UNDER THE HAMMER : WHY AUCTIONS WORK
THE EFFECT OF NPS ON MARKET SHARE
MARKET SHARE PERFORMANCE NSW , QLD , VIC
* OFFICES ABOVE 20 % RESPONSE RATE
100
90
NPS
80
70
60
JOHN MORRIS
SOUTH AUSTRALIA CHIEF AUCTIONEER
50 10 % 20 % 30 % 40 % 50 % 60 %
MARKET SHARE
As the market cools after a meteoric , 18 month rise , our clearance rates across the board have fallen by almost 20 per cent . Buyers are taking their time in this new environment , and while stock has remained steady , the willingness to spend has been curbed by interest rate rises and inflation .
However , when analysing our clearancerate by method of sale ( i . e private treaty versus auction ), we ’ re seeing the same trend across the board : auction clearance rates are consistently higher , and haven ’ t dropped as significantly .
When reviewing the data over the course of a full campaign , auctions are still selling with considerably higher clearance , over 30 per cent - 40 per cent higher in fact over the Ray White network . This is a reflection of quality stock processing .
The auction campaign gives three chances for a vendor to sell : prior to the auction , on the day , or post .
The campaign requires the agent and the vendor to work within a specific timeframe which ultimately keeps them accountable , creates urgency and best educates market value .
Auctions still keep stock moving , but agents need to be aware that this changing market means fighting for every listing and buyer , optimising marketing , perfecting after sales and prospecting , prospecting , prospecting .
It ’ s easy to envisage the end-game benefits of a customercentric strategy : more satisfied customers , increased brand loyalty , and more engaged employees .
But how can a superior customer experience be quantified ? What effect does NPS have on performance ?
It ’ s no surprise that our offices with high market share all have world-class NPS scores . Reputation and word-of-mouth referrals are the most sustainable platform for competitive differentiation , which is evident in our NPS and market share results .
While the NPS score doesn ’ t dictate market share , as there are several factors at play , conclusions can be drawn about its impact .
Offices with market shares above 30 per cent all have NPS scores of 89 or higher . On the other hand , offices with market shares below five per cent all have NPS scores below 72 ( data based on NSW , QLD , VIC offices with response rates above 20 per cent ).
What does this mean exactly ? Essentially the offices that have a high share of their market , have more than 90 per cent of their clients ‘ say ’ that they are highly likely to recommend or re-use the agent ’ s services . How many of their clients were actually referred ? These businesses see referrals and repeat clients accounting for over 50 per cent of their business .
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