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How Will The Connected Car Change The Dynamic Between Automakers And Consumers?

Connected cars are expected to make up 75 percent of total car shipments worldwide in 2020, compared with just 13 percent in 2015, according to Gartner.

But unlike features added to cars like FM radio and air conditioning, the features and services associated with the Internet of Things will also pave the way for new ways carmakers and drivers will interact, notes Brendan O’Brien, chief innovation officer and co-founder of Aria Systems, a software company that provides cloud-based billing services for companies such as digital mapping platform HERE, ride-sharing provider Zipcar, Suburu.

In O’Brien’s view, much of the new opportunity for automakers in the age of the connected car will be “recurring revenue” because of the very nature of how these IoT features are consumed, measured and paid for. Some examples of those services and features include subscriptions to consumption-based recurring payment schemes for such things as ride sharing, location services, apps (from connected devices), telematics, wi-fi access, internet radio, among others.

GeoMarketing: Considering all the potential disruption of the auto industry from the connected car, how will the car companies derive revenue from these new IoT related services?

Brendan O’Brien: For the industry to fully capitalize on connected car services, they are going to have to do more than monetize in-car connected services. Connected services will be part of the deal, but cashing in is going to take a fundamental shift in how automakers think about selling cars. What is thought of as “loyalty” now—building and selling a car and hope that it’s good enough that the customer will probably buy another one from you in 5-7 years—has to evolve into building strong and lasting brand affinity.

Instead of building the car, they need to build the brand and the relationship with the customer. It can no longer be a point-of-sale relationship, it has to be constantly nurtured to develop a permanence. That is going to take a direct line of sight to the customer that cannot be maintained with the current dealer-driven sales structure.

Achieving this all-important brand affinity is going to be relatively easy for makers of luxury vehicles and work vehicles, where such affinity tends to already exist, but is going to be much harder for low-to-mid-market makers of passenger vehicles where they risk being commoditized – in these cases the consumer’s affinity and relationship are far more likely to reside with the provider of the service that puts them behind the wheel (think Zipcar, Enterprise CarShare, even Uber and Lyft) rather than the manufacturer of the vehicle itself.

Connected cars are hot, but it looks like industrial applications for connected vehicles could be just as—if not more—lucrative. Why are heavy vehicles and mobile telematics as much in the IoT fray as their passenger-wheel counterparts?  

Usage-based monetization models and IoT integrations are already popping up in the heavy equipment industry with leaders like Caterpillar and John Deere using the technology in many different ways. There is currently a lot of unanswered demand for data that can be used to create efficiencies and increase profit margins with connected industrial vehicles. This will be a fast-growing sector, and we have yet to see its breadth. Industrial applications also tend to contribute to bottom line in a more immediate and direct way than consumer. And for industrial customers, the machines are already a sunk cost and the connected features just become a huge value-add that has an almost instantaneous positive impact to their bottom line, solely based on the productivity gains and loss prevention these connected services provide.

Explain how new services offered from companies like Trimble, Arsenault/Dossier, and others are fixing problems that have plagued heavy construction for years?

These companies are providing usage-based pricing models to get people to use the vehicle, as well as “add-on” services that dramatically increase productivity (e.g. automated fleet management and predictive maintenance alerts) and decrease loss (e.g. geo-fencing that eliminates overnight equipment theft). The add-on services are instantly attractive for their immediate bottom line impact per my response to the prior question, and the pay-per-use model is finding traction because it more naturally aligns with how these businesses measure their own success, which is the same reason so many enterprises have moved toward the use of cloud-based IT infrastructure (like Amazon Web Services) rather than building and hosting their own IT infrastructure. It can also reduce extremely high costs of entry and gives industrial users a whole lot more flexibility as they are never stuck with machinery sitting idle that they bought for project X that won’t be used for project Y and Z.

What are the likes of Ford, Audi and GM doing that they have never dreamed of before?  

Just take a look at recent actions by OEMS like Audi, General Motors and Ford. Audi is currently offering two different types of “lifestyle access” programs including on-demand cars, and pooled usage. Ford just picked up San Francisco crowd-sourced-commuting company Chariot (which uses Ford vehicles), and they have also promised fully-autonomous vehicles by 2021.

The autonomous cars from Ford will only be offered (at least initially) as a commercial mobility service, and not for traditional purchase, pointing to a shift to usage-based, recurring revenue models. General Motors is also getting into the autonomous ridesharing fray, and they say they will be launching a fully autonomous vehicle with its partner Lyft in about five years. GM has also started its own car sharing service called Maven, in addition to its partnership with Lyft. Previously, automakers were content with a very hands-off fleet sales model where rental companies and then ridesharing and car sharing companies like Uber and Zipcar were sold vehicles at volume discounts or provided with special offers for exclusivity.

But it seems they see the writing on the wall when it comes to the changing tastes of millennial consumers—they are less likely to participate in traditional purchases and more likely to buy “experiences”. Automakers are not about to be left out. Though it is a massive culture-shocking change from measuring success to margin-at-sale to long-term annuity and recurring revenue from services, the opportunity is too large to take a pass.

What can businesses do now to develop their connected vehicle go-to-market strategies?

Mainly, they have to prepare for that massive culture change. Automakers, their dealer networks, the wholesale model—it is built on and relies on long-standing traditions and agreements. Today’s customers are used to self-service, to doing their own research and making purchases on their own terms. To these consumers, the dealership model is archaic, painful, and unnecessary.

While upscale and boutique, Tesla is proving that the current dealership model could virtually be a thing of the past if the industry can break down its own bureaucracy. Tesla is the model, and ignoring this model will be done at the peril of mainstream OEMs.

Although it won’t disappear entirely, the current dealer-centric model is a dead man walking. It will and should be more like, say, an Apple Store, where the purchase is made online, the transaction handoff, value-adds, and continuing service happens in the store, and tech upgrades happen over the air.

The dealership becomes part of the relationship, not the entire relationship. There is also a major technical infrastructure aspect of this for OEMS—they have relied entirely on a one-time sales revenue model for the last 110 years. They just don’t have the back-office capability to handle selling, billing, and provisioning products and services outside the dealer network and with a recurring revenue and customer lifetime value model. If this is to scale, they need to prepare their billing and accounting systems and practices today, not after the next launch or acquisition. Internal evangelism for this shift needs to start in the finance office. Recognizing growth and revenue is going to change—margin models cannot be counted on for much longer.

The CFO has to be on board. The best path to getting this new thinking socialized for many OEMs is more likely to be their in-house financing divisions (if they have them), as concepts like “annuity-based returns” (where profit is realized over time rather than at initial point of sale) is far less likely to feel “foreign”. Many of the explorations at OEMs of non-traditional “transportation as a service” ideas are originating from these finance divisions for that very reason.

You cite four main business offerings for what you call “IoT on Wheels” which includes cars and other vehicles. Can you give us some examples of companies that have successfully adopted these models and what they are doing right?

Let me break it down by offering:

  1. For transportation as a service – Audi and BMW are doing a great job building and capitalizing on brand loyalty and the exclusivity of their brands with their white-glove on-demand car services. They took the functionality of Zipcar and turned it into a luxury service that perfectly matches their luxury brands by leveraging the pre-existing brand affinity that is typical of many luxury buyers. Ford is also on board with FordPass, which is the first automaker-produced app that can provide services even to drivers who don’t own a vehicle from that brand. The app can help find parking, lock and unlock the car—all great—but what it really does is help build brand affinity without the customer even having to get into one of their cars.
  2. For post-sale/lease secondary services – While OEMs are all making several forays into services like roadside assistance (e.g. GM’s OnStar), on-board entertainment and navigation, etc., the companies with the most traction and in better market position tend to be after-market providers. Verizon HUM is a great example that leverages the sophistication of the comprehensive data streams provided by modern, ubiquitous OBD ports, and like the many services provided natively by smartphones from Apple and Google, these services go where the consumer goes and are vehicle-agnostic.
  3. For Usage Based Insurance and Taxation – Metromile is a great example of millennial-focused UBI, and Progressive has provided an attractive way for telematics data to directly reduce premiums for safe drivers. Oregon’s OreGo pilot program is determining how effective usage-based-taxation, again derived from telematics data, can more equitably distribute the road-use taxation load in an era of electric and hybrid vehicles. Oregon is finding a way to replace income can no longer be counted on coming from taxes applied at the gas pump.
  4. For secondary data stream monetization – We’re still in the “wild west” to some degree here, where OEMs who are suddenly the beneficiaries of “direct line of sight” data about the users of the vehicles are figuring out how those streams can be analysed and utilized for secondary direct and indirect monetization. But, we’re getting there. Whether used for influencing broad-market decisions like determining which vehicle features should be developed and highlighted in upcoming models, or for targeted individualized offers to consumers for new vehicles that better serve their personal driving habits, or for downstream sale to third parties like insurance companies, there is a sense that there is great value here, even if the exact application of that value isn’t predetermined by the OEMs up front.

You’ve said the challenges currently facing connected vehicles have little to do with the technology itself. What are the main hurdles standing before companies seeking to capitalize on a connected vehicle business?

The answer depends if we are talking about OEMs or aftermarket providers. OEMs face myriad challenges, stemming from their lack of infrastructure to deal with recurring revenue and usage-based models that need to be employed to monetize connected car services.

They have always operated on one-time sales models and they just don’t have the back-office capability to handle selling, billing, and provisioning products and services outside the dealer network. Not to mention that the structure and culture of the dealer networks just does not jibe with how connected services and vehicles are provisioned.

Not to mention the inherent complexity of manufacturing a car—development cycles are long and the lifecycle is even longer. Tech becomes outdated before a car even hits the sales floor. This is where margin accounting comes into play and becomes a problem—though recurring revenue can be derived from services and sales-alternative models like car sharing and shared leasing—automakers still focus on margin at point of sale. Continuing to do this will hinder innovation.

Non-OEMs, the aftermarket, does not face any of these hurdles, and their barriers to entry are typically pretty low. They can still leverage vehicle systems (using OBDII) to provide connected services, and they are not tethered to margin-based accounting. Not to mention that they are far less burdened by regulation, that while beneficial to consumers, constrains OEMs in ways that don’t apply to the aftermarket.

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Lack of Existing Home Inventory Slows Sales Heading into Fall [INFOGRAPHIC]

Lack of Existing Home Inventory Slows Sales Heading into Fall [INFOGRAPHIC] | Simplifying The Market

Some Highlights:

  • The National Association of Realtors (NAR) recently released their latest Existing Home Sales Report.
  • First-time homebuyers made up 31% of all sales in August.
  • Homes are selling quickly with 51% of homes on the market for less than a month.
  • A limited supply continues to drive up prices for the 66th consecutive month.

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DIY Home Projects: Creating a Study Space That Will Help Your Children Stay Focused

DIY Home Projects: Creating a Study Space That Will Help Your Children Stay FocusedIf you’re a parent of school-aged children, you’ve likely been concerned with their study habits at some point. Sitting down in front of the television or at the dinner table to crack open the books is going to be less efficient than doing so in a quieter, more productive work space. Let’s explore how to create a study space that will help keep your children focused and on task.

Ask The Kids What They Need To Be Productive

Before you get to work on creating a new studying space, it’s a good idea to have a chat with those will be using it most. Ask the children what kind of surroundings they feel would help to keep them productive. Younger kids may only need a small desk area but would appreciate more space in the room. Conversely, older children who are in high school are likely to need a lot of desk space for laptops, textbooks, and other studying materials. Starting the project out by asking what they need ensures that they get what they need out of the space.

Brighten Up The Room

Next, you’ll want to focus on how the room is lit. A dark room isn’t likely to be a positive studying environment. If possible, natural light sources should be used as much as possible. Studies indicate that sunlight is better at keeping individuals alert and focused than fluorescent or other types of home lighting. Also, consider adding some plants which can help to keep oxygen levels a bit higher in the room.

Note that you’ll want to avoid making the room so bright that it’s distracting. Plus, the sun can cause quite a bit of glare depending on how much outdoor exposure the room has. If there’s already a lot of natural light, consider a set of curtains that can reduce or block out any glare to allow for a more comfortable learning environment.

Eliminate Any And All Distractions

Distractions – especially those which are useful for procrastinating – are the bane of any productive space. There should be no television, no video games and no other distracting elements in the study area. The only furnishings should be those used for studying.

A study room is an excellent addition to any home with school-aged children. If you’re in the market for a new home – study spaces included – contact your local mortgage professional today.

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China’s Tencent And WeChat Ready To Make A Big Play For U.S. Advertisers

China’s leading social media and commerce developer Tencent is expanding its reach to Chinese-speakers in the U.S. as it seeks to challenge Google and Facebook  on matching advertisers and consumers on a more global basis.

Tencent will make its official U.S. marketing debut during the Advertising Week New York next week. The company, which runs the popular WeChat messaging app, will showcase of a new suite of advertising solutions and resources that enable U.S. marketers to directly engage Chinese consumers on Tencent platforms both in China and while they travel abroad.

These new offerings and the establishment of a dedicated U.S.-based support team provide U.S. brands and agencies with unique and powerful ways to capture attention, drive brand preference and increase sales among Chinese consumers.

Why should U.S. businesses pay attention?

As Tencent points out, Chinese tourists visiting the U.S. spent roughly $35 billion in 2016 alone.

According to the U.S. Travel Association, the average spending per trip of a Chinese traveler in the U.S. is higher than any other international traveler, and shopping is a key activity for Chinese outbound tourists.

“For U.S. advertisers, China presents a dynamic, lucrative and challenging opportunity. Brands have become more sophisticated about the needs and behavior of Chinese tourists. To make a sale outside China, they understand that they need to speak to their customers before they even plan their trips,” said Poshu Yeung, VP of International Business at Tencent.

Over the past few months, a few select U.S. brands were invited to use these new advertising solutions, including the largest mall operator in the United States, Simon Property Group, and popular women’s fashion brand, Rebecca Minkoff.

“Tencent and WeChat’s new travel targeting and advertising solutions provide us with an unprecedented opportunity to directly connect with Chinese travelers, both in China and when they visit the U.S.,” said Kristen Esposito, Simon Property Group Vice President of Tourism and Marketing Alliances. “China is projected to be the largest overseas inbound travel market to the U.S. by 2021, so the potential for growth is truly extraordinary.”

The connection between U.S. brands and China’s social media platforms could produce a lucrative exchange that allows American advertisers to expand their reach beyond U.S. borders.

In terms of the size of China’s social media usage, More than eight in 10 internet users in China, or 626 million people, will access social networks regularly in 2017, according to an eMarketer report this summer.

eMarketer has raised its previous estimates for social network user growth in China by more than 4 percent, mainly because of older users increasingly using homegrown messaging platform WeChat to perform a myriad of tasks that reach far beyond messaging.

For example, 62 percent of internet users ages 55 to 64 in the country will be social network users this year—equating to 28.8 million individuals.

Since its launch in 2011, WeChat has evolved into what eMarketer called a “must-have” app in China. As messaging apps in the U.S. are still slowly expanding into commerce, WeChat has pioneered the format to be used for shopping, food delivery, even booking a doctor’s appointment and paying bills.

“WeChat’s further expansion into the areas of payments, shopping and general utility have proven fruitful for China’s social networking and messaging giant,” said Monica Peart, eMarketer’s senior forecasting director. “And it will only increase the attraction for new mobile users and older users, as WeChat increasingly has something for everyone.”

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Why Are So Few Homes for Sale?

Why Are So Few Homes for Sale? | Simplifying The Market

There is no doubt that the largest challenge in today’s housing market is a lack of housing inventory for sale. This challenge has been defined as an “overwhelming lack of supply,” and even a “straight up inventory crisis.”

First American just released the results of a survey which sheds light on the reasons for the current lack of supply.

The survey asked title agents and real estate professionals to identify what they believe are the top reasons for this lack of inventory in their markets. Here are the results of the survey:

  • 47% – existing homeowners are worried that they will not be able to find a home to buy
  • 26.5% – first-time buyer demand is absorbing a large share of available homes
  • 11.3% – existing homeowners’ mortgage rates are lower than the current rates
  • 10.6% – insufficient or negative equity in the home
  • 4.6% – foreign buyer demand is absorbing a large share of available homes

As the survey revealed, there is a shortage of current homeowners willing to put their homes on the market for one of three reasons (see numbers 1, 3 and 4 above).

Is this an opportunity for some homeowners?

The report on the survey explains:

“The crowd has spoken, and it seems in many markets home buyers and sellers alike are ‘imprisoned’ by the lack of housing inventory.”

That leaves a tremendous opportunity for every homeowner not facing these concerns. If you can put your home on the market today, you are subject to far less competition than at any time in recent history. That will result in your home selling quickly and for the highest possible price.

Bottom Line

While many homeowners are feeling imprisoned for multiple reasons, those who are not handcuffed by these concerns have a once in a lifetime opportunity to sell their houses at a peak selling time.

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It’s Pre-approval Time: How to Get Your Finances in Order for Your Mortgage Approval

It's Pre-approval Time: How to Get Your Finances in Order for Your Mortgage ApprovalBuying a new home is one of the most exciting experiences a person or family can have. Of course, before you can step foot into your new dream home you will need to get prepared financially, especially if you are taking out a mortgage to cover some of the purchase price. Let’s take a look at a few key steps that will help you to prepare for the financial background checks that are part of the mortgage process.

Square Up With The Government

The first place you’ll want to start is making sure that you are fully caught up on any income or other taxes. Rest assured that your lender will be checking your financial history and being behind on government payments is a significant red flag. Make a quick call to the IRS or visit them online to check on your status and verify that you’re fully paid up.

Scrub Your Credit History Clean

Next, you will want to check in with the major credit reporting agencies to get a copy of your credit report. Your credit or FICO score is an important indicator that suggests your risk level and creditworthiness. However, any unpaid or delinquent amounts on your report are equally as important as they can signal that you may have skipped out on debts in the past. Check for any red flags on your credit report and work with the agencies to get them challenged or removed

Get Your Down Payment Saved Up

You’ll also want to have your down payment amount saved and ready for use. Your mortgage lender will want to know how much of your savings you’re contributing to the overall purchase price. Also, if you’re committing less than 20 percent down you may be required to purchase private mortgage insurance.

Have All Your Paperwork Ready

Finally, check in with your mortgage lender to find out what paperwork you’ll need to bring in for your approval meeting. Recent W-2 or tax returns, pay stubs and financial asset information is a good place to start. Your lender may have other requirements so check in to find out what’s needed or give us a call and we can share some insight.

These are just a few of the tasks that you’ll complete on the path to securing your mortgage financing and buying your new home. For more information on the mortgage process or to start your pre-approval, contact us today.

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Why McDonald’s Keeps Winning The QSR Foot-Traffic Game

From Taco Bell to Burger King, a plethora of QSRs have expanded into the morning space — but McDonald’s remains the winner, with 52 percent share of foot traffic among the QSR breakfast leaders, according to the latest QSR Foot Traffic Trends report from GroundTruth (recently rebranded from xAd).

Part of this success is no doubt due to simple factors, like the chain’s size and number of locations, but that can’t entirely account for the loyalty the brand sees compared to its competitors of a similar scale: While Fast Casual customers as a whole are reportedly the “least loyal,” with only 24 percent returning to the same fast casual brand from month to month, 48 percent of McDonald’s customers came back over the same time period.

In light of these insights, GroundTruth’s Sarah Ohle talked to GeoMarketing about how McDonald’s keeps driving customers to its locations, and what physical businesses — from SMBs to enterprise — can learn from it.

GeoMarketing: From your perspective, why does McDonald’s remain the breakfast winner with 52 percent share among the QSR breakfast leaders?

Sarah Ohle, VP of Marketing Insights at GroundTruth: From our very first Q1 2016 QSR Foot Traffic Trends report, McDonald’s has held the lead in overall share of foot traffic, due at least in part to size and number of locations. However, another big aspect of their success is that they are constantly innovating and responding to market needs. One very clear example of this is their push for breakfast. McDonald’s was the first to offer an all day breakfast menu in October of 2015, and since then they’ve expanded the breadth of their breakfast options, with a focus on more sophisticated McCafe beverages.

Proving the success of these initiatives, our 1H foot traffic data shows McDonald’s experienced a 3 percent increase in breakfast share of foot traffic YoY when compared to a sample of brands.

What’s especially interesting, though, is looking at how much competition has increased over the past year. For instance, while there used to be only a few brands focused on breakfast, now we’re seeing increased foot traffic at breakfast for most of the major QSR brands. The biggest increase is coming from Burger King, who saw significant growth in their breakfast share of foot traffic after rolling out their egg-normous burrito last May. Clearly McDonald’s was onto something with their breakfast focus.

As far as their marketing tactics, what might other brands be able to learn from this?

Other brands can learn from McDonald’s by embracing innovation to respond to changing consumer needs. In addition to breakfast, perhaps two facets of McDonald’s success is through the updated brick-and-mortar location and continued expanded menu options. This in turn is essentially upgrading the fast food experience — and blurring the lines between traditional fast food restaurants like McDonald’s and fast casual restaurants like Panera Bread.

McDonald’s, and a handful of other fast food chains, are adopting more “fast casual” elements by investing more in interior design and offering upscale and healthier food options.

Examples aside from McDonalds include Wendy’s, which has been experimenting for some time with replacing their old carpets with tile and adding cocktail-style tables to encourage people to sit and stay. Taco Bell also launched redesigned concepts that include plush chairs, exposed rafter beams, and modern art. On the cuisine front, fast food chains are now focusing on healthy, fancier, and quick-style homemade food options. Consumers are increasingly being provided more upscale options, like lobster rolls at McDonald’s and truffled burgers and fries at Wendy’s.

What lessons are there in this for other brands — QSRs, retailers in other verticals, or even SMBs? How can they compete and drive more foot traffic to their physical locations?

As we’ve learned from Warby Parker, having a brick-and-mortar presence can prove extremely valuable for a brand. However, in the age of Amazon, some retailers struggle to drive foot traffic to their physical storefronts.

While the convenience of online shopping is a huge draw, the in-store experience still plays an integral part in purchase decisions. And from a marketer’s point of view, once a consumer walks through the door, especially in the case of QSRs, they are very close to purchase. Reimagining the retail experience to draw consumers in-store and providing as seamless of a shopping experience to online is essential in keeping customers returning through your doors. This is exactly what brands like McDonald’s, Wendy’s, and Taco Bell are doing with their modernized interiors and tech enhancements like mobile ordering.

On the retail front, one creative reimagining of the retail experience that builds on this idea is the showroom model, which allows customers to browse products in a physical location — upon purchasing, products are then shipped directly to their home. Examples of brands leveraging this model are Bonobos and Modcloth. A showroom model also provides retailers with the opportunity to save space on inventory — given the need to have only a few products in different styles and colors on display.

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More Americans Say Now is a Good Time to Sell!

More Americans Say Now is a Good Time to Sell! | Simplifying The Market

Recently released data from Fannie Mae’s National Housing Survey revealed that rising home prices were the catalyst behind an eight-point jump in the net percentage of respondents who say now is a good time to sell. The index is now 21 points higher than it was this time last year.

Overall, 62% of Americans surveyed said that now is a good time to sell (up from 58%), while 26% of respondents said that now is not a good time to sell (down from 30%). The net score is the difference between the two percentages, or 36%.

According to CoreLogic, home prices are now up 6.7% over last year and 78.8% of homeowners with a mortgage in the US now have significant equity (defined as 20% or more).

As home prices have increased, more and more homeowners have realized that now is a good time to sell their homes in order to take advantage of the extra equity they now have.

At the same time, however, rising prices have had the exact opposite impact on the good-time-to-buy scale as many buyers are nervous that they will not be able to afford a home; the net score dropped 5 points to 18%.

Doug Duncan, Vice President & Chief Economist at Fannie Mae, had this to say,

“In the early stages of the economic expansion, home selling sentiment trailed home buying sentiment by a significant margin. The reverse is true today.

The net good time to sell share is now double the net good time to buy share, with record high percentages of consumers citing home prices as the primary reason for both perceptions. Such a sizable gap between selling and buying sentiment, if it persists, could weigh on the housing market through the rest of the year.”

Buyer demand continues to outpace the supply of homes for sale, which has driven prices up across the country. Until the supply starts to better match demand, there will be a gap between the sentiments surrounding buying and selling.

Bottom Line

If you are considering listing your home for sale this year, now is the time!

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NAHB: Builder Confidence Dips on Hurricane Damage

Home builders had less confidence in housing market conditions in September. In the aftermath of Hurricanes Harvey and Irma, builders worried that ongoing shortages of construction labor and materials would worsen.  NAHB Chairman Granger MacDonald said that concerns over labor and building materials were “intensified,” but said that builder confidence was expected to return to high readings once rebuilding is underway.

The National Association of Home Builders Housing Market Index dropped three points to an index reading of 64 with all three component readings lower than they were in August. Builder confidence in current market conditions for new single-family homes dipped for points to an index reading of 70. Builder confidence in housing market conditions over the next six months also dropped points to 74. September’s reading for buyer traffic in new housing developments was one point lower at 47.

Construction Labor and Materials Shortages Expected to Worsen

Home builders have cited shortages of labor and building materials in recent years, but these shortages are expected to grow in coming months due to massive amounts of construction workers needed for rebuilding after severe storm damage and flooding wiped out homes, businesses, and infrastructure. As with the high demand for homes caused by low inventories of homes for sale, labor and materials costs will likely rise as rebuilding begins

The NAHB Housing Market Index measures builder confidence on a scale of 0 to 100. Any reading over 50 indicates that more builders than fewer consider housing market conditions to be in positive territory. While September readings are well within positive territory, approaching winter weather and shortages may cause builder confidence in housing market conditions to decrease.

Regional Builder Confidence Readings Mixed

Three-month rolling average readings for four regions tracked by NAHB had missed results in September. The Northeast posted a one-point gain to 49; the Midwest posted a loss of three points for a reading of 63 and the Southern region posted a one-point loss for a reading of 66. The West posted a two-point gain for a reading of 77.

Future builder confidence readings depend on conditions as storm season continues and winter weather sets in.

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Diagnosing The Marketing Challenges Of ‘Aesthetic Healthcare’

It looks as though the spa industry could use some extra self-care when it comes to being discovered by and engaging with its customers.

That’s the diagnosis of SMB marketing platform eRelevance. The company’s The State of Aesthetic Healthcare Marketing 2017 report outlines some of the problems facing the industry, which includes spas and wellness programs.

Even as Google has begun to offer help to make booking an appointment with a treatment center literally as easy as finding one in Google Maps, businesses are plagued by several issues, says eRelevance CMO Adam Weinroth:

  • Practices are far from satisfied with marketing results: Nearly 60 percent of respondents cited lack of results (30 percent) and lack of measurement (28 percent) as the chief reasons for dissatisfaction with their marketing efforts.
  • No practice surveyed focuses exclusively on repeat business from its patients but practices recognize its value: None of the practices surveyed focuses its marketing exclusively on generating repeat business from existing patients despite clear benefits and cost efficiencies. According to respondents, this is due to limited time and expertise.
  • Practices see benefit to outsourcing patient marketing to an expert: While 92 percent of respondents said they are executing patient marketing internally, 60 percent said they would consider outsourcing to a proven expert.

“Aesthetic healthcare practices that want to thrive in today’s competitive environment must find a way to reach the most qualified consumers, with the most relevant messages, in the most cost-effective way,” said Weinroth. Most practices, through the survey, acknowledge the best way to do that is by generating more repeat business from their existing patients. We found that while most of the practices surveyed are aware of the unmatched benefits of effectively marketing to their existing patients, they simply don’t have the resources or expertise to execute the kind of sophisticated marketing campaigns necessary to effectively reach their patients to business growth.”

GeoMarketing: How do we define “aesthetic healthcare?” 

Adam Weinroth: U.S.-based medical spas and elective healthcare practices offering non-invasive cosmetic procedures.

How does the marketing of this category differ from the general healthcare marketplace?

The procedures offered by aesthetic healthcare practices are elective and payed out-of-pocket.  Consumers are making purchasing decisions not based on medical need or insurer requirements, but on drivers such as loyalty, brand awareness and value.

Social media and email are the top methods for driving awareness and discovery. How well are professionals in this space using those channels?

Generally, they are using untargeted, unpaid social posts, which are largely ineffective due to limited reach and lack of segmentation and relevancy. Regarding email, the vast majority are simply email blasting. This is problematic for two reasons: First, they’re essentially spamming their patients, which drives them away, making them ripe for competitors to move in. Second, industry statistics show that marketing emails only get opened 20 percent of the time.  So, best case, professionals in the space are missing out on engaging more than three quarters of their patients—an enormous, missed opportunity.

Are professionals under-investing in other channels?

The internal staffs at most aesthetic healthcare practices simply don’t have the time nor expertise to achieve sophisticated patient marketing across channels. The result is a staggeringly underwhelming level of repeat business from existing patients. And that then leads them to over invest in chasing new business through traditional advertising, which, on average, costs about $1,000 per new aesthetic patient.

What accounts for the high rates of “dissatisfaction” with their marketing services? 

The dissatisfaction comes from a lack of results, the inability to measure results and the overall struggle of trying to execute effective patient marketing with nowhere near the time, technology or expertise necessary to do it well.

How has the use of search evolved in terms of getting their locations discovered? 

Search is no longer just about pages of blue links. Consumers aren’t just using mobile devices, they are driving true mobility between many screens and apps. That means practices should be thinking about search via Google, yes, but also Yelp, maps, Facebook, Siri and more.

Could search and the use of location targeting/analysis generate more repeat customer business (alluding to the data point that few practices tend to focus marketing dollars on repeat business)? 

It may, but those kinds of techniques miss out on the power of effective customer marketing: Knowing exactly who your customers are and how and where to reach them. What we’ve found to be most effective is digitally surrounding customers across channels with personally relevant information.

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