Bearden redefines customer service

Wednesday, June 8, 2005 at 1:00am

You commute each week to Chicago. Tiring?

It has become second nature. The reason I have this arrangement is that my wife, my daughter and I enjoy the quality of life in Nashville.

Your plate is very full.

We have nearly 2,000 employees in my group and about 24,000 agents. GMAC has almost 1,400 offices in the United States and is now in Canada, Puerto Rico and Portugal. We have five domestic offices for global relocation services and about 80 employees in London and 20 employees in Singapore. We will be opening in Shanghai in about 90 days. We have a mortgage company and one of the world's largest corporate relocation firms, which does business in 40 countries. I'm responsible for the success of all four businesses [GMAC Real Estate, GMAC Real Estate Franchise, Global Relocation Services and GHS Mortgage]. Each of those four is ranked in the top five nationally in its respective category.

Your goals for the company seem bold.

We're going to do to the real estate industry what Nordstrom, Southwest Airlines and the Ritz Carlton have done for customer service in their respective service industries. These companies have called attention to the importance of customer service and serve as the models for raising the bar in the real estate industry.

Conversation with a leader
John Bearden
President and CEO, GMAC Home Services Inc.
Hometown: Nashville
Age: 54
Education: Vanderbilt University, bachelor's degree in economics and history
First conventional job: NRT Corp. (predecessor to real estate financing company American General Intereal)
Hypothetical dream job: author and photographer

A Nashville native and chief executive officer of Oak Brook, Ill.-based GMAC Home Services for four years, Bearden is attempting to fundamentally change the way the real estate industry operates by providing greatly enhanced customer service. Bearden notes that GMAC is the only national real estate franchise whose entire business strategy and national marketing plan is based upon sales associates putting in writing, up front, the full breadth of services they will perform for customers. Customers then rate the company's performance, in writing, after the transaction through an independent, third-party survey. Bearden says the focus on customer service justifies agent commissions, which have slid in recent years to a national average of about 5 percent. He points out that brokers average only $137 per transaction and that just 21 percent of sellers and only 4 percent of buyers use the same agent twice.

What is your history in real estate?

I first got involved directly in the residential real estate industry in Nashville in the late 1980s and early 1990s. In those days, I saw both the importance of residential real estate in terms of its professional service, but also the tremendous dysfunctions in the industry. When I had the chance to go to Toronto and own the entire national master franchise for Coldwell Banker, I became determined to be a positive influence on this industry.

What was your take on the industry at that time?

I observed two fundamental flaws embedded in the industry. First, the consumers did not fully understand or appreciate the value of a professional real estate agent nor were we focused enough on giving them a truly positive home-buying experience. Second, there was almost a pervasive lack of business alignment between the real estate broker-owner and the real estate agent sales force. I set about to address both of those fundamentally important issues in Canada. It was at that point that I created a business concept called "ultimate service," which is the predecessor concept to GMAC's "premier service."

How did you connect with GMAC?

In 1999, I unexpectedly had the opportunity to sell my business to Canadian investors. In early spring 2001, I began having conversations with GMAC Home Services, which had recently made acquisition investments in both the residential real estate and relocation management services sectors. I came to GMAC with a very specific vision and business- and brand-building strategy. The company had not necessarily integrated the acquisitions successfully in its first three years. But I believed that they had a significant enough position in these industries that, with the tremendous financial strength of General Motors and GMAC supporting the businesses, there was a huge opportunity to establish a leading participant in each of our businesses.

Your model centers around three business strategies. Please explain.

First, we offer premier service, and today, we have a 94 percent national customer satisfaction rate [according to independent, California-based research company Quality Service Certified Inc.]. Nationally, real estate operations average 70 percent customer satisfaction [QSC Inc. statistics]. Second, we want to transform the residential real estate model into what we call a home-ownership services business. Our research tells us that consumers would strongly prefer to deal with a company that can provide seamless access to the full package of products and services to buy and sell a home [mortgage products, title insurance, closing services, home warranties and, eventually, property insurance]. Third, we have created a partnership relationship with the sales agent. Fundamentally, we believe we should define the consumer as the customer for our services. Therefore, we should define the agent as our partner in the service chain.

This is all different from the traditional model?

The traditional model has the broker define the agent as the customer.

Are you looking to add to the Nashville-based GMAC Legacy and GMAC Broker South franchises?

Nashville is a challenging market in which to generate profit. I wish it were higher on our list. It's tough for a broker-owner to generate profit here.

Within the industry locally, whom do you admire?

Harold Crye has a comprehensive strategy. And I have great respect for Shirley Zeitlin. She is one of the few people in the local market who has acknowledged that I have been able to participate in the industry on a national level.

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