Milk and Cars - why they are important to your business

By
Mortgage and Lending with Alterra Home Loans

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.

BMW 7 Series

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? 

Ford Focus Please feel free to share your thoughts, strategies and ideas regarding this subject.

Posted by

D. Jed Wunderli

Certified Mortgage Planner

Alterra Home Loans

702-812-1214

Comments (3)

Chirag Shah
Gateway Realty Corp of N.Y. - Mamaroneck, NY
Chirag Shah

I always knew this was true. Someone just had to say it. I passed this on to my friends. Thanks for always putting the truth out there. 5 stars.

Jan 25, 2011 05:17 AM
Gary & Melynda Wolter (CRS) 480-269-1164
ProSmart Realty - Mesa, AZ
Reliable, Premier Personal Service since 2001

Price integrity is very important. We don't negotiate commission (once you do, good luck stopping it). Our mission has been to brand ourselves as top dollar negotiators with a higher internet marketing presence than most of our colleauges. It's a good journey and is paying off!

Thank you for sharing your view!

Melynda

Jan 25, 2011 05:27 AM
Jed Wunderli
Alterra Home Loans - Las Vegas, NV

Chirag - Thanks for the nice complement; I hope your friends like the post as well.

Melynda - All integrity is very important.  I agree about negotiating commissions; when the income tax was started to pay for World War I it was only supposed to be temporary and we see how that turned out.  I'm glad you're doing well; it sounds like you have found your niche.  Are you familiar with www.agentsunfairadvantage.com?  This is great as far as internet presence is concerned.  Let me know.

Jan 25, 2011 08:15 AM