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2012-01-30 18:18:22

A Brief History of CRM & Who Will Survive? (Part 1)

Currently, there are about 40 Real Estate specific CRMs (Customer Relationship Managers) and they are surprisingly unique in many respects. Can the industry support them all? If not, how do you pick one that is most likely to survive?

Moving from one CRM to another is very costly in terms of loss of data and the investment of time in a new learning curve. If at all possible, you want to pick the right one the first time.

The very first Real Estate specific CRM was Howard Sanderson’s Howard & Friends in 1982. Around 1986, another came out called Real Estate Specialist, which I used for about 5 years. Top Producer was released in 1989, followed by Online Agent (which was later renamed to Agent Office) in 1992.

Howard & Friends was a much loved product and many still speak of it fondly. I preferred Real Estate Specialist because I didn’t like having little wizards telling me to wait while Blinky gathered my database. What can I say, I was a computer operations manager in my prior life. Howard & Friends took too long to make the transition to Windows and Real Estate Specialist never did. They were both such small companies that they couldn’t afford to do some of the things necessary to remain competitive. Imagine how small the market for CRM was at that time and how difficult it was to get the word out pre-Internet. They also lacked marketing funds and expertise. When Top Producer started gaining ground, Howard & Friends and Real Estate Specialist couldn’t keep up. Top Producer has always been aggressive in their marketing and has retained the number one market share as a result. Top Producer then affiliated with Century 21 and that, as they say, is history. Agent Office was released in 1992 and very quickly affiliated with RE/MAX. Agent Office was then promoted on the RE/MAX Satellite Network featuring Jim Casey’s training videos. Thousands of agents were exposed to it and Agent Office took off, maintaining the number two market share for many years.

From 1992 through approximately 2005, the only Real Estate CRMs of which the vast majority of agents were aware were Top Producer and Agent Office. Both were good programs, but there was certainly room for improvement.

Most Real Estate specific CRMs currently available were released three to six years ago. Having personally interviewed 30 of the CEO’s and developers, I can tell you that most were developed by people with a software background who became real estate agents. When they looked for a CRM, all they could find was Top Producer and Agent Office which was insufficient for their needs. Deciding they could do better they left Real Estate sales on a mission to build a better CRM. In 2006, these entrepreneurs would have seen a market of Real Estate licensees comprised of 2.63 million according to ARELLO. It was reasonable to project that there was room in the market to compete with Top Producer and Agent Office but there were two factors that could not have been foreseen. One was that the number of agents was about to drop by 20 percent. Today there are approximately 2.1 million. The other was that the competition in the CRM business was about to increase dramatically.

There are estimates showing that only 50% of that 2.1 million agents are making a significant income. We can say that is a low estimate and for the sake of argument we’ll say 75% is a high estimate. Now guess-timate what percentage of agents are actually using or are planning on using a CRM. Based on polling about 10,000 agents over an eight year period, I found that number to be about 20%. Based on my day-to-day conversations I believe that percentage is increasing though. For the high-end let’s double that and call it 40%. Work out all these numbers and the result is a market size of between 200,000 and 900,000 agents. But remember, the 50% and the 20% are supposed to be the real numbers. The low-end.

If the high-end is more accurate that would be enough for more CRMs to survive. If the low-end is,  that is not a very large market in which to sell a software product, especially if you have competition. And what none of those developers could have known is that they were one of many working on the “new best CRM”, all at essentially the same time.

There were a few CRMs here and there that were being released over the years, such as Advantage Xi in 2002, but 2005 was when the pace started to pick up. About six were released between 2005 and 2007 including Agent360, Agent’s 1st Choice, Busy Agent Pro, and Realty Ware. In 2008 though, the flood gates burst wide open. About 15 new CRMs came out that year! Among them were: Address Two, Agent Business Builder, CRM Real Estate, Easy Broker, Market Leader, Masterdigm, More Solds, My Real Estate Tools, Net Aspects, Plan Plus Online for Real Estate, Realty Promoter, Prospects, Sharper Agent, and Simple Remote. In the last two years, four have gone out of business, including Agent 360, 360 Agent (yes, they are two different CRMs), Simple Remote, and Real Time 2020. Since 2008, several more opened their doors, including IXACT Contact and Real Estate Client Management.

It is significant to note that also in 2008, Emphasys Software bought Agent Office from FNRES. The last upgrade to Agent Office had come in 2007 to make it Vista compatible. When Emphasys bought it, they maintained that they were going to continue to upgrade it, but have since opted not to do so. My assumption is that they felt it was a better idea to create a new CRM than to re-write the old one converting it to a better/newer software language.  Several years ago, my contacts at FNRES had told me that was what really needed to happen for Agent Office to progress. So after 18 years, the Agent Office that many of us came to know and love will eventually be phased out. Emphasys Software has now created a completely new and different product that is an Outlook add-on and they are calling it Agent Office Personal Edition. It bears no resemblance to Agent Office other than its name.

There are now about 35-40 Real Estate CRM products competing for a probable maximum of 600,000 buyers. My best guess is that the top four or five CRMs, of which Top Producer and Agent Office are two, comprise a user base of at the very least 150,000. There have been five failures in the last two years and I would expect a good number more in the next few years.

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