Brokerages and Customer Service: Show Me the Money

Some of the most powerful men and women in real estate at T3 Summit.

This will be brief, as I am in Las Vegas and both the dinner reservation and the craps table are calling me. But if I don’t write this now, I’m afraid it’ll never see the light of day.

At Stefan Swanepoel’s T3 Summit event that just finished yesterday (a wonderful couple of days of really high-level conversations), I got up to ask a question to a panel discussing consumer experience. The panelists were Grier Allen of Boomtown, Austin Allison of Dotloop, Steve Berkowitz of Move, Lawrence Flick of BHHS Fox & Roach, Steve Ozonian of Carrington, and Phil Soper of Royal LePage. In other words, heavy hitters, big time decision makers at big time companies. Of course, in the audience were CEO’s of practically every major franchise company and numerous bigtime brokerages.

The panel ran out of time before I could ask the question, but… it so happens that I write a blog that many of the people I want to reach read… so…

The issue the panelists were discussing was the importance of delivering consummate consumer experience, coupled to the difficulty of having a group of independent contractors deliver that awesome customer service experience. There was much talk of technology platforms that can help, training that can be delivered to these independent agents, etc. and so on.

My question was, and is, this:

For the brokerage leaders on the panel, I understand the difficulty of trying to get your agents to do anything, whether undergoing training or implementing customer service technology platforms. But here’s what I’m curious about. Are your office managers compensated on the basis of customer service, or on the basis of recruiting and driving affiliated business leads?

Because if it’s the latter… what the hell are we talking about here?

This is obviously a rhetorical question. So here’s what I’d like to recommend to every brokerage CEO, every brand President, and every person in a position of leadership in a real estate organization who wants to talk the talk about customer service.

Show me the money — bonus your office managers based on customer service.

The Office Manager and Incentives

Fact is, even if the agents are 1099 independent contractors who often take the position that you can’t tell them what to do or how to run their businesses, the office managers are not. They are almost always W-2 employees who are paid a salary, required to come to work at the office, and subject to your will.

Thing is, most office managers are compensated on a salary + incentive basis. Those incentives often make up the bulk of the compensation. For example, the position might pay $50K a year in salary, but the performance bonuses might be over $100K. So one might ask what are those performance bonuses based on?

In the vast majority of cases I am aware of — and I’ve been in boardrooms when major national brokerages discussed manager compensation — those incentives are based on three things:

  • Production/Profitability
  • Recruiting
  • Affiliated Business Leads

That is, the office manager often gets an override based on the office’s total production or profitability. It might be a few basis points, or it might be very significant. But the more money the office makes, the more profit the office drives, the more the office manager makes.

Recruiting incentives are also extremely common. The expectation from the broker/owner/corporate is that the office manager would be recruiting new agents to the office. In a few cases I’ve heard of for large national/regional brokerages, the office manager has a monthly/quarterly quota he must hit. Fall short and not only does the manager not get a bonus, he might be looking at a resume-generating event.

Finally, for brokerages that have affiliated business units — title, mortgage, escrow, etc. — it is extremely common to have incentives tied to how many referrals are generated to those in-house services from the office. Again, quotas are not rare, especially if those business units have far higher profit margins for corporate.

These setups work for a number of brokerages and for offices and managers. And if that’s all we’re talking about, hey, power to you and good luck and so on.

But if you’re the CEO of a major brokerage company and you’re serious about delivering customer service… step on up and put some money on it.

Change the Culture

In a whole lot of conversations about brokerages, about brand, about agents, about consumers, there’s a lot of references to the importance of culture. Many brokerage CEO’s are rightly proud of their company culture, and stress how important it is.

What is less often discussed is how that culture is transmitted throughout the organization: from the top down, and always through middle-management and local office management. Before you can get agents to change, you must change the office manager, and allow them to work with agents to change the culture.

One simply cannot underestimate the importance of the office manager in getting something done in real estate. I work with Associations who want to drive member participation in political advocacy; the most successful such efforts recruit the office manager to help lead those efforts to the agents in their offices. The office manager is the key to getting anything done with the herd of cats that is the independent real estate agent.

If you talk a great game about customer service, but the office manager doesn’t make an extra red cent from delivering great customer service, guess what the culture of the office and therefore of your company will be?

If You Don’t Measure It, It Doesn’t Exist…

Of course, if you’re going to incentivize your office manager on the basis of customer service and consumer experience, you have to measure such things. Hard to write a check for $25K to reward an office manager for exceeding expectations on customer service delivery by her agents if you (a) have no expectations, and/or (b) can’t measure if and by how much the office exceeded those expectations.

There are a ton of ways to measure customer service. Surveys, phone calls, counting complaints, etc. etc. You can measure referrals, agent reviews, and so on. There are companies out there who specialize in measuring this for you — RealSatisfied comes to mind. I’m a big fan of the Net Promoter Score system, used extensively in modified form by Redfin to name just one real estate brokerage.

In a sense, it really doesn’t matter how you measure customer service, as long as you measure it. If you don’t measure it, it doesn’t exist.

Then all the talk about customer service is just lip service.

Show Me the Money; Change Your Culture

So, here’s the recommendation.

If you are a major brokerage/franchise CEO, show me the money on customer service. Bonus your office managers on the basis of customer service delivery, measured however you measure it. You may not be able to get your agents to do what you want, but you sure as hell can get your office managers to do what you want. They’re employees, not independent contractors.

I’m absolutely certain that if you change how your office managers are compensated, you will change the culture of that office, and over time, of your entire company. Agents who suck at customer service will find themselves out of the office, because the office manager wants to make that bonus by getting rid of agents who can’t or won’t deliver customer service. Recruiting will change subtly away from agents who just do huge volume of business to agents who combine production volume with consistently delivering excellent customer service. Training and coaching will shift subtly from merely stressing lead generation and conversion to doing lead generation and conversion while delivering exceptional consumer experience.

That, my friends, is how you change the company culture.

Your thoughts, as always, are welcome. And I’d particularly like to hear if your organization already incentivizes managers like this, and what your experience has been.



Share & Print

Picture of Rob Hahn

Rob Hahn

Managing Partner of 7DS Associates, and the grand poobah of this here blog. Once called "a revolutionary in a really nice suit", people often wonder what I do for a living because I have the temerity to not talk about my clients and my work for clients. Suffice to say that I do strategy work for some of the largest organizations and companies in real estate, as well as some of the smallest startups and agent teams, but usually only on projects that interest me with big implications for reforming this wonderful, crazy, lovable yet frustrating real estate industry of ours.

Get NotoriousROB in your Inbox

Comments are closed.

The Future of Brokerage Paper

Fill out the form below to download the document