Purplebricks spent roughly 900 days on Australian soil, reportedly spent roughly $200 million in marketing, yet couldn’t make their business model work.
With my marketer’s hat on, here are what I hope are seven useful and practical lessons we can all take away from the experience.
1. There is no point branding unless you can convert
Homer Simpson can’t live without doughnuts.
To Homer, doughnuts are life.
If I was going to open up a doughnut shop, I would do it right next to where he lives.
I wouldn’t open it next to a gym.
Donuts don’t appeal to everyone, every day, but they do to Homer.
Not everyone needs a dentist every day.
But if you have a cracked tooth, you really need a dentist straight away.
If you are in a lot of pain, you probably don’t care too much about the price.
If your getting divorced, you need to deal a different type of pain that you would similarly want gone – the pain of separation and splitting up assets.
The buying choices consumers make depends on their circumstances and their value system (I’ll dig into this a bit more in a moment!)
Nobody buys products, they buy solutions to problems and their pain points.
Consumers may not like dealing ‘with the cliche’, or with an under-qualified agent – but that is not what I would call an urgent problem that needs solving.
It’s not a marketing ‘bleeding neck’.
Key Takeaway: ‘Spray and pray’ is not a great marketing strategy. Just because you love your product doesn’t mean there is a market for it. Before you invest in marketing ensure you are solving a ‘bleeding neck’ problem for a customer. If you don’t know what that is, find out by talking to them.
2. There is no point converting unless there is economics to support it.
I would love to have the marketing budget that Purplebricks Australia had.
For the last 900 days, Purplebricks’ branding has been everywhere – from the Melbourne Storm to silly ads on TV.
The puff of purple in every corner of our lives larger than Barney the Dinosaur has been inescapable.
Having a big marketing budget is fine, but it will run out if you’re not converting your leads to sales.
Example: I sell cut-price books at $10 a copy.
It costs me $20 to print and send a book to a consumer.
Unless I have a way to upsell that consumer to something else, I am going to have a profit problem pretty quickly.
So if you were to grab a calculator and do some numbers on Purplebricks marketing spend vs listings/leads, the cost per lead generated must have been enormous.
That’s fine if you have the revenue to support that kind of cost base, or some clever upsells to make up that margin.
If you don’t…even deep pockets are only so deep.
Key Takeaway: Understand your cost per lead and the revenue that will come from that lead. Ensure you also have strong processes in place to follow up leads (so you don’t miss any) when they come through your door. And if your cost per lead is high, I would also be looking at upsells, what can you do that is income generating, for consumers between sales or purchases?
3. If you chase one rabbit, you might catch it. Chase three and you’ll probably catch none.
Most entrepreneurial thinkers know a good idea when they see it – so much so that most have dozens of ideas bouncing around at any one point in time (just ask me!)
This is kind of dangerous as if you try to do too many things at once you may never achieve even one of them.
Purplebricks decided to conquer the globe all at once – expanding to Australia and the US before they were even profitable in the UK.
At marketing school, they teach us to segment, test, test, test, test – find a winner and then double down.
Much better to realise revenue from one idea and then move forward, than to realise none from none.
Key Takeaway: If you are looking at expanding by offering new products, services or markets pick one and make it revenue generating before you move onto the next. If you attempt too many great ideas/initiatives at once it’s possible none of them will actually realise greatness they probably deserve.
4. Be humble
I think the one thing that’s really gotten on everyone’s goat was the way Purplebricks spoke about the industry.
Here’s my take: If you’re going to earn an income out of an industry – any industry – then you need to leave it in a better place.
How can you expect to prosper in an industry where your whole marketing message is based on how bad the competition is and how bad the industry is generally.
Key Takeaway: One of my first bosses taught me that you should never talk about the competition in a bad way, as it only reflects badly on the person talking.
5. Don’t rely on (or stand behind) technology
Purplebricks has one of the best tech platforms going around town, developed new from the ground up.
If there was one thing that they really have going for them, it’s this.
The purple jewel in the purple crown.
The platform was designed for speed and transparency – allowing consumers the option to manage their own home, being in direct contact with potential buyers, accepting and rejecting offers, answering questions.
But as much as it is a great tech platform, consumers in Australia seem kind of reluctant to talk to buyers and show people through their homes.
Many of us understand we have better things to do with our lives and that there are folks out there way more qualified than a DIY.
So even the best of the best tech didn’t make a difference in the ultimate outcome.
Key Takeaway: Don’t be sold on the latest and greatest technology thinking you have to take on everything. Don’t think every piece of tech that comes your way is what the consumer wants. Evaluate technology for the type of consumer-focussed service it can help you provide (again if you are not sure, ask a customer!)
6. A little competition makes everyone better
The whole Purplebricks thing reminds me a little bit of my time at Optus many, many years ago.
Telstra didn’t like us much, especially when we did things faster, more efficiently and cost-effectively than they did.
We were new, nimble, shiny and had a ‘can-do’ attitude.
The old monopoly carrier moved at a pace slower than a herd of turtles attempting to stampede through peanut butter, and they were expensive to boot.
Consumers were fed up, and now had choice.
Competition (and subsequent transformation) made Telstra better.
It forced them to innovate.
Rethink who they were.
We had to, at times, respond and rethink who we were.
But the winner at the end of the day was the consumer.
For those of you who have experienced the pain of selling against Purplebricks, it’s probably made you think about how you pitch your fees to clients, and how flexible and responsive you can be while still maintaining service and profitability.
Key Takeaway: Purplebricks weren’t the first fixed fee/tech disrupter and they won’t be the last.
Can you take this opportunity to critically look at your business model and the consumers you serve? Where can you innovate or transform to compete with the next shiny new disrupter that will inevitably come along?
7. The ‘Uber’/Value equation
There will always be consumers who want the best and most expensive of everything and conversely, there will be consumers who always want the cheapest of everything.
It’s planet story, vs planet price.
Every consumer, in their own mind (you included!) weighs up the costs and benefits of making buying decisions on everything from shoes, to cars to who is going to sell my home.
Sometimes the elements that need weighing up are obvious – eg price tickets.
Other times they are intrinsic – levels of service, dealing with someone you like, the red carpet treatment…the list goes on.
Each potential product or solution you put forward is weighed up against alternatives (eg traditional agent), substitutes (eg FSBO) and competitors (the guy down the road).
In the case of Uber, some consumers will always be Uber X or Uber Pool.
Some will always be Uber Black or dip ‘down’ to Uber Select.
Some will always want their own car.
Some might go back to a taxi on any given day due to convenience…or order the taxi through Uber for the additional convenience experience of payment and tracking.
Me… where possible, I like to walk.
It gets my step count up (benefit) in the fresh air (benefit), and saves me money (benefit) vs a cheap ride (cost) that won’t get me there as fast (cost).
These buying decisions are made by consumers in split seconds as we mentally calculate what the best and easiest option for us is at any given point in time.
Key Takeaway: This is the time to be crystal clear in articulating everything you do that buyers and vendors value, and for the future of the industry this has never been more important. Consumers now have a heightened awareness of the Purplebricks ‘Uber X’ proposition in real estate so now is the time to talk about your more valuable service.
Get super clear on who you are, who you serve, and what your customers value.
Now’s the time.