works with brokerage firms to make these programs pay out.
Here is the rub. The broker must become competent at developing these opportunities and purchasing solutions efficiently. The challenge for brokers is taking this strategy, understanding how it fits into your business plan, allocating resources, implementation, and managing effectiveness. You cannot just buy the service and expect the checks to start rolling in. This strategy needs to be developed as a center of excellence in your company.
Brokers Can Win!
WAV Group has done some experimenting with market buy-outs. In some cases, the brokers have purchased 1/3 of the opportunities in a marketplace. The pricing for these buyouts is based upon a calculus of the number of properties in a zip code or county, the price, the commission opportunity, etc. The good news is that big purchasers typically get bigger discounts because they reduce the churn rates and customer acquisition costs for the big data companies.
If you need support with your big data strategy – contact Camilla@wavgroup.com to schedule an appointment with Victor Lund.