Are Rightmove at a cross-roads? I think so even if they probably don’t.
Last week I was asked for my analysis of the leading portal by a US financial institution and therefore it does seem that the money-people are contemplating their future too. Has it peaked? Does it need to alter its direction? If so, what does it need to do? What does the future hold for it if it does change tact or, importantly, if it does not?
First off, let me muse about one aspect that makes these questions more complicated – the complexity being the misalignment of management and shareholders.
Misalignment
According to Rightmove’s 2008 financial results published in its early listed days, two of its biggest shareholders were BlackRock and Baillie Gifford. Between them they still own 15% of the company 12 years later.
This is typical of many investment funds and whom take a very long-term view on the monies they deploy into publicly traded stocks.
However, unfortunately the same cannot be said of senior management.
The typical tenure of a UK CEO these days is just 4.8 years, according to the Financial Times. Since it became a PLC in 2006 Rightmove has had three CEOs.
So, if the average investor takes a 10 or 12 year view yet the senior management team take a 4 to 5 year view and are incentivised as such, that begs a problem.
In particular the incentivisation of individuals with bonuses and share options aimed at revenue, profits and a share price target 4 years hence provokes a certain behaviour.
That behaviour, quite obviously, will focus on aligning the metrics being measured for the purposes of financial incentive solely on the time horizon that reflects the likely tenancy of the CEO, CFO, COO etc.
In practice therefore marketing spend, investment in technology and for the purposes of this piece, pricing and the company’s approach to customer relationships will be manipulated toward the best outcome for the individuals driving the business – not the passengers.
Example:
As a publicly listed company management negotiate share options and bonuses based upon a) revenue growth of [x%] each year for five years and b) a particular share price being reached or maintained over a 12/24/36/48 month period.
This share price being a combination of revenue growth, profits and city sentiment.
Management decide they can push revenue much higher quickly by increasing customer pricing each year aggressively.
But they also understand that in the medium to long term this will create a problematic relationship with their customers.
Yet, by the time this problem manifests itself as fleeing customers and reduced revenues the management team have cashed in their chips and gone.
You see? The perils of incentive and tenure misalignment between management and shareholders is a big problem for shareholders now that CEO terms have reduced to little more than a fleeting visit.
This is a particular problem for Rightmove because the example I’ve used above is a real one.
That’s exactly what has happened and thus this reality is not just a complexity but is an obstacle.
A Game Of Two Halves
In essence Rightmove’s 20 year life can be categorised in two distinct, almost opposing halves.
In their formative years they were clever.
They were useful – indeed indispensable.
And they were respected for what they had built as the UK’s largest property window by far.
The term ‘Rightmove’ became more searched for than the term ‘property’, an incredibly impressive feat.
Yes, in their early days they were seen as a valuable partner by the estate agency sector.
But as they grew up they became petulant, obnoxious, unapproachable, unreasonable and full of an unhealthy belief in their own greatness and immortality.
A typical teenager.
As their pricing increased, the perception of their arrogance increased too and this was viewed as especially grating by a property industry that had realised that Rightmove only existed by re-marketing the industry’s own stock and charging them for the privilege.
The largest property company in the UK – didn’t own the properties they were advertising nor had the public even directly instructed them. Clever. But dangerous also perhaps?
Despite the financial crisis and the uncertainties of Brexit, subscription price per branch increased as did aloofness too.
Rightmove management, keen to whip up investor enthusiasm and no doubt to bolster share price still further, announced their aspiration to push average revenue per estate agency branch from c.£1000 as it was, to £2000 over time – great for investors to hear but not such a good look where agent customers as the recipients of said increases were concerned.
This, plus Rightmove’s initially bungled handling of their recent Covid ‘support’ pricing approach were catalysts to where the property sector is at now – a fast growing body of rebellion in the form of the ‘Say No To Rightmove’ campaign and, together with a handful of similar lobbying outrider groups, numbers 3000 agency branches as the total objectors to the portal’s insistence on milking agents for increasingly unsustainable sums.
‘At least Dick Turpin bothered to wear a mask’ said one. And other less printable ditties along the lines of ‘at least buy me a drink first…’ abound.
The question is, are Rightmove listening to the noise? If they are, do they care?
Freshly strengthened from the wreckage of the ongoing failures of On The Market and their somewhat pathetic attempts to compete, unfortunately they’re probably now less likely to listen than at any time in the past. Thanks Ian.
If Blackrock and Baillie Gifford execs have not read The Innovators Dilemma by Clayton Christensen, they should.
In short it’s a walk through the graveyard of commercial history that’s littered with the headstones of once huge, profitable, market leaders that thought ‘business as usual’ would prevail.
This affliction applies to Rightmove more than most. A giant of market share with an enviable net margin and a market cap with nine zeroes behind it. A Goliath.
But it’s their apathy and their perception of indestructibility that makes them so vulnerable.
A culture of being bullet-proof that ultimately by way of complacency leads to its downfall.
When it’s too late Rightmove will realise that it should have adopted a fairer pricing model. It should have innovated for the agent more. Much more.
And it should have been a friend to its agent customers and seen them as people to build strong relationships with rather than the apparent attitude which is one that’s entirely transactional.
Here’s what I would do
This is what Rightmove should now do – and this is a plan for the long game rather than just from the short-sightedness of a ‘CEO perspective’.
Alter pricing – charge by newly listed property per month per branch.
The smaller agents would save money and the busier more profitable agents would pay their fair share. A sensible and equitable solution that is hard to argue with on a fair basis. When the market turns against agents and listings diminish, they’d pay less. Less anxiety would result between supplier and customer.
Charm offensive – hire a senior person that understands culture, comms and empathy and then lead on these things. Genuinely realign the company’s attitude to agents and demonstrate respect for them. Take the temperature of agents by a proper poll and, assuming satisfaction levels are somewhere less than 20%, aim to improve that exponentially by re-surveying agents annually. Mean it.
Qualify leads – each buyer lead generated by Rightmove is a potential seller too. Seller leads are what agents crave but not unqualified enquiries that are all lumped together as the same quality. Instead, Rightmove should properly qualify each lead as a potential listing and book the valuation straight into the agents’ valuation diary charging additionally per lead or a greater amount on completion. This is Rightmove’s opportunity to grow revenue by adding value. Not just by increasing fees unjustifiably so ******* agents off as they do now.
Innovate – redefine how buyers search. Why does a potential buyer have to know where they want to live rather than adding lifestyle, work and school criteria that might then throw up unconsidered locations? Think like a buyer, not a website.
Add value – Build a CRM and give it to agents free. Rightmove can afford to in the short-term and long-term it adds value to the relationship and ties agents to them ensuring greater lifetime income. This is also what ZPG should have done.
Say ‘Thank you’ – to agents for the business/revenue they provide. It won’t kill Rightmove to do this. But not doing so just might.
Many of these suggestions, if not all, require financial investment and potentially an interruption to revenue in the short-term.
That’s why Rightmove management probably won’t actually consider enacting them.
Yet if they don’t the combination of a) customer anxiety wound as tight as it is b) the poised anti-Rightmove lobby of 3000 mobilised agents c) the financial wobble as a consequence of Covid for agents and d) the next generation of challenger portals launching soon – could just maybe, this time be the beginning of a very slippery slope indeed for the portal giant.
Do you agree? Should Rightmove adapt? Must they adapt? Or can they survive with a business as usual attitude?
To me, they need to grow from spoiled teenager to adult business with some humility.
Because where estate agents are concerned, ‘happy’ is not a word that many of them would choose to use when describing their relationship thus far.
Ironic considering the millions of pounds that Rightmove have spent promoting that very word in their marketing messaging.
Russell Quirk founded emoov, is PropergandaPR co-founder, and a director of Keller Williams (Essex).
EYE is pleased to announce that Russell has joined us a Contributor to the publication and will be writing a regular opinion column for interest and entertainment – Look out for ‘A Quirky View’.
So in the past 18 months RQ has come out and told the largest estate agency in the UK Countrywide how they should run their business. Today decides to tell one of the most profitable companies in the UK RM what they should be doing.
Can we just put his ‘Achievements’ into perspective. Started an online agent up that went bust leaving numerous people out of pocket. And is now basically recruiter for an estate agent which has little to no marketshare.
Delusions of grandeur
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Proper Waffle Ganda by the Quirkster –
Apparently the Quirkster has a monthly slot on PIE – this is the guy who POTENTIALLY misled investors.
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Very diplomatic. I’m sure some people would’ve left one of those words out of that sentence.
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He’s not my cup of tea but in this instance he is talking a lot of sense.
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Why people still mention this guy? Undoubtedly he is the UK’s worse businessman in the last decade. who managed to lose so much investors, customers, and employees monies that it’s beyond me how he can afford to sponsor an opinion column.
Is it a requirement at KW not to know how to use Google in order to become an employee under his ‘leadership’?
PIE – I get it, he brings rating, in the same way you can’t take your eyes off a train crash. But it definitely harms your credibility
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Has anyone heard his regular slots on talkRadio where’s he’s branded as “a property expert”
He’s also diversified and promotes himself as an expert on “the economy” and other industry sectors with an opinion on everything.
Maybe he’s pitching to be a specialist adviser for Boris if D.C. goes
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Sounds to me as if he wants a job at Rightmove….
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Bad judgement by PIE to give this chump a regular slot. He spent years trying to undermine us high street agents.
Now he wants to be our friend and lecture us.
A bit like Rightmove, MISJUDGED.
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“-hire a senior person that understands culture, comms and empathy….”
Sounds like someone is pitching for a consultancy role?
RM will carry on as normal – if EA leave in sufficient numbers, then they have the funds to buy the next generation of property search tech.
They will use their brand name to make it the number 1 choice for consumers and “reassuringly expensive” to the EA.
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I’ve never heard of Russell Quirk so I won’t be commenting on his past.
However this article I totally agree with. He has completely nailed it.
I have three offices and I’m seriously considering what to do next. For certain I will have to make redundancies and other cuts.
For me one of Rightmove’s big failures is not adjusting pricing structure for smaller agents.
During the last financial crisis I did leave Rightmove merely to save money. I was told that if I left I would have to rejoin at a higher rate! Never forget that. I’d given them tens of thousands of pounds and in my hour of need I got blackmailed. Unbelievable.
Sorry RM your behaviour is disgusting.
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“I’ve never heard of Russell Quirk so I won’t be commenting on his past.”
Assuming this is true, you probably won’t have heard that the PMA has been replaced by ‘new’ Legislation… about seven years ago.
Welcome back from your extended nap, andrew1503.
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Lol
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Pie searching for more comments and not thinking about who they allow on – this guy has zero credibility
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I haven’t read this article for 2 reasons – most decent Agents won’t need to work out which 2 particular reasons.
Frankly, I won’t return to PIE if RQ is given a platform to peddle his nonsense.
End of…….
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What a load of absolute nonsence. He makes it sounds like he has just discovered that the tenure of C level execs is relatively short and that there is a chance they will have a short term view on the business to meet their goals. This is the reason there is a chairman and Non Exec Directors independently overseeing the running of abusiness with no skin in the game when it comes to incentivisation.
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Unfortunately, for me, this sentence in the second paragraph undermined the credibility of the piece;
“What does the future hold for it if it does change tact or, importantly, if it does not?”
Now, he might have typed ‘tack’ and had it changed by damned auto-correct, but if that’s true then it points to a sloppiness that seems to run through the thinking. (Hopefully, now they’ve signed him up, PIE will have a sub-editor check his content before publishing future articles.)
The new pricing model he suggested was interesting, but, other than that, the article struck me as a mix of reworked ideas and tired themes.
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Rightmove is to house sales what hoover was to the vacuum. My Mam still calls her Dyson “the hoover”. I rest my case. Rightmove aint going anywhere until a Dyson pops up and right now, OTM ? errr no, Zoopla ? eer no. Yes they do the same job but they aint in the same league. Homesearch ? Now that could be the Dyson we are all looking for. Here’s hoping they don’t do what Dyson has done to pricing, but hey, if they are leading the way, its worth paying for.
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“Yes they do the same job but they aint in the same league.”
‘In the same league’ in what respect(s), itsgreatupnorth?
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Another portal-reliant agent.
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I’m sorry and I realise that everyone deserves a second chance, but this individual was clearly painting a very different picture of his previous business in an effort to get investor cash. The fact that Google was a major creditor of the business upon administration shows he was just betting on SEO right up to the end.
Now he seems fit to lecture Baillie Gifford, the UK’s largest investment trust nonetheless, on their business and what books they should be reading!!
As I said everyone deserves a second chance, even a third chance but this frankly sits uncomfortably in giving an individual with a lot of unanswered questions a platform of this nature.
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