by Fred Crawley
Looking back some six years, and reflecting on the entry of Lloyds Bank into estate agency, I continue to be surprised that our move was not more widely foreseen, given the conditions prevailing in the financial world and the property market at that time. Indeed, I wonder why one of the financial institutions had not, long before 1982 and our first purchase, looked at this highly fragmented market and perceived the competitive advantage to be gained from entering the sector. The other great mystery is that when Black Horse Agencies made its move it took so long for competitors to follow. Their hesitation gave us a head start in the development and management of such an enterprise.
We never favoured expansion for expansion’s sake. Rather, we determined to grow into areas which complement and add value to our existing network, balancing expansion against tight budgetary control and the need to achieve the returns on capital demanded by our parent company.
Nor, perhaps, in acquisition profile, for our major corporate competition — late entering the market-place — have perforce adopted a highly visible (and highly expensive) stance, buying at prices out of all proportion to possible benefit in an attempt to catch up.
Our continuing success, in my opinion, rests on several factors. The identification of a major estate agency chain with a clearing bank, and one which perhaps has placed more emphasis than most on tradition, quality and service, has served us well, raising the standing of Black Horse Agencies in a field not always well regarded by the public. It is illustrative of what we have achieved that customers who are dissatisfied write to us believing that something will be done because of the Bank connection. And they are right. This trend is to be encouraged, and it is heartening to note that the entry of respected financial institutions is bringing benefits to the public in increased responsibility and, in conjunction with the professional bodies, raising standards of service throughout the industry.
Taking this a stage further, I believe that our entry has been instrumental in raising levels of professionalism, in making our staff more responsive to customer needs. Lloyds Bank has always had a major commitment to the training of its staff, recognising that in the financial services industry the best — and some might say the only — way of long-term differentiation from competitors is through a higher quality of service.
In many other countries the “service ethic” is a natural part of life. Here, it needs to be consciously taught and learned. It is a vital part of training to implant a willingness to provide top-class service and for this to become second nature to staff. I do not wish to devalue the excellent professional and technical training supported by the RICS and the ISVA but I do insist that, in a service industry, to be a superb technician is not enough.
Professional skills must be combined with inter-personal skills and it is in this aspect of training that the corporate networks excel. Through training facilities which have been developed over many years, our staff are trained in the marketing of a range of financial products as well as continuing to provide the traditional services of an estate agent. In this we have brought to the business, if not a new dimension, certainly a sophistication, an expertise and an investment not available in such large measure before.
The importance of service has always been recognised within the industry but the mobilisation of massive training resources to provide it is a new phenomenon, introduced by Black Horse Agencies and those who followed.
With the development of large estate agency networks, the problems of management control and communication have become far more acute. Traditional methods were clearly inadequate. The small partnership might operate efficiently by consensus and committee management and via manual accounting, but such a system breaks down when it is applied to a chain of 500-plus offices. To manage a large, widespread business, communication and decision-making have to be based on sound data and clear lines of authority: improved use of information technology provides the former, executive structure the latter.
In most cases, computers first provided the financial control mechanism, and then the realisation that the same technology could be turned to advantage in the business itself — in developing product lines, refining mortgage products and terms and providing insurance quotations. But technology requires capital on a large scale. Previously, the partners would have had to find this. Now it can come from a parent with far greater resources, so the network is not constrained by the limited availability of funds which hampered the expansion of partnerships in the past.
Equally constricting was the partnership mentality. Equity partnership, with some honourable exceptions, tended to leave control with founder partners or their heirs, regardless of ability. It tended to stifle new blood or drive it out, encouraging a like-thinking “club mentality”. It was hostile to innovation and to expansion. A corporate executive structure is better suited to the flexible and efficient management of a large growing business in today’s rapidly changing environment.
So what has been the impact of major corporate entry into estate agency? For the business itself, a revolution which will see the majority of outlets in the hands of the big networks. For those agents choosing to remain independent it has meant growing uncertainty and the need to link with each other in an effort to remain competitive, and to provide the same range of services as the majors. And, once linked, how independent can they remain?
For the individual choosing estate agency as a career, the carrot of partnership (usually requiring an upfront capital investment) will be replaced by a broader career structure basing reward on performance.
For the professional bodies it should bring nothing but good. Their clarion call for ever higher standards is echoed by the banks, insurance companies and building societies who will not allow their good names to be sullied by association with the “shadier” tricks of fringe operators.
For the public, on whom all our livelihoods depend, it offers a commitment to improve quality of service and greater choice; confidence in a nationally recognised name and a commitment to the highest standards.
With its investment in Black Horse Agencies, Lloyds Bank recognised that there was a profitable opportunity to be grasped by being close to the house transfer process. We were first in the field, but others also saw the possibilities — building societies to protect their source of new borrowers, insurance companies to protect their life business, to diversify from an increasingly saturated endowment market and to establish a High Street retail network where none existed before.
For me, six years ago, the development of financial services within estate agency outlets was exciting because it gave an opportunity to build on the traditional skills of the professionals in residential agency. By not divesting other disciplines at the time of purchase we kept the flexibility to develop commercial agency, a new homes capability, professional services and other areas of estate agency as the opportunities arose. But our core business is residential estate agency, from which we derive the largest part of our income. I remain convinced that there is still vast potential in this area.
So long as we apply our resources to making the house move as painless as possible for our customers, maintain our high standards of quality, integrity and professional skill and motivate our people by means of training and reward, the Black Horse Agencies/Lloyds Bank combination should continue to stay ahead of the competition.