The housing downturn – An analysis

Graham Norwood, with whom I co-wrote the book “Media relations in property” (EG Books) a couple of years ago has just had his latest book published.

In the book, he sets out the signals that were appearing from 2005 and asks questions about why so few people spoke out as the foundations of the industry began to crack.

Senior figures from all elements of the residential industry - developers, agents, analysts, lenders, planners and pundits - comment on what they believe led to the downturn. The book then sets out what the industry may learn from the experience. It compares those developers and estate agents that down-sized or collapsed altogether with those that survived and, in some cases, even prospered in the downturn.

It identifies common indicators amongst those that remained strong through a 50% collapse in sales and a 25%-plus collapse in prices, and offers insights into how policies of diversification and modernisation helped many companies survive. It also looks to the future and presents a sobering vision, created by scores of experts interviewed during the downturn, of what the market may be like when volumes, prices and spirits move upwards once again.

I am impressed (if not a little envious) that he got his latest book out two months before mine...

Some good news at last - Accountants 'best placed' to benefit from recovery

Accountancy Age magazine carried the following story yesterday:

“PwC says business services sector will emerge in the best shape following the recession

Accountants, lawyers and property management companies will be among those to benefit early from an economic recovery, a PricewaterhouseCoopers index has found.

Firms in the business services sector, which also includes computer technology, advertising, engineering and telecommunications companies, are set to benefit early from a cyclical economic upswing.

The sector has the highest price earnings ratio – share price relative to annual income, putting it in a strong position for accelerated long-term growth.

In contrast, the PwC upturn index predicts that metal products, textiles and food manufacturing companies will be among the last to benefit when the economy begins to recover.

Non intrusive marketing

I have just read a great Alumni Briefing Paper on "Non intrusive marketing" (some call this Web 2.0 marketing or Inbound Marketing) from Cambridge Marketing College – www.marketingcollege.com (where I lecture on the marketing communications diploma courses) – it provides a great introduction to the subject.

It explains that non intrusive marketing is about making sure that the right people find your company’s web at the time they are most likely to become a valued client. In essence it means being visible so that the client comes to find the marketer.

It talks about the need to summarise everything on offer in less than 100 words (25 character title and 70 character description in Google whereas 135 characters and an image in Facebook).

The booklet explains – in simple terms – the opportunities with Google. It describes the use of key words, AdWords, Pay Per Click and Pay Per View, AdSense, Analytics and the Google Content Network. And does the same with Facebook – including the use of Groups and Fan Pages to engage with users and obtain direct feedback.

There is a quick review of the other social networks and suggests B2B companies should concentrate on LinkedIn, Plaxo and Xing whilst B2C companies should consider Myspace, Facebook and Windows Live Spaces.

Property marketing and PR

There were a number of speakers at yesterday’s Estates Gazette Property Marketing and PR Summit who supported the argument that those who continued to invest in marketing during a recession were most likely to make the most progress when the upturn arrives. The key points I took from each of the presentations that I heard were:

Paul Craven, SEGRO
• Modify your marketing strategy to stay visible in the recession by adopting a “little and often” approach (smaller ad spaces, more frequent and better targeted) and to drive traffic to the web site
• Investigate inbound marketing techniques
• Stay close to existing customers

Richard Crook, Drivers Jonas
• Use the recession to identify new and emerging areas of client need
• Reduce print use and embrace the digital revolution for both cost and environmental benefits
• Cut back on entertaining and make better use of your own facilities for events

Liz Russell, Nabarro
• Make better use of the greater time availability of professional staff – get more people out there networking
• Be bolder and more creative

Marc McConnell, Atisreal
• Ensure message clarity – you need a coherent strategy before investing in any promotion
• With less noise in the market it is easier/cheaper to get a larger share of voice
• Ensure employee engagement on (re)branding programmes

James Friedenthal, Workspace
• Ensure you do thorough source analysis to see where the business comes from
• Develop metrics to know exactly what each activity generates
• Optimising your web site is low cost but highly effective (linking to Paul’s point above about inbound marketing)

Ralph Doyle, Adventis
• Remember to consider the differences between corporate and product marketing/advertising
• Concentrate on position, perception and proposition (differentiation)
• Tell agencies what you want to achieve – not what you want them to do

Mike Slade, Helical Bar
• Greatest concern is falling rents, not falling yields
• Firms need to be “potent” – ready, able and willing to do things

Roger Madelin, Argent Group
• For existing developments it is business as usual with regards to marketing and PR
• Take care with PR – it can cause problems with planning

Andrew Marsden, President of The Marketing Society
• In the property industry, the good marketing is outstanding and the bad marketing is really shocking
• All marketing/campaigns must show clear results – the return on the money invested

Liz Peace, British Property Federation
• Sustainability and our societal contribution provides a real opportunity to raise and improve the image of the property industry

Building brands – while building a PSF

At the risk of upsetting my friends at BrandFinance, I want to share what I heard at the keynote speech of yesterday’s Estates Gazette Property Marketing and PR Summit which was supported by the Profile Property Networking Group.

John Murphy established Interbrand back in 1974 – along the way creating a new marketing discipline (brand valuation) - and then sold the business in 1994. Subsequently, putting his theories into practice, he bought Plymouth Gin in 1996 from Allied Domeq for £600,000 and then sold it in 2000 for £28m. That’s some return! But his story offers some great lessons in building a professional services practice and some interesting ideas particularly for those in the intellectual property sector.

He started out with a small consultancy creating names for companies. This then required advice in trademark law so that the name could be registered, used and protected. Clients then asked (notice the fundamental principle of marketing – anticipate and meet client needs) for support in corporate identity, design and packaging to use the name – so the business expanded into design. Whilst the service offering, at the time, was unique there were fears that others would enter the market so offices were opened in New York, Paris, Frankfurt and Tokyo – a classic “new markets” strategy.

Returning to the service provided, a number of methodologies were developed to protect and promote the way Interbrand did things and maintain a market leadership position in the face of competition. A book was written “Branding – A Key Marketing Tool” – which was reviewed somewhat negatively by The Economist. The methodology – despite some challenges from the business management academics – became an industry standard. And most marketers will be aware of the story of when Rank Hovis McDougall first placed its brand value on its balance sheet. The financial/investment industry and media interest this generated prompted all the major accountancy practices to establish brand valuation consultancies.

John’s philosophy on pricing offers a salutary tale to those in the professions. He never used the hourly rates model but always quoted a fixed fee for the solution to the client’s problem. As an analogy he mentioned the Dynorod message of “satisfaction guaranteed or your blockage back”. This also relates to the principle of value pricing – how important is the service/solution to your client? He told the story of how Ford urgently needed a name for its new car model – which he did within just six weeks at a cost of £1m (a huge margin).

Things were going well in 1990 but then market indicators suggested that the bubble was about to burst. The tough economic environment forced Interbrand to make some tough choices, review all operations and expenditure and make massive cuts. “In recessions you have to do hard things…” Interbrand weathered the storm and the rest, as they say, is history.

John – like most true experts – can explain really complex ideas very simply. When asked to explain brands he responded “create a personality that stands out from the crowd – a personality that runs throughout the organisation and manifests itself in every aspect of your business”. He recounted how when he was asked to persuade leading business people about the value of brands he said “Put it this way, if you sell your business you can perhaps expect 2-3 times its future value, with a significant brand the multiple goes up to 7-9”. He then went on to do some very straight talking about the lack of differentiation in the education and legal sectors – and then the lack of profile of even the largest property services companies!

In the questions that followed his talk he also concurred that the starting point must be a good product (service) – as no brand will succeed without this. He also argued that you must “play to win” and concentrate on beating the competition rather than collaboration or collegiate approaches

Social changes – Never weds to outnumber married couples

Spare a thought for family lawyers. And those in the residential property business.

Last year the number of married people fell to less than half the population. The Office for National Statistics has now forecast that by 2031 the ranks of those who have never married will swell to 22.1m (42 % of the adult population) and more than the 21.6m total of the married. They predict that whilst the married population comprises 49% of the population now, by then it will have dwindled to 41%.

The figures also show that the number of people who cohabit will rise from 4.5m to 7.4m over the next 20 years.

People who live by themselves will be the biggest group in 20 years’ time, making up 44% of the adult population. Those without partners will outnumber the married and the greatest increase in singletons will be among people aged between 30 and 65.

They also predict that around 3m who are now in their teens, twenties and thirties will be without a partner of the opposite sex in 2031.

The arrival of Generation G (for generosity)

I have long been interested in generational differences (in addition to personality, cultural and other ones) amongst both the clients and staff of my professional service clients. So I was pleased when one of my former students sent me a fascinating article from www.trendwatching.com about Generation G.

Generation G "Captures the growing importance of 'generosity' as a leading societal and business mindset. As consumers are disgusted with greed and its current dire consequences for the economy—and while that same upheaval has them longing more than ever for institutions that care—the need for more generosity beautifully coincides with the ongoing (and pre-recession) emergence of an online-fueled culture of individuals who share, give, engage, create and collaborate in large numbers”.

The article points out three Generation G trends:
1. Recession and consumer disgust
2. Longing for institutions that care
3. For individuals, giving is already the new taking and sharing is the new giving

They predict increasing popularity for “caring” brands that give more to customers, employers, the environment and social causes and offer eight ways for organisations to join Generation G:

1. Co-donate
2. Eco-generosity
3. Free love
4. Brand butlers
5. Perkonomics
6. Tryvertising
7. Random acts of kindness(RAK)
8. (F)rigid no more

Services marketing

I have just finished writing a review of the book “Services Marketing” by Steve Baron, Kim Harris and Toni Hilton and I must say that it is so good to review a book that combines the academic rigour needed by those who have to teach marketing with the practical advice required by those who are busy practitioners looking to deliver real value to their organisations.

It is also encouraging to see, so clearly presented, the links between relationship marketing – a critical component of the work of marketers in the professions – with service marketing systems (where marketing, operations and human resources come together) and the service-profit chain (where service quality, employee satisfaction, retention and productivity are linked to organisational growth and profitability).

The full review will be published shortly in Professional Marketing magazine.

Signs of the property market recovery at last?

I was cheered to read the news yesterday. The Nationwide Building Society said that property prices increased by .9 cent compared with the previous month - the first monthly rise since October 2007.

Not such good news for London though as it reports that property prices in the capital have fallen by almost a fifth since this time last year and have dropped in value by more than 5% since January.

I postponed the production of my book (for the property market) so that is published in June this year. I am feeling a little more optimistic that my forecasts for the market recovery were not over confident.

Twitter and Vodafone

Now that Vodafone has agreed that I can send text messages to Twitter for free, I might just take the whole thing a bit more seriously. However, I am very conscious of the fact that I now need to update my status on LinkedIn, Facebook and Twitter amongst.

So with all this updating how will I find time to actually do anything that may be of interest to others – let alone explore how the medium might be successfully used for social networking in a marketing context?

Anyone got any views on the use of Twitter in the professions?

Business development vs. reputation management?

Oh dear – it seems that even when you are supremely successful at business development and generate good results for your clients, you can end up suffering at the hands of the media and your reputation takes a bashing.

The mainstream and business news media devoted many column inches last week to Irwin Mitchell. Their sin? Earning £11m (about 10% of their total income) in mostly taxpayers cash for pursuing compensation claims against the NHS (claimant clinical negligence work) and recovering £58m in compensation for its clients – an average of £250,000 per case.

Irwin Mitchell is noted as earning more than double that earned by any other firm carrying out such work – 364 cases. So they are the market leaders and should be congratulated? No - the partners salaries – quoted as averaging £309,000 are mentioned and it is noted that a lot of the cases were on a “no win, no fee” basis which means that the tax payers – rather than private means or insurance companies – met the bill. There were also references to the fact that the head of the clinical negligence team at Irwin Mitchell is married to a leading clinical negligence barrister at Devereux Chambers and there are mentions of the value of the home they live in.

Yet it notes that NHSLA (the National Health Service Litigation Authority) only spent £4.7m defending these cases compared to its overall spend of £633m during 2007/08 in damages and legal costs (up from £579m the previous year). Having worked with firms who had to deal with the NHSLA I wondered whether more attention should be paid to these facts?

Reading through the articles, other law firms were also mentioned:

Leigh Day & Co was noted as having recovered £4.8m for 53 cases on which the NHS spent £1.6m defending. It was also claimed that the highest average bills come from McMillan Williams and Kingsley Napsley with charged £250,000 and £307,000 respectively.

There was a lot of negative press coverage recently about how law firms in the immigration and employment (discrimination) areas were also making a lot of money.

One wonders whether perhaps it should be the law, the compensation rules or the NHSLA and Government bodies that should be in the spotlight – rather than the firms who are simply following the present system and doing their best for both their clients and their firms.

But it does underline the need to consider your PR and reputation management strategies when your business development is really successful.