Budgets – Friend or Foe?

Furthering Amy’s theme of knowing your customer better through the use of analytics, let’s explore fiscal planning for 2011. Many of our MLS industry partners are meeting right now with their finance committees, reviewing the current number of subscribers, the current year’s revenue numbers, and working on 2011 budgets.  Tough decisions on programs, events, staff, new investments, etc. are made in conjunction with the revenue forecast.

Looking back at 2010, many organizations have not only met, but far exceeded their revenue targets.  High-fives all the way around!  This defines ultimate success for an organization, doesn’t it?   Does this mean next year’s forecast should follow the same model? Should the forecast be increased or decreased?  Consult the crystal ball or even flip a coin?   Neither method has historically created an accurate prediction.

With all of these questions, analytics are more important than ever to help separate the signal from the noise, the wheat from the chaff.  Our Scout for SAFEMLS solution uses rich analytics to identify revenue and cost reduction opportunities by recognizing shared subscription accounts.  Revenue assurance is the formal name for ensuring everyone is paying for services received and is a very important part of revenue forecasting.  Easily understood is the straight line drawn between a shared subscription and a lost revenue opportunity.   Which begs the question – “Why budget for a 10% revenue loss when more than 25% of your subscribers are sharing access to services?”

As your organization heads into this 2011 budget season, please ask the tough question – ‘are we maximizing the revenue for all users of our services vs. just the current paying subscribers?’  If the answer falls along “we don’t know” or “it’s unclear” or “what??” please drop us a line to discuss our proven track record of maximizing our customers’ revenue and how we can create success for you.

Raise your hand if you think understanding your customer is more important than ever…

… Ok, actually hand-raising may not be the best way to measure this exercise since we are having this conversation virtually.  I think we can all agree on a few premises though:

1)     Understanding your customers can help retain and grow revenue.

2)     All organizations benefit from gathering data on their customer and using it to provide better (or even different) services.

3)     The word “analytics” is a big scary word that is hard to get our brains wrapped around.

In real estate it seems everyone with a website has some type of tool they use for analytics.  Google Analytics is popular because of the price (free), others like Webtrends are often included in hosting packages.  More sophisticated and expensive products from companies like Omniture are also available.  The bottom line is ALL of these products help you to better understand which content is popular, but tell you very little about your customer and their uniqueness.

I have been watching with interest, the trends with digital publishers such as newspapers and other paid subscription (SaaS) providers.  I think of MLS organizations and other real estate service websites as being digital content providers with similar models.  Some times the content is offered for a fee (MLS subscriptions), sometimes the content is free (real estate search sites) and sometimes the content is offered with a “pay-wall” where you have access to some information for free but additional information requires a “registration” process and often a fee (third party applications, VOW’s, and some real estate search sites).

Like other digital publishers, organizations in real estate can benefit from understanding not just what “content” is popular, but more about the actual “people” interacting with that content.  Understanding the demand at the “user” level instead of the “content” level helps organizations to understand which users are getting value from your service and which are not.  This information can be used to predict user behavior and open opportunities for revenue optimization.

I’m probably losing a few folks about now with all of these buzzwords so let me put this into simpler terms with an example.  If I am an MLS organization, understanding my users’ behavior (based on their login activity combined with which content they find most valuable) I can make better decisions about future products and services.  I can predict with leading indicators, as opposed to trailing indicators, changes in demand for my services along with changes in my market.  Imagine being able to predict your own increase (or decrease) for demand to drive operational cost decisions ahead of time.  Imagine being able to target sub-groups of your membership for additional product opportunities.  Imagine understanding your user population well enough to consider the impact of a change to your pricing model.

These are just a few of the benefits of deploying “user based” analytics, such as those utilized in Clareity Security’s Scout for SAFEMLS product, to detect and report account sharing.  We would love the opportunity to hear more about how MLS organizations, real estate website service providers, brokers and agents are using or would like to use analytics to better understand the health of their business, and we look forward to sharing success stories from other customers.

About “Adaptive” Authentication

Clareity Security set the standard for real estate industry login security over five years ago, introducing strong authentication to the industry. Strong authentication, also termed “multi-factor” authentication, involves two of the three following items: something you know (e.g. a password or PIN), something you have that is not shared (e.g. a token, PDA or cell phone), or something you are (e.g. biometric information such as typing patterns). Recently, some vendors have offered an “adaptive security” mechanism that would replace strong authentication, implying that adaptive security is comparable in strength to strong authentication but when it comes to MLS use cases, this is simply misleading.

Adaptive security, for those unfamiliar with it, tries to detect abnormal use and then takes action when that abnormal use is detected. For example, if a user usually logs on from MyCity, Michigan and there is a logon attempt from YourCity, California, the system would attempt to make an assessment of whether the logon was valid. That works great in the banking context, but it just doesn’t apply in any significant way to MLS authentication security, where the most common problem is users intentionally sharing accounts within the same geographic area and even within the same office or home office, where they would likely be using the same computer type and perhaps even the same IP address – likely even the very same computer! An MLS user may also utilize a variety of computers to access the MLS – at customers’ homes, at coffee shops, or sharing computers in broker offices – that makes it even more difficult for adaptive technology to reliably distinguish between legitimate and illegitimate logon attempts based only on identifying the computer or IP address of the user.   The potential for false positives is far greater and presents potential customer service issues for the organization.

Clareity Consulting has performed security audits for MLSs that have tried adaptive authentication. Their staff ask, “So, this user-id logged in from 2 computers – I don’t know if one is the home and the other is the office, or if this is a shared password. Another logged in from 15 computers and local IP addresses – I don’t know if they’re out in the field checking the MLS from wherever they can or if this is a shared account. Another user logged in a lot from one IP address – I don’t know if that’s a bunch of appraisers sharing a computer, a husband and wife team, or just someone that logs in a lot. So, I’ve got this information about Devices and IP Addresses used from the adaptive system – what do I do with it?” Unfortunately, there isn’t a good answer for them!

The only time one can depend solely on device identification to supplement the username and password credentials is when the device is something that is never shared – like a cell phone. Clareity Security experimented extensively in fielding a solution leveraging the agent’s cell phone, but both software and certificate deployment to the cell phone and text-messaging were simply too unreliable and required too much support from the MLS help desk.

Some vendors might point out that financial institutions use adaptive authentication – they are correct, but what they leave out is that banks are swiftly moving away from adaptive authentication alone and are moving to or adding strong authentication mechanisms. The real estate industry has unique issues around intentional account sharing, computer sharing, and mobile professionals, making adaptive authentication using device and IP address based identification insufficient to provide revenue assurance or ensure that MLSs remain members-only systems.