Skip to content

Defining the Customer

July 26, 2008

This is from a conversation I had at Inman SF ‘2008. Perhaps conversation is too dignified a term for what was actually going on at the time, since all of the participants were three sheets into the wind by that point in the night. Let’s call it more like… inspired spouting of words between people who were far too happy for that time of night. I believe the participants were Jeff Corbett, Daniel Martin, Joseph Ferrara, Dr. Salvatore Giammarresi (who just might be the smartest guy in real estate), and Jessie Beaudoin from Retrove. I say “I believe” because well, see aforementioned number of sails and the wind and the effects thereunto. For all I know, Santa Claus was at the discussion and I may not remember.

Nevertheless… we somehow got onto the topic of business models because I had recently written a post criticizing Zipvo’s business model. Let’s just say that some of the folks agreed with me, while others thought I was hitting the ye olde pipe pretty hard. When you’re in San Francisco, with a bunch of young real estate tech people, discussing startup concepts, business models, and such is inevitable. I just couldn’t help but think that many of the ideas I was hearing were weak, and fundamentally weak, because of a simple definition problem: Who is the customer?

This is not to say that the ideas were bad, or that they did not create value. They most assuredly did. But value creation and customer definition are actually two different things.

Take our friends at Trulia, for example. They create immense value for consumers by providing a great user experience for finding a place to live. They create value for real estate professionals who need to market properties for their clients. They create value for the network of developers who use Trulia’s API’s to create even more value. And so on. But who is Trulia’s customer?

That leads me to this pronunciamento: The customer is the guy whose name is printed on the check.

In Trulia’s case then, the customer is the advertiser. Not the real estate agent, not the consumer, not the blogger, not the developers, but the advertiser. Because it is the advertiser who pays Trulia for its services. It’s obvious, of course, once you state it that way; it’s just that the obvious is easy to miss.

What results from defining the customer?

For one, it clarifies the business that a company is actually in. Trulia is a media company, no different than NBC Universal in some way. (Well, Trulia doesn’t run theme parks… yet.) It produces something that makes a lot of people gather, then sells access to that audience to someone who wants to reach them.

For another, defining the customer helps to identify the key drivers, the key metrics of success. The value of a media channel to an advertiser is dependent not only on the size of audience, but also on the demographics and psychographics of the audience, as well as the response rate. An interesting thing happens when you apply this to real estate brokerage – and especially to the real estate blog (meaning, blogs operated by brokers/agents focused on lead generation).

First, in brokerage generally, the guy whose name is on the check is the seller. You might have two agents, one representing the buyer and the other representing the seller. But both get paid by the seller. As far as I’m concerned, that makes the seller the customer. Others have written why this could be a problem, and I frankly can’t see why they’re wrong. Even with an exclusive buyer’s agent, if he’s getting paid from the proceeds of the sale… and the seller’s name is on the check… sorry, the customer is the seller.

Second, the real estate blog can be thought of as a media company that is supported by advertising. In most cases, we don’t think this clearly about it, because the agent and the blogger are the same. But really, the agent-half is effectively writing the blogger-half a check (in the form of free labor, that has an opportunity cost, by the way, as well as server costs, office, computer equipment, etc.) to produce content to get potential clients to visit the blog in order to advertise to those people.

The same metrics for success then apply to agent blogs as does to media companies: size, demographics, psychographics, and response rate.

Too many agent bloggers make mistakes at this stage, from what I can tell.

They confuse reader loyalty with success. This is natural, of course, when you are an agent-blogger and all the comments, the readership, and so forth satisfy the blogger-half. But if you think of your customer as the agent-half of yourself, then the only thing that matters is the quality of the audience.

On the other extreme, sometimes the agent-bloggers look only at raw count of leads. This can lead to error as well when the leads don’t appear to live up to expectations. The issue here is that the publisher side of the agent-blogger can be doing a great job, but the advertiser side is not. Let me put it this way: if the size, demographics, psychographics, and the response rate of the audience of the publisher are all good, but I’m not getting the results I want, then probably, the fault is with the advertising message, or with the sales process itself (i.e., after the lead comes in, what happens to it). The right thing to do is not to tinker with the publisher, but to improve the advertising or lead management. With agent-bloggers, that means trying different advertising messages, rather than messing with the content that’s working well to draw the audience you want.

Additionally, because the agent-blogger is not conceptually thinking of herself as advertiser on her own blog, she doesn’t do the things that an advertiser would naturally do. She doesn’t ask questions about audience size and demographics. She doesn’t think much about the advertising message. She doesn’t give much thought to lead capture, lead management, and the sales process – including tracking that lead through to the final transaction.

There are more insights to be had here, and more things to delve into, but it’s just a start of the investigation. The power of the right question is undeniable. In so many cases, that right question is, “Who is the customer?”


6 Comments leave one →
  1. July 26, 2008 11:41 am

    I absolutely have to agree. When you answer the question “who is the customer?” however, you find yourself at the edge of another question that seemed undefinable during the “productivity” session at Inman: “What is Productivity?”

    When you have defined your customer (your consumer) you begin to ponder what steps toward customer acquisition are productive.

    The answer: anything that changes tho “who?” to “when?” It isn’t a matter of “if” people want to by a home it is “when.” Most don’t even consider the stages of the buying process until they are ready to pull the trigger. That is normally when they ask the question “who will assist us?” Will it be an agent? Will it be a FSBO and an attorney? Will it be their uncle Bob?

    I define productivity as: removal of the “who” factor. When you have a loyal army of consumers dedicated to using your brand it will only be a matter of “when” they buy. A strategic plan (not tactical maneuvers) developed and implemented for your niche with the expressed purpose of removing the “who” factor will create consumers who will willingly sign checks.

    The only question that remains is: “how do I spend all the money I have made?”

    Only you can answer that.

  2. July 26, 2008 12:34 pm

    @Daniel –

    I like it — moving beyond the “who” stage to “when” during the acquisition process.

    Thing is, you raise a critical point that we probably need to discuss as a community at some point: value of the agent brand. I feel like some of the points being raised on the whole Trulia Blog vs. ActiveRain blogs are related to this notion of the Agent Brand.

    A strategic brand plan is not exactly easy; nor is it what most people think it is (IMHO). Yes, when you have a loyal army of customers, it’s a wonderful thing. But I’m not convinced that the same metrics apply to real estate agents as does to, let’s say, Apple.

    I smell a post in there somewhere.


  3. Louis Cammarosano permalink
    July 26, 2008 8:35 pm


    Thanks for this.

    When the advertiser is the customer of a real estate site that relies on acquring and displaying realtor content a potential conflict exists.

    The realtor views the relationship with suspicion and opportunity.

    Companies that exploit the opportunity only are able to do so because the realtors don’t do it themselves.

    They should not be heard to complain about lost territory when they participated in relinquishing it.

    Would have loved to have been part of your conversation, but my disappearance was the subject of another topic that evening…

  4. July 27, 2008 5:07 pm

    If I remember correctly you instigated a lot of the inspired conversation with the introduction of your friend named Jack D

  5. July 27, 2008 11:48 pm

    Ah yes, my friend Jack D. He doesn’t talk much, but somehow inspires all sorts of random verbalizations from everyone who meets him.


  6. Shell Smith permalink
    July 30, 2008 10:52 am

    I think you made some great points here. Who is the customer is such an important thing to ask – because quite frankly I think Trulia sometimes focuses to much on the agents, and not they buyers. I think another thing to ask is what is unique about us? I think with the many engines out there each ones needs their own thing. For example, PropertyMaps and their google maps/mls tool. This is one I recently found…but there are so many. Anyway, thanks for the great information, and good conversation topic.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: