The Agent Is the Customer
Redefine who your real customer is, then build everything around serving them.
- Difficulty
- Moderate
- Time to result
- ~months to results
- Steps
- 3
- Confidence
- 84%
Liniger disrupted real estate by redefining the customer. Traditionally the customer was the buyer and seller; he decided he was in the real-estate-agent business, so the agent became his customer and his job was to create an environment where agents could be more successful than anywhere in the world. He paired this with an economic disruption, flipping the standard 50/50 commission split to roughly 85/15 in the agent's favor, modeled on how doctors or lawyers share office space and keep the majority. The industry hated it and tried to drive him out, but the model reshaped commission splits across real estate and scaled to 110 countries.
Origin
In 1973 Liniger analyzed that agents never really earned a true 50/50 split after their own expenses, so he restructured RE/MAX around a shared-overhead, high-split model and reframed the agent, not the buyer or seller, as his customer.
Core principles
- 01Reframe who your actual customer is.
- 02Liniger was in the real-estate-agent business, not the real estate business.
- 03Your job becomes creating the best environment for that redefined customer.
- 04The redefinition, paired with better economics, can disrupt an entire industry.
How to run it
- 1
Challenge the default customer
Question the industry's assumption about who the customer is; Liniger decided the agent, not the buyer or seller, was his customer.
- 2
Restructure the economics
Change the money to favor your redefined customer, like flipping the real estate split from 50/50 to about 85/15 via a shared-overhead office model.
Pro tip Model it on professionals like doctors or lawyers who share office space and keep the majority of their earnings.
Watch out Expect the incumbent industry to resist fiercely; RE/MAX competitors tried to drive Liniger out of business.
- 3
Build the best environment for that customer
Orient every system toward making the redefined customer more successful than they could be anywhere else.
Pro tip RE/MAX agents ended up with twice the experience and three times the sales volume of other full-time realtors.
In the wild
In 1973 the standard agent/owner split was 50/50, but after personal expenses agents really netted more like 75/25 or 80/20. Liniger created a shared-office model where agents paid their own expenses and kept the majority, shifting the split to about 85/15.
→ The controversial model changed commission splits across the entire real estate industry and RE/MAX outlasted the competitors who fought it.
Common mistakes
Accepting the industry's customer definition
Competing on the same assumed customer as everyone else forecloses the disruptive move of redefining who you actually serve.
Is it for you?
Best for
Founders looking to disrupt a traditional industry by rethinking the customer and economics.
Not ideal for
Businesses where the customer definition is already optimal or where restructuring economics isn't feasible.
From the transcript
“I was not in the real estate business I was in the real estate agent business”
“my job was to create an environment where real estate agents could be more successful than any place else in the world”
From the episode
Dave Liniger: Top Leadership Principles to Achieve Extraordinary Entrepreneurship Success
Dave Liniger