Yesterday Countrywide announced the reaffirmation of their ‘Back to Basics’ plan which, in a nutshell, sets out that they will seek to grow their fee pipeline ‘back to 2017 levels’ by re-hiring some of their former experienced colleagues. Plus they are cutting one third of their head office costs.
There was also a further profit warning, one of several in the past two years, whereby EBITDA is expected to be some £20m lower than forecast.
But nothing about a proper future proof strategy. Or any acknowledgement of the way that the consumer is driving the industry. Or any mention of installing a CEO which, one would imagine, is rather key to providing reassurance to investors that the ship is now steering away from the rocks.
Consequently Countrywide’s share price has plummeted.
The explanation as to why Countrywide has suffered so much is apparently because estate agency is cyclical and because ‘the London market is slow’. But as far as explanations go, I’m afraid this is really window dressing.
Countrywide must face reality. The reality is that the industry is changing and the consumer no longer wants (or will tolerate):
- Unjustifiably high fees
- Inaccessibility
- No customer empowerment
- No transparency over their transaction
- Poor service
The answer is to work with the consumer rather than against the grain and by providing them with what they are used to where their other buying experiences are concerned. The solution is not to ‘carry on doing the same as we did up until 2015’ and to ignore the direction of travel that the industry is being taken in.
Because if that attitude prevails as it seems to have done, then Countrywide’s value will continue to be decimated.
The solution to the demise of this once fantastic business is obvious to me, albeit to the incumbency it is probably unpalatable at first glance.
The traditional high street estate agency model does not work that well. It’s predicated around high (and rising) fixed costs and the consumer being on the hook for those costs, whereas in all other verticals now, that premise has changed (Amazon, Ocado, Expedia, Monzo etc).
But not everything about the incumbent model is bad.
Countrywide for instance has a great basket of brands. A good name in estate agency. Some awesome people. And once their debt mountain of circa £200m is mitigated, a decent balance sheet.
They’ll have to sell off some of their portfolio first, although the likes of Gascoigne Pees, Greene and Co, Lambert Smith and Taylors do have value if run properly.
In refusing to understand, acknowledge and adopt the ‘newness’ now prevailing in estate agency (and proven by the growing market share of PurpleBricks which is now a £1bn business, more than five times Countrywide’s value) renders the high street giant unable ever to prosper.
That ‘newness’ is characterised by the following:
- A technology platform that delights and empowers the customer 24/7 and substantially reduces the cost of servicing each customer but with no compromise on service.
- In fact, service becomes enhanced as it is perfectly possible to use a blend of great people and brilliant technology (if done correctly and with experience in such things) to improve customer experience to a 90%+ satisfaction (Emoov have a 9.3/10 Trustpilot score and is also rated the UK’s number 1 hybrid estate agent on allAgents.co.uk).
- Marketing is a complex animal these days. But no longer is estate agency marketing about window displays, press ads and door drops. It’s about performance marketing, PPC, SEO, affiliates, Paid Social and a balance between clever brand building ATL creative and its effect on digital (if you don’t know what ATL is, that’s exactly my point). The consumer searches and procures services differently now and this needs to be understood. My belief is that within Countrywide and the like, this maze of non-understanding is very much an ‘unknown unknown’ still.
- A modern team – across property, technology, marketing and finance.
Our sector is undoubtedly seeing change. And I believe my own business, Emoov, in particular understands this and has executed on what the future looks like.
We’re no stranger to a merger deal now, having just aligned with Tepilo and Urban to become the UK’s seventh biggest estate agency group, combining the best bits of all of these brands and consolidating the sector to put distance between the leading pack and the others.
So the natural progression to that deal is for Countrywide to merge with someone that can provide these vital new ingredients, forming a combination of the best of the traditional and the best of the new. A ‘paper’ deal that existing and new shareholders would surely savour and benefit from. Indeed, under the right direction and with ‘future proofing’ I can see its burned-out share price reigniting so that it has the decimal in the right place once again.
This deal does not mean ‘no branches’, but it does mean fewer than now.
It does not necessarily mean fixed fees at £800. But it does require an acknowledgement that home-sellers will not pay 2% any longer.
It does not mean that Countrywide becomes an ‘online agent’. Hell, I don’t even regard Emoov as an online agent. Just a great estate agent that’s better than most and which charges a fair fee. The label does not matter, at least not to the public.
Amazon are buying grocery stores. Ocado is facilitating traditional retailers’ supply chains. The tobacco manufacturers have purchased all of the E-Cig companies. Oil companies are now ‘energy companies’ and invest heavily in sustainable solar, wind and wave technology rather than seeing them simply as a threat. And the once staid car manufacturer now understands that developing electric powered, driverless vehicles is no longer the realm of 1970s science fiction or mad billionaires, but a consumer led environmental necessity that also has huge economic benefits.
Countrywide could be great again and I want it to be. But it’s an experienced horse in an automobile world and now it needs a car. And a driver.
I’ll be waiting by the ‘phone…
* Russell Quirk is founder of Emoov, which has recently acquired Tepilo and Urban
#fakenews
Stick to facts not propaganda.
Until pay any way is abolished p.i.e. needs to ban them any airtime.
So should rightmove.
Has quirk bought p.i.e.??
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Mr Quirk is not wrong, but not entirely right either.
The biggest mistake online agents made was the fixed fee. Consumers don’t understand the probabilities in selling and what the online agent did was pass that risk onto the customer. FYI – that risk isn’t transparent Mr Quirk.
The biggest mistake countrywide, as well as other local agents did, was not stick to their fee structures. Compete on service, not price. So many local agents have let their average fees drop significantly for no good reason. Purely out of fear of objections on fees. Paired with a slow market e.g low transaction volumes, have crippled margins. For example I don’t worry to much about Foxtons. Their average fee has actually increased slightly over the last few years and the drop in revenue (and therefore hit in profits) is almost exactly inline with the percentage drop in London transaction volumes. My point is their Market share has stayed flat.
Bottom line I agree Mr Quirk. Online or Local. Who cares. The winner of the future will be a mix of the two.
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why would Countrywide take advice from a bloke who’s company has never made a single penny in profit?
In fact things are so bad they even had to merge with two other struggling businesses to help cut costs.
As for suggest emoov understand what the public want ….. their market share is pitiful after more than 5 years. The public do not support them financially which is why they keep needing to be bailed out by investors money.
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Countrywide is a horse in an automobile world.
Frankly, a horse would have done a better job of running it these past few years.
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ASSISTED FOR SALE BY OWNER SITES like Purple Bricks, Emoov are also struggling to make a profit and always will.
The underliying issue with the UK property market is government policy. MMR, Stamp Duty, Section 24 etc…..
Quirky is comparing a retail industry with a service industry and thats the issue.
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Look what happens when estate agents relentlessly follow the retail model…ask Alison Platt and the shareholders how well that played out!
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I think Mr Quirk should look at his own problems first before commenting on others.
“Local” – having 24 “Experts” covering the whole of the country must either be a proper stretch or more likely they dont have enough to do
“Equality” – Something must be wrong in the culture of Emoov. Estate agency is well know for having a great balance of Men/Women yet Emoov only have 3 female “Local” Experts”, why dont Emoov want to recruit women?
Transparency – Emoov claim their “Local” people will “Sell” your home. Now Russell this isnt actually true is it. There is no selling involved. What you should state is that you will plonk the house on Rightmove/Zoopla and take your chances.
Poor Service – Yes many estate agents dont offer the best service, but god forbid a high street agent to find themselves involved in a chain with Emoov, or one of the other lot.
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…and let this be a lesson to you all…
Too much sun is dangerous.
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Says it all really doesn’t it….
A massively failing company is still more attractive and still making more money than the bargain bucket onliners?
No wonder Emoov are interested?
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The world according to Russell Quirk…
You May know ATL, but do you understand P&L?
#ifangyou.
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New entrants to the market have given the consumer choice. It’s the same as people choosing to fly economy or businesses class, same destination, just a different way of getting there.
What traditional estate agents cannot afford to do is charge a first class fee and offer economy service, this would destroy them. Most high street agents I know offer great service and are therefore still trading through these difficult times.
The problem appears to be this, online/hybrid agents don’t make a profit. I’m not sure if Purple Bricks are hitting their lofty targets, they may be an exception to the rule but it might take world domination for them to be profitable to the levels that shareholders expect. The high street agents are also struggling to make a profit due to low transaction levels, disruptive business models, too much local competition, slowing pipelines and regulatory challenges.
So who is making any money at the moment? is this just a period of reflection for the industry forced to look at itself whilst the changes around it happen? or something more sinister at hand where we’re all snookered and can’t retire in style as planned?
My gut feeling is that hybrid/online agents will have to raise their fees or switch into the NSNF model which will push fees back to levels for high street agents to compete again. The best high street agents (first class service) will come through this and sit alongside the competition but whilst all this is going on the not so good high street agents will sadly perish, meaning more to go round for the survivors.
Not a bad scenario for the customer, the hybrids/onliners or the top quality high street agents, but getting to this stage will be painful for many.
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It’s not economy. It’s advertising it as first class and once your on the plane they take the wings off.
Nothing short of criminal in the name of consumer choice.
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“When all else fails, you always have delusion.” – Conan OBrien.
I wonder, at times, whether Russell actually believes the rubbish he writes. The article is littered with false comparison and choice. Thankfully the public see through it.
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Funny he didn’t specifically refer to BTL. It’s often the case that marketeers driven by ego rather than results tend to allocate too much of their budgets to ATL.
I never saw Amazon, Google, Ebay etc blowing somebody’s else’s cash on vanity driven brand building campaigns during their early days.
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AgentPink back again under my new non de plume…. now retired having sold my agency.
As for the Quirkster… the only thing I agree with him on is “It’s about performance marketing, PPC, SEO, affiliates, Paid Social” as this is how I built my single high street agency into a 300 property branch and whitewashed the long established and previously dominant local competition.
In my humble opinion there is no ;genuine ‘disruption’ from the so called online agents… they have simply exploited the massive marketing opportunities offered by SEO, and more particularly PPC, far earlier and with much more expertise than traditional agents.
Cheap pricing on its own never sold anything in volume… you need traffic… and the onliners have gained that traffic from YOUR POTENTIAL CLIENTS who have searched for local agents online and come across the like of the Quirkster and his cronies.
The simple fact is the internet, and Google especially, is the new high street for everything, and that includes property buying and property selling. Do a Google search for anything related to property in your area and you will see that for PPC – the ‘prime high street positions’ are dominated by the onliners. You are allowing them to trample all over you.
The way to disrupt the onliners is to take their PPC and SEO territory and to execute your campaigns even more cleverly than they do. That is not difficult either, believe me.
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I agree, but the likes of PB, Emoov, Yopa, Housesimple have driven the cost of PPC through the roof.
Are we not just better off to let them fight it out and let them drain them of their funds?
We get a better return from door knocking and working our database. I can employ a neg on 18k plus comm, and they can bring me that in 3 times over.
What i will say is my branches do not carry a stock of 300 per office, so i may well be wrong!
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SP,
My average click cost was 17p and PPC directly contributed 60% of my valuation appointments and 35% of my sales. Average spend was c£1000 per month.
PB, Emoov and the rest – just like most heavy spenders on PPC – use marketing agencies who mostly charge a % of PPC spend.
So, guess what… the higher the click cost the more they earn so the agency isn’t overly concerned about bidding wars etc.
I’ve been doing PPC for 15 years, and still do it now, and I know far, far, more than the average £20Kpa agency employee who might be running 10 accounts for businesses they know very little about.
Something to chew on…
My agency campaign had c3500 keywords I bid on and nearly 13000 ‘negative keywords’ that prevented my ads showing for searches that I did not want to appear for ie., salary, earnings, jobs, as in estate agency jobs etc., etc.
PB, Emoov etc are wasting possibly £1000s every month because their agency hasn’t spent enough time, or has the knowledge, to eliminate clicks from irrelevant searches.
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I stand corrected.
The key words we target are between £2 and £3 and we certainly do not have 3500 probably less than 10% of that figure.
I think i need to bow to your knowledge on this.
Is this just because you were operating in an area this is possible or is this able to be replicated anywhere?
From what you say it does seem like a no brainer!
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SP,
I operated in a sparsely populated area of the North East but geographically targeted a radius of 30 miles.
My campaign can be replicated anywhere but one of the key factors in making it successful is the web page the resulting traffic is directed to. If that is not right the campaign will not work anywhere near as effectively.
A web page, for any business, is the first salesperson that a potential customer ever sees – again, most web designers, businesses and agencies do not understand this. Would you give a ton of valuation enquiries to a neg who couldn’t convert? No. So don’t do the same thing with your web pages.
Every word, every picture, every headline on any web page will affect its conversion in exactly the same way that the knowledge, trustwortiness, appearance etc., of a neg will affect face to face conversion.
My background was in direct response advertising ie., mail order, mail shot campaigns etc., where the principles of high converting marketing literature are almost identical to those required for web marketing.
The advantage of PPC over SEO is that there is no waiting period to getting traffic, you can get it TODAY, whereas SEO could take months. Plus, you can switch it on or off in a second.
IMO the best way for any local high street agent, big or small, to protect their business against the onliners and other changes challenging the industry is to develop a highly efficient and cost effective internet marketing campaign.
Traditional high street estate agents are definitely not dead.
But… the high street and local newspapers as the main point of customer contact most definitely is dead.
Not being proactive online is the biggest danget to traditional agents… not online only agents like PB, Emoov and their ilk.
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Certainly food for thought, good to get constructive comments on here rather than chest beating!
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What a load of rubbish. How do you know these brands do not have the right management in place. Countrywide still make money unlike your own company.
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I’LL be waiting by the phone? Well i think you may well have a long wait Mr Quirk. Even the sleepy BODs at CWD are not stupid enough to get on your train as the light at the end of the tunnel will be a train coming their way pretty quickly. Whats needed? Not too much just a gradual clear out of ‘ the boys ‘ currently running the show and bringing in a new CEO and or group MD pretty sharpish to at least lead the experienced senior managers who remain. Someone with a track record in the Industry and not tainted by failure or the on-line brigade which contributed massively to the mess CWD are in currently. Ah for the good old days. MD’s who ran a tight ( profitable ) business, knew everyone personally, led from the front, visited the Branches and gave confidence and guidance. Truly a place to be proud of. There are still loyal people at CWD those who lead ( less and less ) and those who follow ( more and more ). Sad.
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What other ‘manager’ would still be in their job 8 years since launching and still failing to make a penny in profit?
RQ is a fantastic fund raiser but lets face it emoov is far from a success. To be touting himself as saviour of CW is laughable.
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Totally agree, Emoove was thrown a lifeline of cash and suddenly Quirk is Gordon Gekko again.
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Self publicist
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Always has been – just hasn’t done it as much for the last year or so.
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“The answer is to work with the consumer”.
Currently, 93% of consumers are choosing traditional agency’ (although apparently not Countrywide). Those consumers obviously don’t prioritise low fees when choosing an agent.
With literally hundreds of millions of combined advertising spend thrown by onliners over the last 5 years, all with the same message: “Agents are expensive, save money with us” is it any surprise that the public are battering agents on fees?
This is compounded by falling transaction volumes, making it incredibly difficult for many good, trustworthy agents with great service levels to keep their doors open.
When good agents start closing their doors through no fault of their own (is Countrywide an example victim?) have the onliners actually helped anyone? Has anything actually improved?
The thing all agents know is that an informed vendor will always pay a fair price if they know they will get a quality service.
Quality service cannot be automated. Personal service cannot be delivered by a brand, only by a person. People need to earn a living and be fairly paid for value provided, therefore, UK agents fees, among the lowest in the world already, are easy to justify.
The one thing onliners have shown though, is that agents really should make it easier for people to book appointments online – that feature has proved popular. But its not enough to make them replace traditional agents.
Having said all this, I do support Russell’s vision of better service levels at lower costs, if it can be achieved. Corporates like Countrywide carry so much excess cost of infrastructure and layers of expensive middle management which add no value at all to customers, that it was inevitable they would struggle to remain competitive and viable.
But personal service is not cheap, and 93% of consumers accept this. The other 7% are misguided, uninformed, or both.
I urge traditional independent agents to batten down the hatches and ride out this storm. Quality always wins in the end, and the harder times are, the more consumers will seek out quality professional advice, and be prepared to pay for it.
It’s selling a home, not a car.
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Is this the one with the silly sheep on the boards??
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I don’t think so (assume jesting mind), I have never actually seen an Emoov board, although I have seen a Ewemove board, green with a sheep on it.
Where exactly do Emoov operate? it is strange that I haven’t seen one considering the amount of publicity Mr Q generates for his brand.
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