Outsourcing to your clients

November 10, 2006

Patrick Kitano’s recent post on the Internet and outsourcing got me thinking about a pretty neat kind of outsourcing — the kind where you pass off some of your work to your clients, sometimes without compensation.
Client outsourcing is one of the drivers behind the Internet’s cost efficiencies. If a consumer can download copies of old checks from a bank’s web site, that means the bank no longer needs a department of people to follow up on requests for dated checks. It’s not that nobody is doing this job any more; it’s that the client is doing it instead of internal staff, and the client isn’t really being compensated for it either, especially when you consider how much bank fees have increased over the last decade.

Google does some very creative client outsourcing:

  • Google Image Labeler: This is an entertaining, nearly addictive game, masking its real purpose, which is to provide labels for the millions of images Google has in its archive. Rather than spend millions on technology to scan the images and label them (technology which may not even be completely possible with what we have today), rather than hire several hundred new folks whose sole (and boring) job it would be to write labels — Google has simply outsourced that job to its clients! Pretty neat.
  • Google search: While nobody outside the company knows Google’s secret sauce for ranking pages and relevance, we all know that part of it is analyzing incoming links. The legitimate (non-link-farm) links are generated by millions of real, live people who essentially “vote” on how good a particular page is by linking to it. Again, Google’s users are doing part of its job.

What does all this have to do with real estate? Quite a bit, actually — one of the growing current trends in real estate is client outsourcing. In the bad old days of data exclusivity, Realtors took clients around to see properties. Though that still happens a tremendous amount, there are a growing number of home buyers who take themselves out to view properties, thank you very much. Redfin didn’t invent this model, but they certainly have made a big splash about it, and they compensate their clients for doing some of the work by giving them back part of the commission.

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Written by Kevin · Filed Under Disintermediation, For buyers, Google, Real estate 

Comments

One Response to “Outsourcing to your clients”

  1. Doug Quance on November 12th, 2006 6:39 am

    Actually, the concept of client outsourcing and rebating is not so new… although not as popular as it is today.

    Back in 2000, we trial-tested the model for a year… and then decided to kill the program. eRealty was running virtually the same model… yet they had some deep pockets for advertising, and we did not.

    When we analyzed the program, we realized that most of our buyer clients did not use us because of the rebate… it was because they simply wanted to do the searches, themselves.

    Of course, we live in a different world, now…

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