Is there opportunity beyond property handovers
The Future of Residential Property – Part 2
In the second of a four-part series, Dharmesh Mistry, CEO of AskHomey, looks at the future of residential property through the lens of the biggest brands on the planet, envisaging how different the industry could be if new players applied technology to residential property development.
Table of Contents
The residential property development market has improved over time with better materials, better automation through machinery and better design/management through technology and data. However, no one player has disrupted property development as Tesla has with cars, Netflix or Spotify has with media or Zara in retailing. Having already compared Tesla in my previous article, this piece looks at Zara. Yes, the clothes retailer Zara.
Zara didn’t set out to be just another clothing manufacturer. Its founder Amancio Ortega had a simple vision to create “instant fashion”. Ortega created a business that could design, manufacture and ship products in less than a month whereas his competitors could only ship new designs twice a year. This meant they could ship more designs, in fact, Zara produces over 5 times more (around 18000) products than its nearest competitors who produce 2000-4000 products. Zara ships new designs to every store, every week, this keeps customers coming back.
The relevance to property development is data. Zara didn’t have better machinery or manufacturing capability, it had better technology and understanding of the business through data. Zara leverages data throughout its entire product lifecycle.
Whilst much is covered on the need to integrate data in a single “golden thread”, this paper presents a case for much greater benefits if property developers were to extend their relationship with homeowners beyond the handover.
Quality and Reliability Improvement
Zara’s processes were created to ensure there were feedback loops that helped to improve their products’ quality and increase sales. Today, in property development, only product recalls and claims during warranty periods provide information about the quality of the build. Beyond this, complaints handling processes and social media sites bear the brunt of customer dissatisfaction. However, if information about the property could be maintained and provided to property developers, valuable insights could not only improve future developments but reduce complaints and improve customer satisfaction.
For example information from repairs, maintenance, replacements or renovation beyond the warranty period could be used to identify poor quality materials and work, design choices that quickly dated, items that were inefficient or failed etc.
If this information could be captured property developers could make better choices and they could differentiate on longer warranty periods with more confidence. After all, one of the main reasons buyers opt for a new home is that they don’t want to have to worry about repairs or improvements too soon.
Efficiency and Lower of Cost of Ownership
Not only can Zara’s systems track and trace every product from manufacture to sale, but they also highlight when sales of a product are slowing, so they can stop making more. They know how and when to reprice stock to move excess inventory. This enabled them to reduce storage and wastage costs.
For property development, the running cost of property has typically not been a concern although regulations around sustainability and energy performance have driven improvements for buyers. Buyers can find rough costs to run their new home from EPC information.
However, if property developers did have access to data around the cost of ownership, again better choices for design, materials and suppliers could be made to improve the overall efficiency of the property. Property developers could highlight these savings as part of their sales process and even use this to value properties higher.
“Property developers, either by choice or by design, lose engagement with customers after the sale and the warranty period.”
Customer Satisfaction and Loyalty
The best measure of customer satisfaction is increased sales. In the case of Zara, Amancio Ortega became the second richest man in the world in 2017 whilst his company has rolled out stores in over 80 countries.
Customer dissatisfaction can easily be measured by complaints or by monitoring social media sites. Property developers, either by choice or by design, lose engagement with customers after the sale and the warranty period. However, if they proactively provided a way of staying engaged with their buyers, they could not only find ways to improve customer satisfaction but also identify how they could improve their product.
Better still, property developers may find additional revenue streams during the lifetime of ownership, an approach that is currently being adopted in the build to rent sector. Here tenant engagement is seen positively and monetised throughout the tenancy period. Could tenant engagement platforms provide a clue to improve customer satisfaction and increase revenues in the build to sell market?
Reduced Cost of Sale
Unlike other fashion stores, Zara spends little on advertising and marketing. This hasn’t impacted sales of $22bn last year and growing its presence to over 80 countries. Zara designed their business processes to get rapid feedback directly from customers and from their data. Instead of “pushing product”, Zara “pulls customers in” by leveraging influencers to evangelise their products. It has over 25 million followers on Facebook and 16 million on Instagram. Having happy customers is not only cheaper than spending on marketing, but it is more effective, lasting and profitable.
Brand and reputation are key to property sales and much work has been done by many property developers to improve customer satisfaction but it would be hard to name any that have customers that evangelise about them. Again, an opportunity exists here for property developers to create a longer engagement that not only drives advocacy but creates new revenue streams for them.
Look Beyond the Handover
The key to Zara has been a simple vision and a strategic approach to using data to drive game-changing business outcomes. Although there is a wealth of data in property development, it is largely used for specific purposes like construction or sales.
Looking beyond the handover process presents huge new opportunities that many have either not been considered or underestimated. There is a clear opportunity for visionary property developers to create a disruptive strategy using data. One that will not only improve customer satisfaction but also create new lucrative revenue streams.
The only question is, will you lead, follow or be disrupted?