Yesterday I wrote a post about milk the commodity and how, for most people, the brand of milk doesn't matter, price does. I then wrote about how high performance car companies like Aston Martin and Porsche (just to name two) use a variety of things to differentiate themselves and can then charge a premium for their product. Today I will get a little deeper into the philosophy in an effort to help those of you who actually read this post think about how your business is set up relative to your competitors and what you can do to differentiate yourself from everyone else. In the end, you'll see it's about establishing a brand and getting people to know and understand that brand.
When you buy a gallon of milk from the store, you don't really need an customer support. Milk doesn't break or need servicing unless it happens to go sour before the date and then you bring it back to the store and swap it out - but that's the extent of the customer service for most people when they buy milk. Cars, like real estate, are a much more complex item and thus, require a lot more thought and strategy. If you looked at the process of bringing a car to market from any high-line company (Porsche, Audi, BMW, Ferrari, Mercedes Benz, Aston Martin, Bently, and Lamborghini, to name a few) you would see a dramatic difference in probably every phase of the process than companies such as Chevrolet, Ford, Dodge, and GMC, for instance. Not that their cars are bad, but I can assure you that the design process of the high-line performance / luxury cars as well as the materials used, the way their built, sold and serviced are all on a higher level than than the Chevy's, Fords and such. It's these differences that allow them to charge a premium for their cars.
We all need milk and I enjoy it in a lot of different ways (cereal, milkshakes, chocolate milk, etc) but in the end, milk is milk but a car is not just a car and a house certainly isn't a house nor is the process of buying and selling homes. Realtors, for the most part, get 3% per transaction. This means that pricing is basically set. People negotiate the price of a car, which can affect the commission for a car salesman, they don't typically negotiate the commission itself. When buying a home, the price of the home is often negotiated, again affecting the commission of the agents involved in the transaction. Additionally, agents sometimes use some of their commission to make the deal work - I've never seen this in the car business. It's great when the Realtors are willing to be flexible and as the saying goes, "some money is better than no money." However, the point of this post is to get you to think about the business model you have created and the brand you are establishing in the eyes of the consumers. Are you developing a reputation that will allow you to make your full commission and to earn a client's business when competing against other (top) agents? Why do people choose to pay more for a BMW rather than buy a car like a Ford Focus that will also get them from point A to point B? When price isn't an issue - such as choosing between two Realtors - why would someone choose you as opposed to your competitor?
Please feel free to share your thoughts, strategies and ideas regarding this subject.