This is part four of a series of posts based on The Ten Day MBA by Steven Silbiger.
In our last post, we talked about Market Analysis with a focus on real estate markets. Competitor analysis is a big part of market analysis since your potential market will be determined, in part, by the quality, expertise, market share, and vulnerabilities of your competitors.
In order to analyze your competitor, you need to be able to analyze yourself as well. According to Silbiger, you need to answer a number of questions including
What are your advantages?
What things do you do well?
What are your weaknesses?
How can your company capitalize on its strengths and exploit your competitors' weaknesses?
What's a SWOT?
According to Silbiger, SWOT is a framework MBAs use to organize the questions above. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats.
Strengths and weaknesses are internal factors -- they come from your performance, capital, and even personal factors.
Opportunities and Threats are external and driven by the market, competitors, and even large-scale factors like the economy and politics.
Here are some questions to help you analyze your SWOT.
What is your company good at and what is the competition good at?
If you are well-established in your career or market, you may have a good way to differentiate the value you bring to your work. If you are just starting out, you may have more difficulty with this question.
Either way, you need to be able to answer this question both in order to steer your business and to effectively compete in your market.
Business schools call these core competencies, and many Realtors tend to fall back on a few cliched ones: service-oriented, great negotiator, market expert. While all of these may be true, they are the same things that everyone is saying in your market, including your competitors.
There are a number of ways to differentiate your service from that of others:
Designations and Certifications
Leadership Positions at the Association and State Level
High-Profile Media Appearances
Niche Specializations
Expertise in Investments
Staging Services
If you are numbers-oriented, you can analyze your stats and use them to advertise the advantages of working with you. For example, you might have
Fewer Days on Market for your Listings
Higher Average Sale Prices
Exceptional Sales Numbers over the Previous Year/Lifetime
Who are you in the marketplace?
Again, you may just be beginning to think about this or, if you are just starting out, you may not yet have a defined place in the marketplace.
Some of the elements to consider are
Market Size and Market Share
Financial Position
Historical Performance and Reputation.
For real estate, you may also think about
Niche
Neighborhood
Size (Team vs. Single Agent)
Areas of Specialization
Types of Clients.
If you have been in the business or in your local market for a while and don't know who you are, you might want to take a look at the transactions you have done over the past few years.
Do you tend to work with first-time homebuyers? Do you tend to do a lot of business in a particular area? Do you tend to draw people who are interested in a particular neighborhood or type of property? Have you developed a specialty through experience e.g. Senior transitions, land sales, luxury homes?
What are our resources versus those of the competition?
This can be a difficult question, especially if you are a small player in your market competing against a much larger competitor. However, remember to focus on the positive here -- they will have overhead that you do not have, thus their revenue requirements and expenditures will outstrip yours.
Alternatively, if you are the larger player, you will have resources of capital, space, and staffing that you can leverage in a way that your smaller competitors cannot. It is important to ensure that you are making use of these -- if you pay for a large office space, ensure that every inch of it is being used in a way that will make you money.
Remember, resources can take a variety of forms. One Fairfax VA agent I know owns a box truck with her company's logo and the promise that when you buy or sell with her, you get free use of the truck for moving day.
You may not be in a position to buy a moving truck, but you may be able to pay for a one-day truck rental out of your commission. That could provide a similar incentive without the financial outlay (though you'll miss out on the advertising potential of the branded truck itself).
What are the market shares of the industry players?
In some neighborhoods, there is a clear winner who essentially "owns" most listings in the market. This may be someone who lives in that area or just someone who has put a lot of time, effort, and expense into circle prospecting that particular neighborhood.
If you are in a large metro area, there may be a wider market distribution. In that case, market segments may be dominated by one or more major players. For example, some brokerages may specialize in condos and pull a great deal of that market share.
While specializing in a particular neighborhood or niche may be a great strategy for growth, keep in mind that you will want to diversify over time in order to avoid setbacks should there be an adjustment in the popularity or size of your chosen micro-market.
How does my service perceptually map against the competition?
Perceptual mapping is a visual technique to help you determine how your product or service compares to others in your market. While products often map based on price and quality, there is not as much differentiation in these within real estate services. Therefore you will need to choose other factors.
You might choose to look at the following factors:
Brand Recognition
Luxury/Prestige
Local Reputation
Advertising Coverage
Niche Ownership
Neighborhood Ownership
Office Location/Visibility
Say I am analyzing an independent brokerage called Pierce Murdock Group within the luxury market in my large metro area. I might choose the two factors of local reputation and brand prestige. My map might look like this:
In this case, Hometown Realty has a great local reputation with major market share, but they are not thought of as a prestigious or luxury brand. Valu-RE is considered a low-cost alternative and do not have a large share of the local market.
Christie's and Sotheby's are well-known luxury real estate brokerages, but your local market does not have offices for either of these brands. Pierce Murdock Group is the ideal combination for the two factors you have chosen to map -- it has a solid local presence and is considered a luxury or prestige brand.
Determining what factors are important to you and where your brand is positioned is key to understanding your place in your local market. In addition, if you have multiple areas of specialization you will want to analyze your brand's perception for each.
How is my service positioned against the competition?
Determining your Unique Selling Proposition (USP) has been a goal in advertising and marketing since at least the 1960s. What you do better than anyone else, what you bring to the table in a new, unique, or superior way -- these are the core of your brand identity and your potential value for the client or consumer.
Ten Rules for Positioning Your Service Against the Competition
In order to formulate a USP, try running through each of these possibilities. One (or more) of them may give you a way to differentiate yourself from the competition.
1. Own a word in the consumer's mind.
Just as Xerox means "to copy," Kleenex is a tissue, and Jell-o is gelatin, if you can make your brand synonymous with the service it provides, you own the market.
This may seem impossible when it comes to something as ubiquitous as real estate, but that doesn't mean it shouldn't be a goal. Your marketing should be designed to make your name or your company name the last word in real estate in your market.
2. Positioning begins with a company's name.
Think about what image is conveyed by your company name. Whether you use your own name, a team name, or a brokerage or company name, it should be descriptive, convey a benefit, or otherwise draw in potential clients.
3. If you have a new service, use a new name.
If you have an established brand and want to diversify your market reach, you might want to create a new brand identity, including a new name.
For example, if you have been successfully selling residential real estate under your current branding, you might want to create a new brand identity in order to move into the luxury market.
The new branding can be related to your current brand, but should be sufficiently unique to differentiate and better position you for success in the new niche or segment.
4. The easiest way to own a word is to be first.
If you are creating a unique niche for your local market or breaking into a previously underserved market, consider creating a unique word to define the brand. If you can make your name synonymous with service to that area or segment, you create ownership.
5. Don't stray from your message.
Consistency is key in cementing your brand in the consumer's mind. Real estate is notoriously bad at creating brand loyalty on a large scale, but consistent branding coupled with a consistently delivered message can create brand loyalty on a local or niche level.
6. The best way to respond to a new competitor is to introduce a new brand, not blur the original one.
If you have a well-established business, a new competitor may take the form of an agent, team, or brokerage pursuing a particular niche or market segment -- and looking to chip away at your market share.
Rather than trying to compete for a segment from the position of a generalist, creating a new division -- complete with a new brand identity -- allows you to compete more effectively and define your value for that particular segment.
7. The first option for a follower is to establish a new category.
If you are a smaller player trying to compete against a larger, more dominant brokerage or agent, establishing a category -- niche, market segment, or other specific service -- will help you better define yourself and your UVP.
8. The second option for a follower is to find an open position in the consumer's mind.
If there is an underserved segment in your area -- first-time homebuyers, homebuyers with credit problems, senior citizens and empty-nesters transitioning out of large family homes -- making yourself the brand for that group allows you to peel off market share from the larger generalists in the area.
9. The third option for a follower is to reposition the competitor to undercut the leader's concept, product, or spokesperson.
Calling into question the larger competitor's service may allow you to cut into their share. For example, a message that emphasizes "personal service" may be very effective against a large real estate team. A brand that emphasizes youth and glamour can compete favorably against an older, more conservative brokerage's brand.
10. Stay consistent with the positioning you choose.
Whatever you choose, hang in there and keep working with the model you've designed. Use content marketing to create a substantial and robust digital presence and use a consistent social media plan to keep your brand in front of potential clients.
One of the things that undercuts many agents' marketing efforts is impatience. It takes time to establish a brand and still more time to help it take hold in the minds of local consumers.
Consistent outreach and consistent brand identity over the course of years -- especially when coupled with additional focus on geographic farming, market segmentation, or appeal to specific niches -- can help you build your business and outlast the competition.