Countrywide’s strategy to combat the rising tide of online agencies has come at a pivotal point for the whole industry.
But its venture into online agency is not a ‘fighter’ brand, new analysis has found.
Proptech experts Eddie Holmes and Mike Delprete conclude that “significant changes” are needed if Countrywide’s digital offering is to succeed.
The pair claim that by using its existing brands, “Countrywide is not likely to reach new customers in new ways. Instead, it is only reaching those potential customers who already know their existing brands . . . There it only serves to cannibalise the existing customer base by selling them a lower priced service while simultaneously failing to bring in new customers.”
The respected pair say that for every disruptor such as Purplebricks, there are those being disrupted.
These include Countrywide, whose share price has halved over the last year.
The analysis claims: “We’re at a pivotal point for the entire industry and for Countrywide in particular.
“Countrywide is a business in decline, and the line between death spiral and a rebirth is razor thin.”
Their analysis says credit should be given to Countrywide, which launched its online offering last year. It says the UK’s biggest agent moved early and quickly, but goes on: “Countrywide’s strategy raises serious questions around the viability of the offering and if it was, in fact, designed to fail.”
The pair conclude that Countrywide’s online offering is a brand extension, acting as a lead-generation effort to support the incumbent business.
They also claim it was launched after an “inconclusive pilot”.
However, Holmes and Delprete say that Countrywide “ought to be congratulated for doing something”.
They say: “Countrywide felt forced to do something; online agencies are perceived by the financial markets to be the greatest threat to its existing business. Purplebricks’ continued momentum, market traction and rising stock price demanded a response from senior management.”
But they conclude: “However, customers don’t seem to be buying the new service and the markets aren’t buying the strategy.
“In reality, the brand extension offering cannot succeed on its own. At best, it achieves product parity with online agencies, and offers a platform to upsell potential customers to its premium estate agency proposition.
“However, it does not suggest that the business has thoroughly understood the challenges that this must create around issues such as incentivisation of staff or servicing a totally new service line with the existing infrastructure and cost base.
“If Countrywide’s offering was designed to fail – that is, to not succeed as a stand-alone business or product, but as lead-generation for its existing business – it does not mean it is a bad strategy.
“In fact, it may be the best course of action for the large incumbent as it is relatively low risk and keeps its options open.
“But if the offering was not designed to fail, significant changes are clearly required to give it a chance of success.”
The authors of the analysis did ask Countrywide to comment on what is undoubtedly interesting stuff.