Internet Bubble II?

Last week’s LinkedIn IPO created quite a stir.  Not only was the financial services industry on display, as the bankers bought low and sold high within 24 hours; but pundits also began wagging about the Second Coming of the Internet Bubble.

There are about 10 Internet companies in line to bring out IPOs.  Zynga, FaceBook, Pandora, Renren, HomeAway, Groupon, Active Network, Skype, Trulia, Viadeo, Kayak, and Tudou. Experts are predicting a banner year for IPOs.

This exuberance is, supposedly, going to be rational this time.  The irrational kind of exuberance that created and burst the Internet Bubble in 2000 won’t be repeated, the ‘experts’ say, because we understand bubbles better now.  Really?  Somebody should tell the housing market.

Internet Bubble I, which burst in 2000, was generated by the investment banking and financial services industry creating over-inflated stock values in Internet-related stocks.  The Real Estate Bubble, which is still bursting on people, was generated by the mortgage companies and banking/financial services folks creating over-inflated mortgage paper.  Both were ‘exuberances’ of profit-taking for the financial institutions.

This new Internet ramp-up could in fact be the first positive macro market event since international melt-down started.  Internet companies can jump-start the overall recovery.

The 10 big IPOs coming, as well as the tens of thousands of other Internet companies, can sustain accelerating valuations, especially if they match product performance with solid customer service.

REALTOR Internet Marketing

Each year we work directly with hundreds of realtors–both brokers and agents–concerning Internet Marketing and Lead Generation.

Each year NAR publishes a Technology Survey.  That’s where that 87% number came from a couple years ago–87% of the potential home buyers were searching for homes on the Internet.

Our skepticism of the NAR report’s numbers has always been based on the relatively small return they receive from surveys sent.  Also, the quality of the response is worth examination.  For example, in the last one, REALTOR® Technology Survey Report
2010, 16% of the respondents had not done ONE DEAL in the last 12 months!

So, one needs to use such global survey data with a degree of caution when it comes to serious decisions like how to spend marketing funds in a brutal market…like now, in other words.

Here’s what we do know, based on observation and anecdotal information gathered by interfacing with realtors daily for the last 10 years on the subjects of websites, IDX searches, SEO, and Internet Marketing in general:

During the last three-four years the top 12-18% of the realtors have continued to complete successful volumes of transactions and invest in marketing.  Dollars have moved rapidly from print advertising to Internet Marketing.

Brokers and agents who understand that Internet marketing is not a passive, do-a-website, post-my-listings, and they-will-come, kind of process, are generating outstanding lead flow and return on investment for their marketing expense.  These realtors actively engage with work that improves SEO.  They also know how to use IDX searches on their own websites to drive traffic and leads.

In a counter to the good returns being achieved by some realtors, most realtors have squandered time and money with website providers.  We rarely encounter a broker or agent who has not had an unfortunate past (or current) experience with a web provider.  Tales of over-priced, under-delivered websites; lost money on pay-per-click (PPC) programs; long-term contracts with penalties for early termination; SEO scams; abound–but, still the serious competitors have pushed forward.

The range of technology knowledge, experience, and patience, among individual realtors is extreme.  A significant portion–my best estimate is 20-30%–are still on and  In the next group up, agents who use the MLS to search for homes for buyers and then email them the property detail pages.  These realtors tend to have websites, and  are still surprised when one of their buyers finds a property on their own, searching on the Internet.  They should be thankful that the buyer called them back.  (Buyers today increasingly want to have control over their home search.  They enjoy home-hunting at odd hours of the day, when they can fit it in.)  This second group comprise another 30-40% of the industry.  The third group (so the market has three basic segments) use their web presence to attract buyers and market sellers.  They provide the buyers with an effective IDX program, to be able to search all the listings in the MLS, and so the realtor generates leads on all the listings, not just their own.


Lower Third:  Clueless.  Some of these folks have the good fortune to be working with an effective web provider, and may have nice sites.

Middle Third:  Have websites, but don’t actively push traffic, don’t refer buyers to their own IDX search on their own websites, don’t understand keywords, or how SEO works in general.

Top Third:  Actively drive traffic to website that features a leading customer-friendly IDX search.  Uses blogs, reciprocal links, and organic SEO programs.  Updates website regularly.  Features own listings as a benefit for sellers, achieves non-listing lead generation that provides a positive return.

Segment Size Possibility:  In an industry where some pundits say the 80/20 rule is really 90/10, with 10% of the players generating 90% of the revenue, the Top Third could be smaller–as much as 15%–and the other two categories could in turn be larger than a third.

An Imperfect 10

Measuring some indices of performance is a relatively straight-forward process.  Revenue & Expense–and all the various expressions of margin–are measured and reported as specific numbers.  The speed you’re traveling in your car is measured precisely and arithmetically, as is the amount of alcohol in your system if your driving happens to become impaired by a police officer.

BUT…When it comes to measuring indices of human performance in work, we have somehow been convinced that measuring people is more art than science.  The earliest human mesurement system I can recall encountering is Satisfactory/Unsatisfactory, which was the system rating me in the early grade school years.  Then it became ABCDF, and then it’s numeric equivalent in high school and college, the 1.0–4.0 scale.  When I went to work it became Outstanding, Good, OK, Fair, and You’re Fired.  There’s even a system out there today that uses a rating scale of Very Satisfied, Mostly Satisfied, Satisfied, A Little Bit Unsatisfied, and Ballistic.  “Satisfied” is not a behavior…You can’t see it, you can’t measure it.  How can a person measure their own “satisfaction?”  What does it even mean?

All of these human performance rating systems share a common problem–not enough categories.  Even the old 1-10 scale applied to the overall attractiveness of a person, and the 1-100 scale for scoring math tests, only allow for a limited number of ratings.  Trying to press, say, 200 peoples’ performance into five categories ends up being an exercise in relativity–‘Let’s see, I rated John a Good, but Sally is better, so I’ll have to rate her as a Good+.’

Evaluating a person’s performance is serious work, and it has consequences.  If you enter a person’s life in a helper role, you will either have a positive or negative impact on that person–never a neutral impact.

Communicating to an employee areas of performance that need improving may be the hardest job a manager has.  Most managers are reluctant to communicate directly about a person’s problem areas, because they fear a reaction from the employee, one that will focus on a weakness/need of the manager.  (The manager, like all of us, is mostly thinking about themselves during a performance appraisal.)

To effectively measure human resources, a manager needs some tools.  The first of these is a rating system that gives the manager enough options to reflect the multiple levels of human performance.  The rating system needs to be numeric, so that indices of performance can be weighted, combined, and averaged.  The rating system also needs to give the manager some standards upon which to anchor the ratings.

Human behavior can be observed and measured.  Standards for behavior can be set, and performance against those standards measured.

A 1.0–5.0 rating scale can be applied to human behavior.  The key is to set the standard at 3.0.

5.0  Creates new standards

4.0  Exceeds some standards

3.0  Meets standards

2.0  Fails to meet some standards

1.0  Destructive

Examples of standards include:

Revenue/employee, Forecasting accuracy, On-Time Delivery, Sick Time, Calls per Day, Interpersonal Response Level, Callbacks, Transactions per day…If you can observe someone doing it, it can be measured.

Perhaps the most unfulfilled employee need is honest feedback and information about how to improve.  Managers who can put aside their own fears and provide accurate ratings based on defined standards with an effective degree of empathy will actually help people.

Chicken or Egg?

Marketing a service is different from marketing a product.  A product can be demo’d, it is tangible.  Service is a promise to deliver, an intangible.

Service companies can demonstrate how many trained people, how quickly they respond, how long it takes on average for them to fix the problem, how often you’ll need help per year…but, service is manufactured daily in front of the customer.

We recently needed to develop a marketing collateral piece, requiring content and images.  Which comes first, the content (message) or the image(s)?   What’s the “best practice” for the creative process?

In this case, we started with an image, and that led to the content:

This is Chloe, a developer-in-training, staring out the window in the office this winter.

Looking at this picture generated the idea for the content:  She’s watching traffic go by.  Some small businesses are watching the internet traffic go by, rather than participating and getting their share.  So the content line became, “Just Watching the Internet Traffic Go By?”

Check out the postcard that was created on our website.

When it comes to the question of which comes first, with image & content it’s the same as with the chicken & egg–It doesn’t matter, as long as you get one or the other to start.

Service Industry Association

The Service Industry Association’s annual Summit of Industry Leaders, held last month in Las Vegas, was remarkable on a number of levels.

SIA, the organization itself, under the leadership of an excellent Executive Director and Board, is experiencing a remarkable growth spurt, including an increase globally.  The whole conference was, in fact, infused with enthusiasm and a positive outlook.

Also remarkable is that anti-competitive actions by original equipment manufacturers (OEMs)—in both IT and Medical Equipment services markets—are increasing.  Policies that tie hardware service to software service, or to equipment purchase, are intended to benefit only one party—the OEM.

The effect of OEMs tying services is to eliminate choices and options for enduser customers.  For decades Independent Service Organizations (ISOs) have provided a balance and an option for endusers.

ISOs maintain a wide range of manufacturers’ products.  For some enduser customers, this is the best-performing and most cost-effective solution to managing the full spectrum of technology services needed.  OEM actions and policies that eliminate that option harm those customers.

ISOs are typically profit center organizations.  They are not tied to the success or failure of a manufacturing or a product sales/marketing organization.  ISOs are positioned to provide a unique set of services to meet customer needs, and have historically stood closest to the customer.  In past decades when OEMs have attempted to monopolize the service market for their products, remedies have been found—both in the courts and in the offices of customers.

OEMs need to adhere to long-standing industry standards, as exemplified by IBM.  When policies are designed to meet the full range of customer needs, the customer, OEM, and ISO all benefit.

If I were a betting person, and having recently been to Vegas who isn’t, I’d bet on the customers, once again, versus the OEMs.


Blog will offer easy to access ideas and info.  Not just a platform to hear ourselves think– although there’s value in the exercise alone–but hopefully you will add some thoughts and ideas of your own.

We are actively engaged in the technology customer service industry, a huge ($350B annually in the US) arena offering an endless number of topics to discuss, ranging from web services to high-end technology and service industry consulting.