The impact of proptech on property services marketing

Proptech is driving changes in demand and influencing how we buy, sell, lease and occupy real estate.  No surprise then that it's also changing how we market real estate and even the activities involved in marketing.

If you're involved or responsible for marketing property services, including agency, investment, Landlord and Tenant, PM, FM and consulting, it’s important to understand how these services are changing in response to proptech and have a realistic understanding of the scope and pace of change. Knowing this will enable you to focus your service positioning and marketing strategies, based on relative strengths and weaknesses of your product and services compared to the competition, including new proptech entrants. 

In this post, I outline how proptech is impacting marketing strategies and then give a quick overview of proptech to give you a basic idea of what to look out for that will change your marketing strategy in the future.

Customer expectations

Customer expectations of service including self-service, speed of execution, responsiveness and personalisation are going through the roof.

It's the same with your property partners and contractors, too. They are also looking for a higher level of service and experience so they can focus on their main purpose, doing what they do best and leaving the rest to others.

This trend is here to stay; sky high expectations of doing business with you will escalate as proptech solutions flood the market, infiltrating your own and competitor's ecosystems.

And for any doubters out there, possibly those over a certain age, don't forget that in the next 10 years a generation shift will take place as millennials and Gen Z take their place in the boardroom. Meeting the expectations of these digital natives will be more than your marketing differentiator, it will be your license to trade.

What do rising customer expectations mean to marketing strategies?

Focus on helping colleagues in operations and service delivery REALLY understand what the customer wants and needs.

Customer experience expectations won't be met as long as colleagues say they already know what they are, from years of practice in the discipline, because they heard it from the key client or just based on their personal intuition.

Clients will answer the question, "What do you want" rationally and logically but they find it difficult to tell an account director how they feel.

But rest assured that emotions underly every business decision, from leasing to contracting to referring you to new clients.

It's marketing's job to push that message home and get a well designed customer experience feedback programme set up to understand the pain and smile points on the customer journey and to communicate the results effectively so that colleagues can act and make changes that improve experience.

The date-brand-valuation circle

Data on real estate usage gives better insight to user behaviour and combines with customer experience measures to enable continuous evolution of products and services to meet expectations. 

CX measures coupled with faster, more transparent flow of date will change how real estate is valued. See my post on this here 5 reasons property operators and marketers need to work together.

The assessment of property performance is based today on valuation not sales or leasing data as both of those events are too infrequent. This is why tenants have sometimes been tagged a necessary evil. It's also reflected in the fact they are not called customers, since their satisfaction and the strength of the service brand, as yet, has little impact on valuation. The assumption that value is in bricks & mortar and location gives way to an assumption that usability, flexibility and service quality ie brand, will be the source of value.  

The evidence for this can be seen in BCO's 2017 report Office service standards and customer experience. Fewer than 1 in 5 landlords offer a responsive service yet a rise in satisfaction by 1 level in a 5 point scale improves returns by 1.9% annually.

The valuation of Regus (30 years old) vs WeWork (6 years old) is $4.2b vs $16bn respectively (Jan 2018). In fact, the sale of Regus just collapsed and I surmise it is because their brand (the branded customer experience) wasn't compelling enough to warrant the price tag.  In other words, they had no distinctive differentiator.

Service differentiation

For the property services business, differentiation has always been a challenge. Indeed, it's a challenge for all professional services.

Instead of differentiators, most firms rehearse the same three or four features; scale, national or global coverage/reach, and either everything-under-one-roof or leadership in a certain discipline.

In the absence of true differentiators, firms and individuals fall back on the uniqueness of their relationship with the client. The person-to person, deal-orientated nature of agency and investment services has often led to tech being an afterthought, but now it is seen as the differentiator in terms of customer service, right through the customer journey.

Elements of service delivery previously handled personally by delivery teams are beginning to be replaced or augmented by technology. Out of 43 tasks analysed by RICS, 88% were 'ripe for automation'. The Impact of Emerging Technology on Surveying is well worth a read.

55% of clients are happy to be offered tech solutions for back office jobs by their service providers and 37% are happy to deal/interact on line and need no human contact according to a recent Property Week survey.

What does the impact on proptech to differentiation mean to marketing strategies?

For marketing strategy formation, it's vital to have a really good grasp of what your competitors are offering, how they're innovating and the overall direction of travel they're taking.

Keep an eye on proptech developments in the media to keep yourself well informed and make sure that the resistors in your organisation have a good grasp of these changes too.

Equipped with a clear understanding of the new competitive landscape, work out with your service delivery colleagues a clearly defined target market, whose needs you can meet better than any competitor. Be rigorous about articulating how your service trumps the competitors. What do you need to do to improve it? Do you need to collaborate with and incorporate tech solutions?

Whatever you come up with, that's your differentiator.

Create personas to bring the rational and emotional needs of your targeted segment to life. Position your products and services to highlight what you stand for and then support your delivery team by communicating how you can create value for your customers, on a rational and emotional level.

A marketers overview of proptech

I keep an eye on all things proptech because it fascinates me and because, as I've described, a decent level of awareness is vital to any marketer in this industry. The best overview I've read is Proptech 3.0: The Future of Real Estate by Andrew Baum at Said Business School. Baum uses three main categories to simplify a complex catalogue of platforms:

1. Real estate fintech – platforms which facilitate the trading of real estate ownership;
2. The shared economy – platforms which facilitate the use of real estate assets, and;
3. Smart real estate – platforms which facilitate the operation and management of real estate assets. (I haven't studied this in depth as it is more to do with BMS, energy management and smart cities - so it isn't covered below).

Real estate fintech

The property fintech revolution, when it comes, paves the way for property to compete on a level playing field with other asset classes. Rather than being a large, inelastic and inflexible asset, proptech offers the potential for property to become a wholly securitised, flexible and liquid asset. 

The more liquid the asset, the smaller the need for the end user to own or lease. (This is a kind of Holy Grail and one in which the Americans are ahead of us in Europe/the UK. A lot of money and energy is being poured into this area because it promises to generate vast amounts of money for it's investors, in return. )

Property data underpins property as a liquid asset

To be a tradeable asset, property needs to become more transparent. In other words the data that property company's regard as their competitive advantage must be available to all. Until property companies give up data secrecy, the disruption to old business models of property agents and service providers won’t happen. 

But when it does, the value of good CX design and management will be realised. Google SideWalk Labs and WeWork have already realised that.  

Most respondents in REMIT’s survey for The Impact of Emerging Technology on Surveying thought the universal availability and transparency of data was unlikely to happen within the next decade. 

The secrecy of property data has been compared to the time when stockbrokers made their living by farming data in a manner that would now be regarded as market abuse. Since insider trading became illegal in 1980, the quality, accessibility and transparency of equity data has moved on apace. Maintaining these archaic restriction on property data is unsustainable. 

The shared economy

The sharing economy, sometimes called the access economy, will bring a new focus on access over ownership and to service over product. 

Much has been written about the access economy in general (Uber, Airbnb, Borrow my Doggie etc) and in real estate (WeWork, Liquid Space and many others). I've found it fascinating to study the political, economic, social and technological (PEST) drivers of this movement.

For me the key point is this: lives are becoming less structured. They no longer fall into a pattern of study, work, retire or a timetable of 9 to 5 and 5 weekdays followed by a weekend. They certainly don't for me anyway.  People have several careers, in succession or sometimes alongside one another. There is no longer the luxury of putting off ‘life’ for after work either at 5.30pm or on retirement. So people are more demanding about how work integrates with life. We’ll see less distinction between our commercial real estate expectations and those of the real estate where we live and play.   

All of this means that the need for a central office where everyone checks in for 'desk time' is diminishing. Co-working companies are cashing in on this trend. Broadly, there are two models for co-working enterprises: lease length arbitrage and a management service model.  

Proof that this isn't a flash in the pan trend but a change that's here to stay are Land Securities and British Land's decision to run their own co-working spaces. The success of the managed service model over lease length arbitrage alone is shown by a comparison of WeWork and Regus' valuation (see above).  

Future of proptech

One of the reasons commercial proptech has been slow in coming is because it isn’t a homogenous market.  Properties, locations, tenants and leases are different. Resisters to the change in the property services landscape may use this as a reason not to engage with it and carry on as if nothing has changed.  

There are hundreds of new proptech ideas floating around. If you want to understand which ones are likely to succeed or fail, and to get into the mind of the innovators and their funders, check this list of conditions for successful proptech. I've found this a really useful way to unpack what each new platform is trying to do:

(i) a diverse, widely distributed source of demand (eg. potential users of short stay hospitality)

(ii) a diverse, widely distributed and heterogeneous source of supply (rooms)

(iii) no dominant, efficient mechanism for bringing demand and supply together

(iv) potential financial gains to the demand side, the supply side and an intermediary

(v) scalability. 

There are many many better qualified writers than me on the subject of proptech. If you'd like me to refer you to useful sources please message me. I hope the marketers reading this have found it a useful, if very simple, intro and contextualisation of proptech for property marketing.