Alex Perriello, president and CEO of Coldwell Banker Real Estate Corporation, explains the road test of a new service model that will include lower pricing and salaried agents. How will one of the largest franchises in the world serve the price-driven consumer and its broker franchisees at the same time? That's only one of the questions answered in this exclusive interview with Realty Times editor, Blanche Evans.

B.E.: The big question is how you are going to serve price-driven consumers and keep your broker franchisees happy at the same time with this new test service model. Is Coldwell Banker franchising new e-brokerages, providing an e-model to existing franchisees or enabling all franchisees to use a centralized transaction system in the test markets?

A.P.: The answer is the second one. We will be testing a new service models in two markets and possibly expand that to an additional market. The model would be centralized here and the local affiliate would tap into it.

B.E.: Centralized here? What do you mean?

A.P.: It will be centralized on a Web site that we will host from Coldwell Banker's corporate headquarters and the local broker will tap into that.

B.E.: Have you picked the test markets? Will they be "wired" cities?

A.P.: The test markets are not picked out yet. I'm fielding e-mail from the brokers who want to be in it. It won't necessarily be wired cities for both test markets. We are going to look for one market that is more typical of middle America. We want to test the idea in all market conditions. We don't want to just work in the big city, and not work somewhere else.

B.E.: Are the broker franchisees on board with this idea?

A.P.: The response has been very positive. Many have responded that they have been thinking about doing something similar and are asking to be part of the test.

B.E.: Will the new service model depend on consumer computer literacy?

A.P.: A lot of the value will be over the Internet, but you would be able to do business with this company if you didn't have a computer. We really have to do more intelligence, but we are thinking it will appeal to the e-consumer.

B.E.: Will this be an early market advantage for participating brokers?

A.P.: Definitely. In the test markets, we will be looking at a market that is served by one broker who serves one geographic area. We want to keep the test small and controlled, so we can learn a lot from it and then make decisions on rolling it out.

B.E.: Will the new service model be essentially a transaction management platform? If so, who are the vendors?

A.P.: We have a lot of partners on the technology side of it as far as the Web goes. But this is more than just the Web, it is a totally different service delivery from salaried, licensed salespeople to executing a certain service offering at the local level. It will be a consistent package of services.

B.E.: Will it be fee-for-service?

A.P.: We'll be testing pricing options. It will be a package of services for a price.

B.E.: So, it's neither discount brokerage nor fee-for-service....

A.P.: It will be price sensitive and depending on the involvement that the customer wants to have in the transaction, there will be different fees.

B.E.: What about sales people? Where do your agents fit in? What do they say about it?

A.P.: I haven't heard from any sales associates. I think we'll know what the reaction of salespeople will be once we test it. They see things happening in the market, and they appreciate that we are on the leading edge and that their local company will be involved. There will be opportunities for them to be involved in transactions that they normally wouldn't be involved in.

B.E.: How big a market do you estimate the price-conscious consumer to be?

A.P.: I have talked to a lot of brokers and gotten their opinions as to how big a market this would serve. It changes all the time, but there is a meaningful enough segment of the market that is self-directed, and wants to be involved and wants to save some money that we feel we need to provide a service offering for them. Part of the test will be to see how big this market really is.

B.E.: So this will be a bundled service package available on the Internet only?

A.P.: We are building a model and we're going to have a lot of input from the brokers but that will be something we will be developing and taking to the market. The advantage to doing a small test on the Internet is that you can make adjustments on the fly.