Strategic Planning Idea Exchange National Association of REALTORS® 2011 Anaheim
WELCOME Bob Kulick2011 Strategic Planning Chair
Today’s Objectives• Exchange IDEAS – Gather thoughts on the future course for our industry• EXPOSE Leaders to the Strategic Plan• Cultivate the development of GAME- CHANGING Ideas! – Think beyond the Usual• Involve MORE Members in the Strategic Planning Process
Game Changing IdeasWhat “game-changing” eventswill impact the real estateindustry in the next 5 years?
Generations in BriefBaby Boomers Gen X Gen Y(1943-60) (1960-80) (1980-00)• 78 million • 50 million • 80 million• Social • Independent • Self-confident• Optimistic • Problem solvers • Civic-oriented• Career oriented • Portable career • Career with a• Loyal • Not easily awed by conscience• Most REALTORS® authority • Respect for authority • Desire freedom at • Thrive on structure work
Issues and Challenges With Multiple Generations• One size does not fit all – Each generation communicates, does business and thrives as an association member in different ways• Knowledge is power – Baby boomer REALTORS® need to understand Gen X and Gen Y as they come to dominate the market• Selling the value of a REALTOR® – Younger buyers and sellers will be reluctant to work with a real estate professionals who cannot meet their needs for advice and council (they already have the data).• Opening up leadership opportunities – Associations need to create attractive opportunities for X’s and Y’s and shorten the time to climb the leadership ladder
Scenario 1: Organized real estate is hot, hot, hotREALTOR® Organization takes the REALTORS® and the industrylead by: embrace X’s and Y’s by: – Educating members about the – Showing they understand their views and values of younger needs generations as consumers – Providing superior and and sales agents/brokers appealing technology – Encouraging mentorship to – Offering a variety of work integrate X’s and Y’s into the arrangements business – Developing entrepreneurial – Segmenting benefits and opportunities services to each member – Streamlining the leadership structure Probability: 42%
Scenario 2: Why won’t they listen to us?REALTOR® Organization has done REALTORS® and the industry stickthe right things: with the status quo and: – By opening up channels of – Assume boomer values will communication with younger continue to rule the market members – Retain business and – By promoting volunteerism that operational models that have is important to Y’s worked in the past and – By providing more involvement assume will continue to work in governance by X’s and Y’s with X’s and Y’s – But still see membership – See numbers dwindle as decline as boomers exit the business moves toward fewer business and X’s and Y’s companies that recognize the become increasingly changes occurring productive using technologyProbability: 18%
Scenario 3: We don’t need no stinking badges?REALTOR® Organization has made REALTORS® and the industry adaptlittle progress in adjusting to realities by:and – Using many forms of – Retains the same leadership information and structure communication technology – Has a one size fits all view that appeal to X’s and Y’s as – Fails to listen to younger REALTORS® and consumers members – Becoming the first choice of – See influence and relevance younger consumers in a decline transaction by providing the “right” mix of services – Becoming increasingly productive with fewer members conducting moreProbability: 28% business
Scenario 4: Will the last one out the door turn off the lights?REALTOR® Organization has REALTORS® are vanishing becauseresisted change and – Many X and Y consumers find – Has a structure that is not it easier and cheaper to appealing to X’s and Y’s conduct a transaction – Sees a membership of mostly themselves or work with a aging boomers younger non-REALTOR® – Is unable to attract successful agent younger practitioners as – Fewer X’s and Y’s are members attracted to the business and see little value in being a REALTOR® Probability: 12%
Discussion• In the context of empowered consumers, do REALTORS® and the Association have the most complete understanding of the forces that will shape preferences of real estate consumers during the next decade• To what extent are baby boomer generation REALTORS® able to successfully meet the needs of a diverse, and often younger, clientele• What will be necessary to draw the next generation of future REALTORS® to the business and ensure engagement in the Association
Game Changing IdeasIn light of the changingdemographics…What “game-changing” publicpolicy might beintroduced, changed or repealedto position the industry for long-term success?
Issues and Challenges for the REALTOR® Organization• Younger generations see less value in belonging to “The Club”• Value of membership unclear for some members• Disconnect between impressions and attitudes of governing members and the rest of the membership• Organization is viewed as one of several providers of services, although advocacy efforts remain highly valued• Organization tries to be all things to all members even if many members do not recognize value of services• Competition from outside means that associations that are financially dependent on MLS are vulnerable
Scenario 1: National takes chargeNAR leads a restructuring of the REALTOR®organization – Eventual consolidation of locals and MLSs to no smaller than a metro area or regional market area – Focus on key constituencies to include brokers, emerging leaders, successful REALTORS® and others – Streamline leadership path to open more opportunities for Gen X and Y in governance – Create a new membership organization of property owners – Lead industry in adapting to newer and better business models and technologyResult is a more nimble, targeted and effectiveREALTOR® organization
Scenario 2:It’s too late baby!NAR has seen the competitive wave coming, but – Changes are slow in developing and endlessly debated given a disconnect between decision makers, members and governance structures – Leadership path remains long and discourages younger members from participating – Firms offer more and more services and members begin to withdraw from REALTOR® organization – MLSs and local associations become less viable as outside competition increases – Three-way agreement at riskResult is a much smaller REALTOR® organizationwith diminishing influence
Discussion• Who are the vital constituencies of the organization?• What is necessary to make the organization “younger”?• How should messages and services be targeted?• What is the proper relationship of the organization with property owners?• What is the appropriate organization structure for the future?
The Technology Environment1. Speed – Over the planning horizon speed of technology may increase as much as four fold.2. Power – Constant connectivity, large volumes of data and greater customization of information to accelerate3. Competition – Declining price of tech allows anyone to be their own business and compete with the largest players4. Responsiveness – Increasing speed leads to higher expectations of responsiveness by consumers5. Robustness – Consumers demand actionable, accurate, reliable information
Challenges to the Industry• Information Challenge – Expectation of constantly updated local information about properties – Consumers growing expectation of continuously updated consumer feedback including agent ratings – Peer advice through social media – peers become the “experts” – Determining the value proposition for consumers when data is freely available
Challenges to the Industry• Speed to Market Challenge – Instantaneous information transmission in all areas of business, among consumers and thru social media – Availability of better decision tools requiring relevant and accurate data – Increasing premium on being the first point of contact• Organization Challenge – Technology often transcends geography in organizations – Direct contact with and between members outside 3 levels of REALTOR® organization more easily accomplished today – May require tailored messages to many separate segments of consumers and REALTORS®
Threats and Opportunities Threats Opportunities• Someone will do it better • REALTORS® use tech to enhance• Growing tech gap between consumer experience consumers and REALTORS® • Creation of a global real estate• New tech standards for display market operated by REALTORS® of property information • Increased REALTOR® productivity• Diminished value of MLS • Segmentation of messages to• REALTOR® organization member subgroups relevance diminishes • NAR becomes a technology leader• Consumers use social • Attract consumers to NAR networking to form own • REALTOR® organization leverages advocacy groups technology benefits
Scenario 1:We are the drum majors of the real estate market REALTOR® Organization REALTORS® embrace use builds on opportunities of advanced technology to: created by technology to: – Offer the public the most – Use size and scale to accurate, complete and garner benefits and pass instantaneously available benefits along to members information about property – Adopt technology that – Reach the next generation increases speed and of younger consumers quality of communications – Attract younger people to with members the industry as a first career Probability: 42%
Scenario 2: The orchestra plays on but the conductor is out to lunchREALTOR® Organization REALTORS® embracefails to lead in technology technology andand – Are forced to compete with – Offers little or no guidance tech-savvy competitors to members on technology from outside the industry issues – Are leaders in the – Relies on increasingly presentation of property ineffective mass appeals information buttressed by to organize political action the accuracy of MLS data – Members look outside the – Offer compelling services organization as relevance to consumers who look to declines them as expertsProbability: 18%
Scenario 3:Why can’t I get these guys to play together?REALTOR® Organization REALTORS® unwilling toadopts long view, embracing change, leading totechnology and – Increasing disintermediation – Revamps communication as consumers turn to tech channels by segmenting driven companies messages and – Resistance to changes among communicating directly with older members while few members younger members – Sets up R&D function to join, leading to falling prepare members for outside membership tech driven competition – Small number of “survivors” – Provides compelling tech around which the association tools to members re-groupsProbability: 28%
Scenario 4: The stage is dark and the curtain fallsREALTOR® Organization REALTORS® continue toremains largely unchanged conduct business as usualwith and – Growing emphasis on “club – Fall behind in use of house” status technology expected by – Fewer and older members consumers participating and – See income and influence volunteering decline – Diminished effectiveness in – A small group of advocacy REALTORS® exploit technology profitably and abandon the association Probability: 12%
Observations• Technology provides consumers with new opportunities to gather information and make decisions independent of real estate professionals changing the Value Proposition between REALTORS® and consumers• Increasingly powerful business-oriented technologies may alter the relationship between REALTORS® and the REALTOR® Organization as the three-level hierarchy diminishes in importance• Technology will influence the REALTOR® organization – especially local associations and MLSs – as the barriers to the availability of real estate information are reduced
What is the Real Estate Value Proposition?REALTORS® and Consumers• Value is highly personalized – Consumers expect individualized service and attention to their needs• REALTORS® must connect with individual needs – Consumers drive the transaction and expect to have their needs met• The value proposition varies over time – Consumers’ view of value changes along with technology and generational dynamics• The value proposition is the balance between costs and benefits – Consumers expect to receive a benefit greater than the cost they pay.
What is the Real Estate Value Proposition?REALTORS® and the REALTOR®Organization• Information and communication – The organization supports the MLS, networking, business development, and the gathering and creation of information to serve consumers• Representation – The organization provides legislative and regulatory advocacy• Business tools – The organization provides information on, access to and training in tools to help REALTORS® serve clients
Challenges to the Value Proposition REALTORS® and Consumers• Maintaining long-term relationships with consumers – REALTORS® need to touch consumers through a variety of channels – If the relationship is unsatisfactory, consumers will go elsewhere• Efficiency of the transaction – REALTORS® need to understand the consumer’s needs, set expectations, customize services, but not waste their client’s time
Challenges to the Value PropositionREALTORS® and the REALTOR®Organization• Increase member awareness of value of goods and services – Organization services and communications need to be customized and targeted to a segmented member base through many channels• Put money in members’ pockets – Organization should craft its goods and services to provide value and meet evolving needs of members’ businesses – Organization should communicate value of services to members• Examine membership pricing – Dues model (e.g. country club pricing) may not offer the best value proposition to member
Scenario 1: That’s my REALTOR®;That’s my AssociationREALTOR® Organization makes REALTORS® engage themembership invaluable by: consumer by: – Being a technology leader and – Making them the center providing information and of the transaction training – Customizing services – Engaging in advocacy – Providing client feedback effectively and ratings – Raising public awareness – Having a command of among consumers technology – Providing information that – Communicating and defines the REALTOR® as an listening expert – Offering discounts on business tools and services Probability: 33%
Scenario 2: I’m terrific in mybusiness, but its no thanks to thatREALTOR® organizationREALTOR® Organization fails REALTORS® have become theto lead and market experts by: – Relies on the status quo – Effectively using information of the three-way and technology to serve agreement consumers – The governing members – Customizing their practice to are closed to new ideas the individual client and do not encourage – Developing a positive image member involvement in the community as trusted – Sees advocacy ceded to resources large firms and franchises – Firms become the primary source of member value – Membership drops Probability: 33%
Scenario 3: Why aren’t these peoplelistening?REALTOR® Organization REALTORS® unwilling to changeembraces change and and continue to believe that they: – Makes business easier – Are the focus of the and more profitable for transaction, not members consumers – Offers benefit packages to – Know better than members that are highly consumers because of personalized their knowledge and – Increases participation in experience advocacy efforts with – Are the gatekeepers of targeted member information communication – Need not be active in the – Raises the esteem the association public has for REALTORS® Probability: 18%
Scenario 4: Rearranging the deckchairsREALTOR® Organization has REALTORS® are unwilling toresisted change and focus on the consumer and – Continues to operate as – Lose their place in the it always has transaction – Fails to help its members – Fail to adopt “smart” adapt to new competitive technology consumers forces expect – Retains fewer, older, less – Are replaced by salaried productive members who sales people paid a fixed value the social club per transaction fee by a national firm Probability: 18%
Discussion• Already armed with freely accessible information, consumers expectation about what professionals add to the transaction has evolved.• The value proposition is influenced by generational dynamics – younger do-it-yourself consumers want a different set of services than other generations willing to let an expert take charge.• With growing competition to the REALTOR® organization from outside entities as well as large firms what does it take to cause practitioners to join voluntarily? How should this value be communicated to members?
Game Changing IdeasIf you weren’t afraid of failure oryou weren’t afraid of the word“no”…What are your “game-changing”ideas to position the REALTOR®to provide maximum value to ourclients?
REALTOR.org Resources• Field Guide to Strategic Planning• RARE – REALTOR® Association Resource Exchange• Research Data - Industry, State, City
REALTOR.org Resources • Buyers and Sellers Profile – Most Popular Research Piece • Member Survey • Contact Research for custom numbers
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