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Are you smarter than the "Expert"?

Real Estate Agent with Keller Williams Team Realty

March 11, 2011 12:50 AM

I recently read Rob Hahn's latest blog post, Keller Williams’ New E-Edge Program and Strategic Fit, in which he analyzes Keller Williams and their newest eEdge Technology Platform. Now, I don't know Rob personally, but from his education and experience he seems to be a really smart guy. I read his blog regularly and always seem to question his analysis of the issue he talks about. He brings up some very interesting points but like his old blog picture used to show he can be considered the grim reaper of the real estate industry. He always talks about the what if scenarios and worst case situations, at least that is how I would characterize his blog.

I take issue with this particular blog because of how he characterizes Keller Williams. As an associate who has worked for KW for the last 4 years in 2 different offices, I believe I have a better understanding of the company than he does. I feel that certain assumptions he makes based on his "research" are simply just wrong.

Here is a quote from his blog post and a previous article he wrote about a KW office.

"As we will see, the KWRI model – of which KW Premier is an example – is built around achieving and maintaining Cost Leadership, while offering a product to the general agent population that is comparable to that offered by competing brokerages. Almost all of its systems are inter-related, and that system is what provides it with the competitive advantage of Cost. (Emphasis added)"

I agree with this characterization and view of the company. In the next paragraph he says the following.

"Everything in the Keller Williams system, as I understand it, is built around the cost leadership vector of competition. For example, the profit-sharing up to seven levels of down-line revenues incentivized the agents themselves to recruit new agents into Keller Williams, minimizing the need for costly recruiting and retention efforts. The freedom that Keller Williams emphasized in all of its literature and marketing to agents also meant that the average brokerage (or “market center”) did not have to provide costly technology tools and the like. Each agent was free to buy and use whatever she deemed fit."

I think Rob misses the point and the value proposition of Keller Williams. I believe the best way to explain Keller Williams is to say Keller Williams is the foundation of your house. KW provides the tools & training to build a successful business. Thinking of it like a house again, you get to choose the materials you use, how you want to design your house and what you want it to look like.

To suggest that KW does not provide costly "technology tools" I don't feel is accurate. For many years KW has had a monthly eAgentC fee for $10 a month. This fee was created to provide technology services to help agents be more productive. Below is a description of the eAgentC mission.

-------

eAgentC Mission:

Protect and develop our Associates' fiduciary position in the electronic world
Provide relevant technology research, training, and consulting for Keller Williams Associates
Advance our Associates' industry leading position through targeted Internet tool development
Pool our resources to bring associates better ROI than what they could get individually

The vision for eAgentC’s initiatives is directed by Keller Williams Realty’s ATC (Associate Technology Council). The ATC represents the voice of the agent in the development of technology tools.

------------

Kelller Williams Agent's websites receive more traffic than any other brand (ok, I don't have the official stats for this one but it has been said by various "official" people in the company). As far as I know KW is the only major franchise that gives their agents a full functioning and customizable website with full idx (feel free to correct me on this). The other competitors give an agent a web page and not a full website.

This is where I think Rob is really misguided, as with the eAgentC technology platform, the eEdge platform was voted on by the Associate Leadership Council (ALC) which act as the board of directors for every office. The ALCs were given a presentation and eEdge was explained. Over 98% of the offices voted yes to have eEdge.

Rob also makes some other assumptions about recruiting and strategy that I do not agree with. Rob's assumption that KW does not recruit as much as other franchises is wrong. KW has a full time non-selling office manager (Team Leader) whose primary responsibility is to recruit. I think the difference is all the recruiting is done locally vs. nationally and KW does not have a franchise department.

Rob's assumption that this is a change in strategy, I don't see it that way at all. KW has been trying to do this for years and that is why the eAgentC program was started. At that time the company looked into making it's own contact management system but, decided to partner with Top Producer and create marketing material for the program. The program worked reasonably well until the guy that was the liaison, quit and started his own company MyRedTools. KW's value proposition has always been about the agent and I believe it is widely considered the first agent centric organization. People do business with me because of their relationship that have with me, not because of the company I work for. Most of the people I do business with never heard of Keller Williams, (I am in Suburban Chicago) and I never find that to be a problem.

Additionally, the $180 extra a year for the services provided is relatively minimal for anyone who is actually selling real estate. If it is that much of struggle, I might suggest an agent should consider another career. The eEdge fee is mandatory, while all aspects of the product will not be mandatory, all the agents transactions will be run through this system and in order to get paid, so every agent will have to use it.

So, in closing I think I have a better understand of the company and the product than the "expert" Rob Hahn. Does that make me smarter than the expert? In this case, I vote Yes, I believe KW was Notorious Rob-bed.

These are my thoughts and I would love to hear yours. Until next time, remember this time.

I am John Ziemba, enjoying my glass of Kool Aid

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Peter den Boer

Atlanta Communities - Woodstock, GA

MBA,GRI, Associate Broker, Realtor

John - Good response. Prudential also offers a fully customizable website and more tech tools than most agents can handle! By the way, if I ever change from Prudential, KW is probably the only other brand I would consider! Have a great day!

Mar 11, 2011 01:05 AM

Tina Merritt

Nest Realty - Blacksburg, VA

Virginia Real Estate

Until brokerages choose to "select" rather than "recruit" agents, they will all pretty much remain the same in the big picture.

Mar 11, 2011 02:42 AM

Anonymous

Rob Hahn

Hi John,

Thanks for this; it's a valuable addition to the discussion/debate. However, I do think you're missing an important part of the picture, which is the original post on KW that I put on Inman. Too bad, Inman is subscriber only to get past the firewall, and I'm prohibited from reposting it as that content belongs to Inman (since they paid me for it).

I do think, however, that you have to look at it from a Michael Porter competitive strategy standpoint. Seen that way, every single major brokerage is "agent-centric". And RE/MAX was the pioneer of that particular model back in the 70's. KW does nothing substantially different from an "agent-centric" standpoint than any of its competitors.

What KW does best, however, is offer the lowest cost (in the way of effective splits) to the largest number of producing agents. In terms of tools and support, KW actually doesn't offer very much compared to some of the alternatives and competitors. Now, this is not to say that agents want those tools and support, but I believe it is objective fact that KW's offerings are on the low side. Since you're in the Chicagoland area, compare KW's offerings to that of @Properties (the company I used to illustrate Differentiation model). I think it becomes fairly obvious which company pursues which competitive strategy.

So e-Edge to me represented a departure from that competitive strategy. It wasn't a criticism of e-Edge, nor a criticism of KW. The fact that the ALC approved it by 98% is completely irrelevant. The ALC could vote 100% to offer something even more robust (the e-Edge Pro system, for example) and charge everybody $150 a month, and that would still be something I think is outside the KW competitive strategy.

Finally, the conclusions I drew about KW competitive strategy came from interviews with KW market center leaders, agents, and team leaders. Compared to other brands, for example, Coldwell Banker, KW's "full-time Team Leader" does not face anywhere near the same pressure to recruit and retain -- in large part because the KW agents themselves do such a great job of recruiting new people to the brand, because of things like profit-sharing. The system works, and works well.

if your position is that KW's competitive strategy is NOT cost leadership... well, okay. We can differ on that. But then what IS its competitive strategy? It isn't Differentiation. It isn't Focus. (I know I'm throwing jargon around here, but you can read the Inman articles, or read through the Michael Porter essay on competitive strategy.) So what is it?

-rsh

Mar 11, 2011 10:54 AM

Anonymous

John Ziemba

@Peter - Thanks for the info about Prudential.

@Tina- I agree, offices should look more at quality then quantity.

@Rob- I still disagree about the recruiting comments, to me the TL's that I work with, experience enormous pressure to recruit. I would think this might not be evident in interviews because most don't want to admit to that openly. I think KW's competitive strategy is a combination of the items you mention & I think it changes depending on the position agent vs owner. As an owner I think cost leadership is the primary, howver, to sell this to a any agent would be impossible. RMAX has changed their cost model within the last several years and in some cases it is cheaper to work there. Commission splits are only one factor when an agent is looking at a company, training, services provided to the agents, culture. Inorder to talk about what makes KW different in an agent's eyes would require some very indepth analysis.

Ill try this elevator speech, KW offers the models and systems to help you take your business to the highest level with a pay as you go no risk model.

Mar 13, 2011 04:16 AM

Anonymous

Rob Hahn

Hi John -

No doubt there may be interview bias, and the TL's I spoke with may not have wanted to be on the record as to how much recruiting pressue they do face. Or, there may be variance from one market center to another. But knowing how much some Office Managers at NRT make, and how their compensation is structured, vs. everything I have heard (obviously confidential) about how TL's are compensated, I'm inclined to hold that KW's recruiting costs are far below the industry average, until I see evidence otherwise.

[Of course, KWRI is free to commission a study on recruiting costs throughout the industry... :D ]

The real point, I think, is that from a consulting standpoint, we have to ignore the "elevator speeches" and the marketing of a company, and look at the actual fundamentals. It isn't as if REMAX and Coldwell Banker, at this day and age, isn't saying the exact same thing: "we offer modesl and systems to help you take your business to the highest level" and so on. But a rational analysis of competitive strategy ignores marketing and advertising talk, and focuses on the actual system/structure.

I do invite you to check out my posts on Inman, or the HBR article by Michael Porter, on Cost, Differentiation, and Focus and consider which competitive strategy KW embraces.

Thanks for a great discussion!

Mar 13, 2011 07:03 AM

Maureen McCabe

HER Realtors - Columbus, OH

Columbus Ohio Real Estate

I love Rob Hahn's blog... I wish I would have read the article on Inman. I saw it. I meant to go read it but I missed it before it went behind the paywall.

Interesting discussion about pressure to recruit.

Mar 18, 2011 01:55 AM

Rob Howard

Keller Williams - Knoxville and Farragut - Knoxville, TN

Hi John,

I just read your blog. I am an eEdge Ambassador, that doesn't mean I'd write something positive if I hated the system. I will say that I'm very pleased with the 167 people who have logged into my system this month.

Dec 09, 2011 05:22 AM

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