Sweat The Details – Looking Beyond Real Estate

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It’s often better to look through a different lens for inspiration and insight. Jonathan, Keith, and I talked about Nest Realty’s recent Lead Broker summit, where we brought the brokers from all of our offices to Charlottesville, and visited four Charlottesville-based companies to learn about their different business practices, and ways they have each succeeded.

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Transcript follows

Jonathan: All right, welcome back to Sweat the Details. This is Jonathan Kauffmann. We are here with Jim Duncan and Keith Davis sitting around the table and having a conversation about what’s happening in the real estate industry and what’s happening in NEST. We just finished. We just wrapped up our two day, or two and a half day-

Keith: Two and a half, yeah.

Jonathan: The lead broker summit. I guess the first question is what’s a lead broker? A lead broker in our world is one of our franchisees or leaders from our offices across the country. Right now, we have 12 locations in four states. We brought in leadership from all of our locations for the last couple days for our lead broker summit. We do it one time in the Summer, and one time in the Winter. This was our Summer get together. We’re the type of company that likes to, even though we do something every year, we like to change it up every year. Each year at the lead broker summit what we do is we talk about what’s happening in the industry, what’s happening with the market across the board, what is NEST up to, what have we accomplished recently, what are our projects we’re working on, what we have the next coming down the pipeline, the next six months or so.

Jonathan: This year we changed it up a little bit. Part of our DNA is looking outside the real estate industry at different companies to see what other companies, other successful companies, have done and are doing to continue pushing the envelope and staying relevant, and being successful. The first full day we spent together, we spent a morning and we split our group of, we probably had a little over 30 people with us here this time, and we split our groups into four groups, and sent them off to different successful businesses around Charlottesville.

Keith: Yeah. One of the things we always try to look at are areas of focus that we at NEST need to be really cognizant of and paying attention to, and with lead brokers, they’re spending all of their days running their business, working with their agents and they’re focused specifically on their area, and being able to get out and see other markets is always helpful. It’s just enlightening to see what other industries are going through. We did, as Jonathan just said, we split up into four groups that went to four different companies here in Charlottesville. We went out to Crutchfield Electronics. We went to the Draftsman Hotel, which is a Marriott Autograph Collection property. We visited Three Notch Brewery, and we had a group that went over to Farmington Country Club. We went to four very different places, but we had identified these groups because there are five focal points that we wanted to have all the brokers thinking about that translate well into things that leaders in the real estate industry need to be thinking about.

Keith: Our five points that we wanted them talking to these organizations about were number one, service training and how does one get their employees and independent contractor’s agents to be thinking in a consistent mindset of service. One was planning for corporate growth and really the strategies of when is the right time to go after opportunities and to change the model of your business. We had them looking at instilling corporate culture and being able to utilize your client base to help build that corporate culture, and how we work with our independent contractors. We were looking at companies, and we’ll talk in a second about Farmington and their long-term investments, and just the actual physical plant that’s important within an organization, and how that can change the long-term strategies. The final piece that we wanted them to think about was the importance of the local environment in which they operate, so how does a hotel like the Draftsman utilize the Charlottesville environment differently than an Autograph Collection hotel that’s up in Alexandria. Different markets, different important pieces, and so we enjoy going to these four places, and coming back and sharing what we found.

Jim: I think one of my favorite parts about the whole thing was at the end, as Jonathan was doing his wrap up, one of the brokers, he raised his hand and he said, “I just want to say thank you for doing this, giving us the opportunity to go to these different companies is something that we might not have done on our own.” It really opened my eyes to the way the service thread is consistent through all of them.

Jim: Keith, you were talking about Farmington. Were there any highlights for the team that went there that you wanted to hit on?

Keith: Yeah. We had specifically picked Farmington, and for the listeners who don’t know Charlottesville, Farmington’s a country club that started in the 1920s, kind of in the hey day of American clubs, and it has obviously gone through many changes over the near century of its operation, but in the last 15 years, last 10 to 15 years, it really has tried to reinvent and remake the way in which their membership utilizes the club. We wanted to talk to them on service training. Obviously, it’s a country club that relies upon service to maintain membership satisfaction, but it’s also a group where members have changed dramatically the way they spend time at the club. One of the things that we were really talking about … one of the larger projects that they’ve undertaken was they took out a nine hole golf course that was not used-

Jonathan: They took it out?

Keith: Well, they tore up a nine hole golf course, and in its place had rebuilt a 10 hole, par three course along with what’s called a short course practice area where you can … it’s really just more of a short, quick use practice area along with a new driving range, and the focus was because members don’t utilize golf courses as often now, as frequently, for five hour play. They want to use it for an evening after work with a child or with a friend, or with a smaller group of players, and being able to replace nine holes with something that is a more challenging, but an hour and a half event instead of a five hour event has changed the way … it’s reacting to the way members are changing their actual use and their spending of leisure time. Being able to think in terms of how we as a real estate firm are utilizing office space, changing from a time when agents required, demanded, wanted private use of offices to now more of a public Starbucks feel, if you will, within the offices. I think part of this is maintaining relevance to what your consumers, which in our case, are the agents, what they’re doing.

Jim: Right. I think the office space is a great analogy of the concept of we work and flex office usage across the country is people can work in a variety of different spots. Some of our locations we have multiple offices where agents can pop back and forth between different offices, depending on a. Where they’re located, but b. What type of work environment that they’re looking for at that time. If they need privacy, then they can rent a room, or reserve a room in a certain office. I think that’s a great analogy. That’s one thing that we’ve seen changing from an agent perspective is as we provide more online and digital tools that can be utilized that they can work out of their house, or they can work from a coffee shop, or they can work from the NEST office, or they can work from any restaurant anywhere, it’s important to stay ahead and stay cognizant of those trends.

Keith: Well, I think beyond the physical plant, because they have the obvious correlations, it’s also the fact that every real estate firm out there is spending more and more money on digital, whether it’s web, whether it’s social, whether it’s, in the case with NEST, with the creation of NEST print maker and being able to create on the fly marketing pieces. It’s just reacting to what agents are currently needing and currently doing, and the way they’re doing their job. It’s not reliant upon a 12 person staff who can custom design each flyer with a four day delay because that’s what Photoshop takes-

Jim: Right.

Keith: -and what those departments were doing in the past.

Jim: I’d push back on one word you used, reacting. I’d say that reacting maybe sometimes happens too late. I’d say when you’re paying attention to trends, and you can proactively make those adjustments. For example, your story about the golf course at Farmington. Clearly that’s a trend that you pay attention to what’s happening in the marketplace. You pay attention to the number of tee times that are being booked, and you proactively get ahead of all right our tee times are sliding because people don’t have five hours. The same thing has happened with office space. We did recently in Charlottesville rearrange office space. We have had five of our NEST offices have had renovations in the past 12 months, proactively getting ahead of the trends of office usage in the industry.

Jonathan: In Farmington, how did they sell the changes to the membership? Was there any pushback from a broader sense? How did they sell that?

Keith: We talked about it a pretty good amount. I think it has been … I think there are two different sides to that, and I think it depends on which group of membership you speak to. One of the big responses is that of the … I’m trying to remember the exact [inaudible 00:09:42] … of the 150 newest members. The average age is something like 17 years below the average age at the club itself. What’s happened is that, based upon its relevance to what the membership usage is, it’s also attracting a new class of members. I think the average age he was saying was 42 for the new members. It’s not just the golf. It’s a number of things. People were demanding more casual dining.

Keith: One of the responses was actually something that Farmington did that no other club in the country had ever done, which was they went out and invested in a food truck. They found a way to bring food, bring services to members in ways that they are used to seeing in their common, everyday life into that membership. I think when you’re asking how did members respond, the answer is the club was trying to predict what they were going to see, and bringing that to them in a direct and relevant way.

Jonathan: One. A Farmington food truck fascinates me.

Keith: Oh, it’s great.

Jonathan: Like that alliteration, I thought about that. I think that the thread that I heard through the conversations was relevance. You look at Three[inaudible 00:10:58] relevant with their brand with the three notches on the road. Crutchfield, we’ll come back to them in a second. The Draftsman Hotel, they try to be relevant to every location they go to.

Keith: Yeah.

Jonathan: It’s not a matter of dropping in a Marriott brand. It’s a matter of coming in and understanding who they want to be. I thought one of the interesting things was they put their staff on bus tours.

Keith: Mm-hmm (affirmative). Yeah. One of the items that the group who went to The Draftsman came back and said, “When they hired the staff, they put them on an eight hour tour of the whole Albermarle County, Charlottesville area,” so that when guests came to the hotel, and said I’d like to go to a winery, they said, “Oh, my favorite winery is King Family Vineyard. You ought to go out and try the Crose Rose.” They knew what they were speaking of, and they knew it from a first hand experience. That’s just something you don’t find at a Fairfield Inn.

Jonathan: When they mentioned that, I kind of want to take that tour, just to see what I’m missing.

Keith: Yeah.

Jonathan: I wasn’t on that tour, but it is also interesting that in the past, it seems like hotels would have a concierge that would sit behind a desk, and you would walk up to the concierge and say, “Help me with this, or get me tickets to this, or where should I go for this,” and what it sounds like what Draftsman is doing is they’re giving that knowledge of a concierge to their whole staff.

Keith: Yeah.

Jonathan: You can walk up to the front desk and you ask the bartender, and they’ll know that information. Just makes it much more approachable, right? We won’t get into this, but there’s a lot of banks that are trying to get away from the walking up to the teller, and having that gate that you walk up to a teller, and there’s this-

Keith: There’s a barrier.

Jonathan: There’s a barrier. That’s exactly right. That’s the word I’m looking for. This barrier and so removing that barrier makes it much more of a conversational situation.

Jim: I’m going to take that for a second because in Crose, where I live, to the west of Charlottesville, they built a new branch for the UVA Credit Union. There are two branches in Crose, old and new. The new one, there’s no barrier. The manager’s up there on a stool behind the four tellers. You walk in and he’s standing up there just being friendly, just as friendly as he was before when I went and got money, but it’s just a very different experience.

Keith: Not behind a door.

Jim: Yeah. It was the first time I’d seen a bank of that new nature, if you will, that removed that barrier and made it more accessible. They still gave me my money.

Keith: Yeah.

Jonathan: Shifting back to Crutchfield, for those of us who lived in Charlottesville, they’ve been around for 40 years. Something like that.

Keith: 45.

Jim: 45.

Jonathan: When I was a kid, the magazine came every quarter. You just devoured it. You looked at all the stuff. You read all the reviews. They’re phenomenal. They started 45 years ago. They made it through the crash. They made it through the Amazoning of the world, and they’re still a remarkable company.

Jim: When you think about the number of legacy catalog companies, forget the fact that this is electronics, but just true catalog legacy companies that just have fallen by the way side, have no place, if they’re even in business now, it’s a struggling piece. I was listening to a podcast recently on Lands End catalog and the recreation of trying to keep Lands End going with Sears and those tie ins. It’s fascinating. Crutchfield has managed to exist in a world of Amazon and Best Buy, and maintain family ownership, maintain a focus on the people who work there. One of the great stories I heard was when they were talking with the HR guy, he said, “We do count our employees, but we really think of them more as being the number of families that we’re responsible for,” and that that’s an important factor of how Crutchfield looks at the entire culture of the organization.

Jonathan: Right. I spent about 90 minutes there the other day with the team, and it seems like they really are a big family business. They care about their people tremendously, and it shows. It shows just walking through the halls. People knew each other’s names. It’s a great vibe, a great tone. One thing I’d say, we talked to them about what their onboarding process was, about when they brought people on new, new employees, what they did, and they like to tell … they didn’t just like to say, “Hey, here’s the values of the company and list them out.” They like to tell stories to explain those values, and why they were important to the company. I think that’s something great for us as a brand to think about is not just say, “Hey, we care about professionalism, or we believe design is important.” That’s one thing, but being able to show and tell stories about why design is important, how it’s helped our agents build trust with their clients is something like we can take from that.

Jonathan: They also with their new employees, they put them in touch with existing employees. They want one of those existing employees to tell their journey to get to Crutchfield, and about their time at Crutchfield. Once again, it had a storytelling approach to it, but it added personality to it. It added a familiarity with the face, and just really, I would imagine, helped to build that vibe and that culture a lot quicker than if somebody came in on day one and they were just, said, “Hey, here’s your desk and your computer. Meet people at the water cooler.”

Jim: There’s something also that, again reflecting back when I was a kid, and that’s just where you went to get stuff. We had Circuit City and Best Buy and Crutchfield, and you just went to Crutchfield because they all knew what they were talking about.

Keith: Right.

Jim: You could go in and you could go to almost anybody in the store and say, “I need to hear about this receiver, or this stereo set, or whatever.” They knew the answers to all of your questions.

Keith: Well, somebody asked if they still do the catalog, and I was humored by the fact that literally a week after we set up the meeting to take the team to Crutchfield, I actually got a catalog in the mail from them, but it’s not a catalog. It’s not a turn to page 12 for stereo receivers. It is on page 12 is story about Jim and the car that Jim drives, and why the equipment that he has in it is there, and why he recommends this sub woofer, or this amp. It’s still about the people who are there, and connecting with them. It’s that storytelling aspect of how do you add a little bit of value beyond here are the ohms. It’s not a stat sheet anymore. It’s a personal referral for every product they have.

Jonathan: One of the aspects with Crutchfield is how ahead of the time they were. Being a 45 year old company, the things that they were doing, two day shipping, one day shipping, two day shipping, years ago even before Amazon was even a word.

Keith: Right.

Jonathan: They were doing that. That’s amazing. The proactivity of training their employees, and having their employees know the products out there, so they could answer those questions, so they could help somebody install it, all that is what’s helping them thrive in an environment where Amazon and Costco and other companies are coming in with much lower costs, but Crutchfield is adding value. The word that they kept using over and over was how do we add value? They don’t see themselves as adding value just by selling a piece of electronics equipment. They add value through experience and through expertise, and through how do we install this, or how do you install this. They were the first company in the country to have a 1-800 number for customer service and tech support, which is phenomenal. Every 1-800 number up until that point was sales. If a company had a 1-800 number, then it was to sell something to you. They were there. They staffed the customer service center just to help people answer questions about how to install equipment.

Jonathan: The other thing that I think they did that was just simple, but ingenious is you’d get stereo equipment in the mail from Crutchfield after you order it, and there would be this gaggle of wires, like “What do I do with these wires?” They thought well geez people get confused by this, let’s have a better customer experience for them, so they started labeling all the wires so when they opened the instructional manual, or when they called the 1-800 number, they knew hey the red wire is for S video, and the green wire is for this, and the yellow wire is for this. Those are just little things that really can help improve the customer experience, and will keep people being raving fans of Crutchfield.

Jim: Opening that box, it’s intimidating. It’s stuff you don’t know, and it looks scary. It’s a mess of wires that you don’t know what to do with. I think we were talking before we started recording, their role is to simplify the process, and to explain it so that you can understand it; make it accessible. Sort of like what we do with our agents. We try and make it so that our agents are in a position to explain to the client here’s what’s coming down the line.

Jonathan: Right.

Jim: We’ve been working on our internal transaction management and customer relationship management system for the last year now. In rolling that out … it’s called Envoy, but what we’ve rolled out to our agents is now a system that once a client goes under contract, they’ve got a portal where they can come and go, and not just see what’s going to happen, but be able to see the steps that have been taken by the agent that maybe the client wasn’t having to see every piece of how the sausage is made kind of thing, and instead they’re getting a list of what’s taken place, when it took place. They’ve got documents at their disposal. It’s just again trying to simplify the process for clients. It’s trying to make it something that’s accessible, and not terrifying.

Jonathan: In the lead broker summit, we were talking … what was the number of times that clients have checked in on the What’s Next portal?

Keith: Right now, when a client has access to a client portal, they’re logging in average of 11 times during the transaction to check up-to-date to see what’s happening with their transaction. The idea behind our client portal is to relieve stress. Buying a home, selling a home is a stressful process. We all know that. Getting consumer electronics from Crutchfield and being alone in your home with this gaggle of wires and stereo equipment, and trying to figure out how to install it, that’s a stressful experience. Crutchfield was proactive and figured a way out to hopefully relieve some stress. That’s what we’re trying to do with our What’s Next program client portal.

Keith: I’ll just go … give you the quick background behind it. Probably about four or five years ago, I was sitting at my desk and one of our agents in Charlottesville was on the phone with an unhappy, stressed client. It was a couple minute conversation. I was eavesdropping. The agent came into my office and he said, “I need some help here. I just listed my client’s house three days ago. It went under contract in three days, and he just called me up and he was stressed that his property that we listed was no longer showing on the portal. It wasn’t on Nestreal2.com anymore. It wasn’t on Zillow. It wasn’t on realtor.com. It wasn’t on Trulia, and he was upset because he wasn’t sure if his property was going to actually … there was no contingencies, and he wasn’t sure if it as going to make it to the closing table,” so the agent, in his mind, he sells 30 to 40 houses a year, and says this is what happens when you put a property under contract, you mark it as contingent in the MLS, and it stops syndicating to the portals. Our agent knew that. He just forgot to tell the client because this is what we do every day.

Keith: What that was was it was a trigger to us to say, “We need to build a program where an agent, after a property goes under contract, hey what’s next? You have a listing, and it sells, what’s next? You have a buyer that goes under contract, what’s next? We put together, four years ago, a What’s Next program, which was a step-by-step process of what happens next during the transaction, and we honed that over three or four years, and we have turned in digital now with an envoy that an agent can press a button, and clients have access to a portal and they can track that almost like … we joke a little bit, but the Dominos pizza tracker, when you order a pizza from Dominos, there’s a tracker, so if you spend $7.00 at Dominos, you get a pizza tracker, and if you buy a house with Nest Realty, you get a transaction tracker to see what’s happening, what your responsibilities are, and what we’re working on.

Jim: Keith, I’ll put this on you. Was there a thread through all four places? I know you mentioned the five topics, but was there one common thread?

Keith: It’s funny. We came up with the five topics that we wanted to study. We looked for companies that we felt reflected at least two of those values, and could speak to them specifically. I think in the end, every single group came back with one focus, and that is that management had to have an absolute priority of what they wanted from their organization, and that it had to be completely focused on the people that were either members, or employees, or whether it’s consumer client, however you want to phrase it, but it was the focus … each of these groups from Three [inaudible 00:25:03] to Draftsman, they’re all focused on the people who are using their product, and they were benefiting from it. It’s people.

Jim: Yeah, but I think there’s something that … we talk all the time about the things that we do as technology evolves. Crutchfield’s changed a little bit in 45 years with technology. The hotels have changed. These have all changed, but the one commonality through everything are the humans.

Keith: Yep.

Jim: The human factor is the thing that continues to be the focus for everybody. I think that the recognition of the, frankly the humanity of what we do and what they do in making sure we’re focused on the right things, both from our perspectives, the clients, the agents, our team is the thing we need to do.

Keith: It’s interesting. We’ve done these summits now for eight years for our agents and lead brokers. Maybe nine years for our agents, and this is probably the fourth year of lead broker specific gatherings. This is the first time we’ve gone out and done the actual site visits. We’ve talked a lot about what other companies are doing, but we haven’t done the site visits until now, and I can say, “It’s eye opening to be able to get in and see what other industry leaders are doing in their organizations, and how it relates. It’s just … it was a fantastic couple o days.

Jonathan: I agree with you. I think that one thing that we have taken away from these meetings is we would love to start to bring in some of these folks that we met with for future podcasts, and talk to them and really drill down even more because I think there’s a lot more we can learn. I know that through conversations that we’ve had with these other businesses that they were eagerly awaiting from us. I think that there’s a lot to learn about there.

Keith: Knowledge sharing is a good thing.

Jonathan: Cool.

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