The 1st & 2nd Moments of Consumer Delight

Reacting to Thursday’s announcement about the new “Freakish Depth” release of Redfin.com, Austin asset manager Lani Anglin-Rosales wrote an analysis of Redfin’s brand for national real estate magazine Agent Genius:

Redfin is actually designed to appeal to GenY by using hip vernacular like “Redfin’s goal is to delight our audience of hard-core real estate fanatics by offering Freakish Depth on major real estate markets.”Lani Anglin

On the same day that Lani talks about our appeal to people born between 1980 and 1995, San Diego real estate blogger Kris Berg writes “you dudes, like, speak my language,” and Greg Swann wonders about the “gnomes who find Redfin appealing.” But it was Lani’s analysis that generated so many comments she had to close the post, concluding with:

As an insider, I can tell you that GenY falls for wants jazzy words and being made to feel special, so all you really have to do to cater to GenY is tell them they’re special, that you’re stupid and they’re not, and give them shiny buttons on your website and offer them $100 at closing as a rebate.

Notwithstanding that our average refund is $10,000 at closing, Lani is correct that our brand appeals to younger people: 90% of our customers are under 45.

But this talk of “delight” was not a calculated attempt to appeal to GenY. The concept actually came to us years ago from P&G employee Dan Gerbus, when many Redfin employees worked for a startup that made software for companies like P&G. It was strange to hear a now-retired IT manager in Cincinnati talk so freely and passionately about the vaguely sensuous idea at the center of P&G’s strategy: “the first and second moments of consumer delight.” Dan Gerbus, a P&G retiree, gave some Redfinners their first lesson in consumer delight

And it had never occurred to us back then that the proper role of a new product is not simply to fill a need, but to delight its customers. Pre-Redfin, we had always focused on such dry selling points as return on investment and network security.

Dan explained that the first moment of delight is when the consumer first spies it on the grocery shelf. The second moment is when the consumer actually uses the product. We liked the idea that using the product is the real moment of truth precisely because, contrary to Lani’s point, this respects rather than dupes the consumer.

Coming to Redfin with no consumer products experience, we remembered what we learned from the best consumer-products company in the world about delight. Our first moment is our map-based real estate search, but the second is what really counts: when we deliver results as real estate brokers. If traditional agents teleported into a random Redfin meeting, I really think they would be surprised just how much we talk about this. And then they would be brainwashed, hogtied or sacrificed in a bizarre, sadistic ritual.*

But what about “Freakish Depth”?

Before Redfin, we had been used to pouring our guts out on software that half-interested people barely paid attention to. But a real estate application is one of the few web applications in the world where you can safely assume that people want all the information you can possibly give them. Few people browse Amazon, Orbitz or E-Trade until their eyeballs fall out, but that’s how they use real estate sites.

So in focus group after focus group, we tried to convince our customers that they didn’t actually want to see all the information about a property for sale, or that brief data quality burps didn’t matter. And we always failed.

Smile in a BoxRedfin’s happiest thought came at the end of one of these focus groups when someone said, “These people are as freaky as we are.” It’s a nerd’s dream: taking one of the most rich, public and structured data sets in the world, and getting free reign to shovel as much of that data as you can out onto the Web.

So after poking at inventory for a while, we’ve decided to go nuclear on data quantity and quality, because we found that consumers really freak out about differences that we had worried seemed arcane or even invisible. Freakish Depth is also probably the only strategy that Redfin, limited now to seven markets while others build national sites, can be good at: taking consumers the long hard way from previewing homes online, to touring, pricing and buying, owning.

So we use terms like “Freakish Depth” not to appeal to GenY but because that’s how we really think of our strategy, and saying what we really think is probably the only way we can be heard in this fake-weary, media-saturated world. But to our critics, sincerity just seems like the most cunning trick of all.

(Bonus to anyone who can identify the art work pictured above as an example of delight, and how it works. Credit to Business Week for Dan’s photo. Many thanks to Dan for all he taught the Plumtree-alum at Redfin and everywhere else.)

*The human-sacrifice comment was just a joke, about how traditional agents seem to think of us and what we do all day. We try to delight you, too. If we held an open house for traditional agents to meet Redfin agents and executives would you come?

Discussion

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  • http://blog.mariah.com Todd Carpenter

    Hi Glenn, you say that 90% of your clients are under 45. I’m interested to know the other 90% number. At what age are 90% of your customers older than?

  • http://www.cincinnatimarketupdate.com kim schieldknecht

    Sounds like another Discounter to me.
    Service is a ” delight” A good agent will negotiate the best price. That is the value to the customer.

  • http://www.GeorgeONeill.ca George O’Neill

    I believe there is a large segment of the potential real estate client base that does indeed seek as much data as possible on any acquisition they make. The old way of doing business was asymmetrical in nature, with realtors having the upper hand. Today, that is changing, with much more information available to buyers, and sellers, from sources that complement the activities of their realtor. “Freakish Depth” is good.

  • http://www.redfin.com/stingray/do/redfin-advantage?direct-section=buy Janelle

    Kim,

    Please take a look at The Redfin Advantage.

    We did a study to see if walk the talk. And, we do. Redfin’s clients tend to pay less than asking price and buyers using other brokerages tend to pay above asking price.

    Getting a kick @$$ Redfin agent negotiating on your behalf certainly is delightful.

  • Molly Hadley

    I’m an old time realtor. Freakish depth is great-informed client is great-knowing what all the data means is a little more complicated and knowing what is left out is more so.
    Some realtors look only to the deal and manipulate their prey (uh I mean clients.)
    Some make money assisting their clients by knowing their wants and needs and knowing the market.
    One missing link here is knowing the market overtime. An experienced salesperson has something valuable to offer a client. In time the best redfin salespeople will be those who learn how to manipulate their prey or those who learn how to best assist their clients by knowing their needs and wants and knowing their market. The old way of doing business. New and improved isn’t necessarily so, giving a client more data and more power is good but there’s still a transaction occuring and power still resides with the entity supplying the info. It’s how that power is used that is key, manipulate or assist, it’s a fine line. So before we say old is bad, new is good, make sure it really is. Maybe the truth is somewhere in the middle.

  • Molly Hadley

    As to Rfers paying lower prices perhaps it’s because they are better informed and good negotiators who are strongly motivated to get the best possible price.
    Not everyone buying property is so motivated and the evil realtor may not be the problem to getting a lower price.
    Also when you sell instead of buy don’t you want a higher price? What then? How does redfin help their sellers get the best possible return on their investment. Aren’t they worthy of your concern and care?
    You insult a lot of hardworking honest realtors by implying that they are all motivated to increase their commissions at the expense of their clients. Most good realtors establish long term relationships with buyers and sellers by looking out for their financial well being over multiple transactions. Realtors are only as good as their reputations and if they make a habit of cheating their clients they damage their own financial well being over time. duh
    Rdfn’s salespeople will be subject to the same truths.

  • http://blog.redfin.com/blog/author/glenn%20kelman Glenn Kelman

    Molly, our intention was not to insult Realtors. Where do you see that we did?

  • http://www.cincinnatimarketupdate.com kim schieldknecht

    Molly, good point. These people seem to think they are reinventing real estate. All they do is give the selling agent a smaller %say 2% or maybe less. Than give the difference back to the buyer.
    They do not take into account the realtor or brokers marketing $$. So pay very close attention when doing a deal with these agents.Freakish depth is just re arranging the commission $

    As for better tools to inform the consumer… Please!

    PS, Mr Fin, the market sets the price, losing site of that will keep you in the RED

  • Molly Hadley

    Hello Glenn,

    I’ve been all over your site and the insults are in the comparisons made in several places. Start with your description of yourself on your “How we’re different” page. You state, “traditional brokerages maintain high commissions by limiting consumers’ access to information, ensuring their dependence on the agent… and ” We won’t hassle you to work with us, or pressure you to close.” Implying by the comparison that a “traditional” brokerage does. You further state that salespeople as employees helps the customer because you can monitor customer satisfaction. In a traditional brokerage the broker is responsible legally for any malpractice of their salespeople. Salesperson gets sued, broker gets sued. Most broker’s are pretty careful to make sure their people are on top of things because it’s their broker’s license at stake.
    The implication is sometimes subtle and sometimes blatant, as you tout your methods you present assumptions about traditional salespeople and brokerages. The most pernicious is the statement as if it is fact that traditional commission structures corrupt the ethical practices of agents. Higher price=higher commission so agent will be unethical. It seems logical but any transaction is complex and an agent just doesn’t have that much power. You are a buyer’s agent and are giving them more leverage which is good, however, the seller also deserves a good return on his investment and in that scenario, low price isn’t to his interest. As I stated in a previous comment that hasn’t posted, you are not a nonprofit. You’re here to make money. Maybe you love real estate and it’s practice, maybe you are concerned about the communities you serve, maybe you enjoy a vibrant healty real estate market. Beleive it or not, associations with traditional agents could be a benefit to you and your buyers. I know it’s always more pleasant to enjoy working with other brokers and buyers and sellers. Calling others unethical greed mongers is counter productive in the long run.
    Hey Kim-the real freakish depth is actually freakish breadth-the web is worldwide. It is genius because the potential numbers that could use their model is huge but what happens when errors and omissions occur and the law suits start. Feduciary responsibility? Disclosure of relationships? Aren’t commissions negotiable in California? Isn’t it the broker’s legal responsibility to tell their customers this?

  • http://agentgenius.com Benn

    Hi Glenn, Benn with agentgenius here. Lani and I would certainly come for an open house… That would be stellar.

    Btw, I appreciate your link to ag- you picked the sarcasm, but I found it odd that you didn’t notice her actually identify herself in the gravitational field of attraction to Redfin. Her vernacular was actually natural, snarky and honest, she gets it.

    Not all of us Realtors out here are closed off to the delight- the link to the delight was great, and I actually love the application to the online store. Although it wasn’t completely foreign to me, reading it from your perspective did give me some great insight into your shop.

    As an aside, I did note all of the comments to this point, and I hope that the gaps can be bridged. You’ve noted some mistakes in the past, and I hope you can see a great opportunity in some positive constructive conversation in the future with fellow agents- if we sincerely want to change the landscape of real estate, it would have to begin there, don’t you agree?

    Benn
    agentgenius.com

  • http://blog.redfin.com/blog/author/glenn%20kelman Glenn Kelman

    Molly:
    Thank you for your comment.
    We agree that the statement about how traditional brokerages maintain high commissions is over-broad and unnecessary. We will change it in our next release, due out at the end of February.
    Having said that, we are still opposed to broker-sponsored rules that govern how Redfin and others display listings that don’t pay a commission.
    It seems possible to oppose such rules without personally insulting anyone. And it is undeniable that if the large brokerages opposed these rules, they wouldn’t exist.
    But folks like you who do oppose these rules feel unjustly tarnished by such a general statement about traditional brokerages, which is why we will change it.
    We would also note that we have never called anyone unethical or greedy, though we do feel that commissions paid by the seller create unwelcome conflicts of interest between buyers’ agents and their clients.
    As for our business model, Redfin has never denied that we want to make a profit. Profits are necessary to our continued existence, and good for our employees and investors.
    But we do believe that a company has to subscribe to a set of values that are more important than immediate profits, particularly since these values are conducive to long-term profits: using technology to empower the customer, focusing on results, putting the customer first.
    As we have tried to emphasize in this post, these are time-honored principles that we inherited from other leaders in other industries, but which we hope will also set us apart. Thanks again for your comment.
    Regards,
    Glenn

    PS We’ve looked all over for your unpublished comment and can’t find it. What was it about?

  • Molly Hadley

    Thanks for the response Glenn-I looked for the other comments as well and they are tied to another post. I can’t remember which one this morning but the essence of the comments were similar to those above, so I felt like I was ranting twice.
    I’ve been all over your site because I like the idea. I’ve always overwhelmed my clients with data. And I’ve always had clients who search for info themselves and were responsive to all I could provide. I think it is the best way to make an informed decision and I do think having a bunch of it on one site is fabulous.
    Your neighborhood blogs, sort of fill in the traditional on the ground info that agents aquire serving a specific community and feedback from your clients could provide the extra info that is always helpful to a broad picture.
    In other words, I like what you are doing but I have some problems with your need to bash the old guard. Perhaps you are a little beaten up by what you see as arbitrary hinderances on your right to provide info.
    Perhaps you could understand that the big brokers want to continue to profit from info they have compiled just like you do. Most MLS rules are set to ensure fair competition and it is propriatory info. They’ve established the relationships to the clients, they’ve comiled the info, paid for the MLS technology and administration etc. I don’t understand the commission issue because where I practiced that info was on the MLS and on all written offers. I would agree that it should be provided.
    “Unethical and greedy” were my words but your premise that the seller paying a commission sets up a conflict of interest between the buyers agent and client directly implies that the buyers agent is going to be tempted to bring in a higher offer. I have seen that occur with greedy and unethical realtors,(they do exist) however, your premise leaves out the natural check to that implulse, namely the ethical character of the salesperson, the incentive to foster an ongoing relationship with the client over time, and the regulatory and legal recourses already existing to protect the client. Old school realtors are no more greedy as a group than your group is. Of course they want to protect their livelyhood.
    Perhaps you would resent someone coming along and copying all your info, presenting it on another website and charging half of what you do in the name of delighting their clients.
    Finally, I have no problem with reduced commissions, that’s fair market. Many agents offer parts of their commission to their buyers, or pay for home inspections etc. It is negotiable. Your model is a threat to the status quo because your salespeople are more competitive to an agent who is in buisness for themselves; your
    costs are lower. Nothing wrong with that. Makes us smarter and faster and benefits the customer.
    I appreciate you conceding that your comments may have been over broad and unneccessary and your willingness to change. Be aware that a lot of realtors are in this business because they love it and like you “subscribe to a set of values that are more important than immediate profits, particularly since these values are conducive to long term profits.” You are setting yourself apart and can offer a valuable service to your buyers, but set yourself apart by doing it smarter, faster not by disparaging your competition.
    love ya-keep on crashin the boards

    Molly

    P.S. Imagine if you can transaction broker relationships where one agent represents both buyer and seller-it sounds outrageous but again an ethical broker and good regulations make it possible and it totally eliminates the competition between a seller and buyers agent leading to cooperation that is quite lovely

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  • http://www.teachstreet.com Dave Schappell

    Great post, Glenn — while reading it, it reminded me of Jeff Bezos’s (Amazon’s Founder/CEO) goal to ‘deliver customer ecstasy’ — it always made folks chuckle to say it, and often folks smirked when they heard it for the first time, but I think it’s a worthy goal and one that Amazon has made strides toward achieving.

    In another conversation today, I mentioned to someone that I’ve recently come to really appreciate the over-the-top service that Nordstrom salespeople deliver — several years ago, I wouldn’t have been willing to pay for that service, but the moments of delight have brought me over.

    I think people lose sight of the fact that Redfin’s moments of delight aren’t really tied solely to the cost-savings. If that’s all it was, you would already be bankrupt. Once you look past that, I think it’s the overall customer experience — from a great website, to a passionate team who’s trying to change the world (or, at least, a small part of it — Real Estate), to refreshing/innovative signage, to all the little things, including your passionate involvement with this blog, etc.

    I’m a continuing fan!

    Dave

  • joe m.a.

    Great stuff here, one quick thought. I heard a rumor that a certain on line Real Estate Firm will turn their back on Federal Equality Requirements when it comes to selling property (or more specifically who they wont sell to). If the Firm in question does not carry a license who protects the consumer? I am not accusing anyone operating on the West Coast but I am just saying, What Up? JoeMA

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