It’s not news among brokerage-based relocation directors that Relocation Management Companies (RMCs) have become the dominant aggregators of corporate real estate referrals. Opportunities for relocation directors to cultivate direct corporate relationships have diminished as the prevalent outsourcing of relocation programs has taken its toll among in-house corporate mobility specialists.
Corporate employers have largely delegated broker selection and management to their RMC partners. RMCs have always been an important segment in a relocation director’s marketing plan and business mix, but now they are the main tent for the relocation circus, and brokerages that don’t succeed among RMCs will struggle in getting relocation business. A relocation director needs to understand some key differences among RMCs that require different approaches:
Branding. Some conspicuous RMCs have direct affiliations or shared ownership with certain real estate brands and may give preference to co-branded companies in referral distribution, so long as other criteria are met. However, no RMC relies entirely on co-branded/affiliated real estate companies. For footprint and performance reasons, they all need to use additional brokers, as well. RDs should never write off an RMC as a potential referral source on the basis of brand alone. In fact, branding should drive three different marketing strategies for an RD:
- How can I max out referrals from my own company’s brand affiliation? If we’re an ACME Realty brokerage, how can we build and maintain a referral stream from our sister company, ACME Relocation?
- How can I grow by using others’ brands against them? My local competitor is an ACME Realty broker and I’m not. RMCs that compete with ACME Relocation should want to use my firm rather than feeding and promoting their competitor.
- How can I gain share from brand-blind RMCs? Most RMCs do not have owned/affiliated real estate brands or holdings. They select brokerages for qualifications and performance with little regard for brand. How can I best apply and compete for this business?
Pay-to-Play. The revenue stream from real estate referrals is now the primary income source for RMCs—more than client-paid fees and any other revenue sharing. RMCs recognize the need to compensate their real estate partners appropriately, but they have heavy market pressure to capture real estate revenues to underwrite their relocation fee structure. We’ve noted some serious “bracket creep” in RMCs’ referral-fee requirements in recent years, with some now taking more than 40 percent of a commission side as a referral fee. Additionally, RMCs may expect their selected real estate partners to contribute significant non-transactional money toward network membership costs, e.g., software adoption, training, cooperative marketing, meetings and/or others. While joining an RMC’s real estate network can be lucrative and mutually beneficial, an RD should comparison-shop the total cost of ownership for an RMC network affiliation and be satisfied with the value proposition before committing.
Table Stakes. RMCs have high expectations of their real estate partners, just as their clients do of them. To compete for RMC referrals, an RD first needs to be sure that all of the expected assets are in place, including, at the very least:
- An established referral management protocol
- A compatible technology platform
- Standards and products for typical services for homebuyers, sellers and renters
- Company credentials and performance metrics
- A panel of qualified and vetted relocation-oriented agents
- Robust local market knowledge, content and data
- A RD or other business relationship structure to support the RMC as an ongoing client
Referral Path and RD’s Role. It’s important to know that some RMCs do not want the customary relationship with an RD as the brokerage liaison. These RMCs, growing in number, prefer to deal directly with selected agents, claiming that this gains them higher agent experience and quality, greater performance accountability and better communications. (We believe they also try to gain some financial benefits and leverage by eliminating the RD middleman.)
As an RD, you might choose to forgo this agent-direct segment of the RMC market, but why forfeit this opportunity? Couldn’t you instead redefine your point of sale and make your relocation-oriented agents your clients? You could provide fee-based services to your agents in lieu of getting a share of commissions from their RMC referrals. The concept here is that while you may continue to distribute some RMCs’ referrals to your agents, you can also profit from a back-seat role when your agents have direct RMC relationships of their own—by improving their competitiveness and results.
Here are just some ideas for services that agents might buy from their RD:
- Relocation education programs
- Tutoring for Worldwide ERC designations (Certified Relocation Professional and Global Mobility Specialist)
- Application process research and administrative support for your agents seeking to join RMCs’ agent-direct networks
- Performance metrics management, customer surveys and reporting
- Agent-personalized marketing collaterals
- Collective publicity and promotions for all your relocation agents
- Lead-incubator technology
- Referral fee tracking and accounting support
- Hosting and introduction events with RMC supplier network managers
- New product development and rollouts (Pre-Decision service, Area Orientations for international inbounds, etc.)
- Relocation-oriented web content and apps about your market area (for sellers and buyers)
- Ongoing subscriptions to statistical reports of relocation-related data for your market
We always emphasize the necessity of reinventing the relocation director function to remain fresh and viable in our rapidly changing industry. We hope these provocative ideas prompt you to think about the available market more broadly. It’s a good time to explore some new initiatives for selling to and working with different segments of relocation clients—RMCs, and even your own specialized agents.
John B. Sculley, SCRP, is vice president – managing director, RIS Consulting Group. Please email him your comments and questions at email@example.com.