Real estate and the experience economy
The basic premise of an experience economy posits that customers are not merely purchasing a product but buying into an experience. Lately, the customer experience (CX) landscape is evolving across asset classes and geographies, including real estate and its verticals. As a testament to the growing prominence of CX in real estate, a recent KPMG study reported a significant 160% year-on-year increase in the use of the word ‘customer’ in annual reports of leading global real estate firms in 2019. Of 60 global investors, representing over a trillion dollars in capital, a staggering 96% of agreed that CX will be critical to successful commercial outcomes in the next five years, in the survey (1).
Gone are the days when traditional, business-facing real estate models paid dividends to supply-side stakeholders. Today, the tech-savvy customer, cognizant of industry best practices and acquainted with unique value propositions, demands consistently personalized experiences across touchpoints and interactions. Under the circumstances, industry stalwarts are considering the prospect of CX as a key differentiator in real estate, which can lead to brand recognition, higher occupancy rates and enhanced overall value generation.
Decades ago, real estate was largely broker-controlled. In more recent years, the market favoured agents and property consultants, who were more qualified, better versed in industry technicalities and more legally astute. Buyers relied heavily on agents to navigate the home buying process. However, technological breakthroughs, accompanied by internet penetration and a surge in hand-held devices, has radically transformed that traditional mode of operations. Contemporary markets are rife with digital marketplaces that are self-explanatory and intelligible, thereby reducing the role of agents from facilitators to collaborators.
The contemporary customer is aware of market offerings, current prices based on location, ancillary amenities, real estate indices, regulatory requirements and ways to evaluate future ROI. Empowered customers therefore seek end-to-end supply-chain transparency, leaving no room for ambiguities and surprises. It is worth noticing that, in the current business ecosystem, transaction is not the end game. On the contrary, customer-centricity is currently supplanting price, place and promotion as the key to achieve long-term sustainable growth in real estate. This begs the question: how to drive CX in real estate?
CX in real estate
Real estate transactions are inherently capital-intensive. Customers are engaging in potentially life-changing financial transactions when buying a property. Therefore, real estate executives must uphold the highest level of transparency every step of the way — pre, during and post sales. A process devoid of hidden costs and false promises is a major draw in itself. This especially rings true on the back of claims that advocacy and word-of-mouth marketing are undergoing a resurgence. On the flip side, poor word of mouth can result in huge adverse impact on the business bottom line.
Even governing bodies are emphasizing transparency in real estate, along with stringent measures to curb fraudulent activities. Under the leadership of Sheikh Mohammed, regulatory bodies in Dubai have introduced multiple customer-focused initiatives aimed at safeguarding buyers’ interest and encouraging sales. Chief among these measures is the recent creation of the higher real estate planning committee to streamline developments, enhance professionalism and most importantly, promote diversification in real estate developments. Product diversification can expand the original market and unlock the untapped potential of the low- and medium-sized investor base.
On the other hand, value- and tech-driven approaches in the IT landscape have normalized services that are responsive, real-time and provide instant gratification. Modern customers seek such experiences in real estate as well. By incorporating appropriate customer relationship management (CRM) systems, real estate executives can drive delightful customer experiences, characterized by round-the-clock service, easy appointment scheduling and personalized attention. Smart home control and automation, powered by IoT and cognitive technologies like AI and ML, have become the holy grail of the real estate experience economy. These technologies will drive energy optimization, personalized experiences and sustainability, going forward. Their influence will be key in the decade ahead, which should see them graduate from high end amenities to standard offerings.
A recent GCC centric survey has replicated the exact 96% figure, which was reported by the previously mentioned KPMG research, as the proportion of decision-makers prioritizing customer experience in 2020 (2). The experience economy is particularly burgeoning in the UAE, a nation that exemplifies competitiveness, future-readiness and constant innovation. As part of its Smart City initiative, Dubai has set itself the target of leaping ten years ahead in services and facilities. In line with these national goals, the regional real estate industry is also striving towards customer centricity. Supply-chain stakeholders are proactively devising a holistic customer experience strategy, to optimize every interaction throughout the real estate life cycle. In order to create competitive differentiation and emerge as a leader in such a market, commercial real estate businesses must have an unwavering focus on customer experience – as a primary and non-negotiable business imperative across all functions and services.