Storytelling is the new real estate super skill - Follow up.
Antony Slumbers
Keynote Speaker. Creator of the #GenerativeAIforRealEstatePeople Course | Master Generative AI in Real Estate: antonyslumbers.com/course | AI won’t take your job—someone using AI will. @genaiforrealestate on Instagram
In yesterdays post I wrote ‘It will be hard to wean a customer off a competitor who knows them much much better than you do. It’ll be like trying to get an iPhone user to switch to Android, or vice versa. The switching cost will just be too high.’
Someone has since asked if I could elaborate on the iPhone vs Android analogy, and how high switching costs might apply in a real estate context.
So here goes.
Within the smartphone market 70% of users run the Android operating system and 29% run iOS, the iPhone’s operating system. Just 1% use something else. This has been constant for many years, as very few people swap from Android to iPhone, or vice versa. Both operating systems have very high ‘lock-in’, meaning that once a customer makes an initial decision that tends to be it. They will be a customer for life.
The reasons for this follow a pattern in the tech industry where the ‘switching costs’ for a consumer to move from one technology to another rise over time. The more a technology becomes tuned to the specific needs of individuals the harder, or more painful, it becomes for them to cast what they know aside and learn, and teach, another technology what works for them. This function of lock-in explains why companies can afford a high ‘customer acquisition cost’, because once a customer, their ‘lifetime value’ will be very high.?
What is really instructive within the smartphone market though is that despite the much smaller market share, Apple, via the iPhone, make easily the most profit. For example, in Q2 2021, only 13% of global handset shipments were iPhones but these generated 40% of total revenue and an extraordinary 75% of operating profit.
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Why is is? It is because the iPhone is a much more tightly integrated package of hardware, software and services than any Android phone. Apple ruthlessly control the user experience of their devices. Indeed it is the user experience offered by the iPhone that gives Apple so much pricing power. They have spent years creating and curating this user experience and it is this which most customers buy in to. An iPhone is an emotional rather than functional purchase, and this has allowed Apple to pretty much own the high end of the market. In Q4 2020 the iPhone had 65% market share in the US. Most of the expensive, high margin smartphones purchased globally are iPhones.
Which explains why I advocate so strongly for real estate people to think of ‘Office as iPhone’. Where instead of just thinking about the ‘hardware’ of real estate, one thinks about the overall user experience of space that can be delivered if one controls the hardware, software and services of any space, or place. Where one designs ‘workplace as software’ that is never finished but is constantly being iterated based around the mantra of build, measure, learn. You build something, you measure how well it performs against specific criteria, you learn from this data, and then you re-build. And you repeat this constantly. A tweak here, a tweak there, on a rolling basis, based on feedback from users, and from the building itself.
The UX, or user experience of real estate is a function of qualitative and quantitative factors. And there are many of these that need to be tracked. But in essence it is a matter of understanding how individuals ‘feel’ that their workspace is enabling them to perform as best they can (the qualitative factors) and how the workplace is performing in environmental terms (the quantitative factors). Critical amongst these are temperature, noise, lighting, and air quality. To what extent are these perfectly optimised to allow every individual the opportunity to perform their ‘jobs to be done’ with their maximum cognitive firepower? Put simply, the environment we are in impacts on our cognitive function. If we can put our customers in environmental conditions that have no detrimental impact on their cognitive function, then we are enabling them to be as productive as they are capable of being.
With our real estate hats on we cannot make a badly managed company better, but we can at least not make things worse. For a well managed company we definitely can help them be their best. The key point is that no company actually wants an office; what they want is a productive workforce. Our job in real estate is to help make this happen.
So, returning to the original question of how switching costs might manifest themselves in a real estate context, the answer is that by thinking of real estate as hardware, software and services, by continually monitoring defined KPIs, and then on an ongoing basis optimising the space based on this data, we can provide our customers with workplaces that are finely attuned to their specific needs. We can provide demonstrably better working environments than if we did not operate in this way. And over time, this knowledge will act as a ‘lock-in’ to our customers. They could go elsewhere, but then they’d need to start again in training the space to function in an optimal fashion.
Put simply, space that is optimised for you, is hard for you to give up.?
Entrepreneur @ HUB System Integration | Act on your Data!
2 年No, never give up ??? Some thoughts ?? The #iPhone is everything, ranging from Apple's (past) computers, #iPods and all. Obviously, they disrupted - intention from day one -? the previously vertically integrated #telecommunication industry forever.? ? An iPhone is a (mobile) #computer. So, Apple needed to add value. The rest is history. All these “i-” whatever derivatives have replaced more services and gadgets we can dream of.? ? The iPhone became the #smartphone, iPod- and all Tech in one package. Loads of enabling tech allowed the iPhone to become a true multi-tool kit. #Accelerometer, #lightsensors, #camera, #Bluetooth, #proximity- and #orientationsensors and all. The #Apps of course. ? Smartphones changed how we look at #architecture. All sorts of tasks became more easy, efficient, integrated and streamlined with thousands of (third-party) services. Also for #developers, remember. ? Of course #iCloud, #Siri, #fingerprint, the #mobilebroadband acceleration (#4G, #5G), #barometer aiming at #science, #fitness, #healthcare, their #Watch, #ResearchKit, #CarPlay, #AppleTV, #HomeKit, were added, everything nicely knitted together… endlessly. ? In one neat #package! ? Name an industry vertical where Apple is not active, somehow? Where their customers are (not yet) Apple's #ecosystem platform subscribers?? ? How about #realestate? * Apple has one #stack, with distinct services and name of the game within each level. ? * Realestate also have one stack. But in each level, a myriad of #Data, #Services, #Systems, #ontologies, #standards, #structures, #metadata, #BIM derivatives, #API:s and #integrations... ? Vendors are ranging from #open- to completely #proprietary-mindset-type of. All together, the possible #combinations are just endless! ? Even within each #layer (like ontologies for instance, with #Haystack, #Brickschema and all) it is diverse in all property-companies. ? Even if there would be just one service (like #SCADA, #HVAC, from the same #vendor, they can still be #setup in numerous ways). ? All together, an endless array of Tech, Services, combinations and possible outcomes thereof. Typically relying on a 1:1 relationship person:system. And many industry CXO's attend #AI-seminars... Mind the gap I'd say! Also - SUPER IMPORTANT - almost endless opportunities viewing it all as #enablers! ? "Perhaps no one ever will", you said? ? Well. The last few years we have worked hard to understand what this is about. We asked ourselves, why does all this mean quite a bit of hassle in #B2B, and in the #property industry in particular? So instead, we looked in other directions. How does #B2C? In gaming, apps, search, finance, retail-fmcg, various one/few-klick-checkout-services? And Tech, #howto, like Apple, Google, Spotify, Strava and many more, all the way down in detail like OCR-readers, specific algorithms and all? We simply just scouted and applied the best available Tech available here to be able to: * Find Data * Understand, get Insight from Data * Enable sharing of (enriched) Data (with coworkers, customers, machines/services). ? And the outcome was surprising! Now, we know it is possible to rapidly fetch and understand 80-90% of a typical property company digital stack. And what goes on there. Like a hospital we onboarded in just five (!) days quite recently. Their IOT (like SCADA systems) and stored-process data (like ERP, files where loads of docs, drawings, manuals, spreadsheets and all... are hidden). And so, we were able to immediately start criss-crossing what we already mentioned above (the "stack" etc) resulting in a data driven approach which: ? i) Immediately displays your own company's digital “DNA”, what each one's unique "stack" is made of. ii) Highlights what can be used to move on immediately. iii) See the rest, with pain points, bottlenecks, downstream-openings and what they mean. iv) Makes a #Roadmap possible, short-long term, initiatives and all.? ? As a result we know: * what #Tech to use, #howto process a huge part of the initial phase, get your #digitalization airborne. * how to give #datascientists, #MSI:s something firm to work on, addressing the remaining 10-20% * how to gradually bring #digital resources (you already have) together into an own digital #ecosystem * most importantly, #why, as we have faced many typical also emerging needs of Data/Digital Services So #ecosystem, yes. Maybe not quite like #Android or #iOS but still. Just being able to get an own digital ecosystem flying is not bad at all. Using enablers you already have! Quite cool given this industry's starting point I'd say ?? Your thoughts here Antony? . . #HUBsystem
Tecno Brand Enthusiast/ Business Development Professional/Connector/Problem Solver/Seeker
2 年Antony, thought provoking as always! Here are a few: Have we yet reached the threshold where crossing unlocks the ability of individuals to creates such a choice? If this choice is not unlocked, there is no price to pay. There are still lots of term leases being signed, which still pander to the brokerage and investor interests. There is also a lot of term left on legally obligated leases, so owners will still be collecting monies they promised to. There is a race here and I am still not sure who wins. How do you get folks with the same company to agree on what place works best for them? My tradeoffs are likely quite different than others. For example, if I have a 10 minute commute to a place with average light and airflow vs. a 90 min commute with wonderful light and airflow, do I care that much if I am still getting what I need to done? I would only make this extra effort if I was physically in front of a person(s) that help change my career. This is similar to the theme espoused by Colin Newlyn below.
Decrapify Work ???? Recovering Executive ?? Helping you survive corporate life ?? Making change happen ??
2 年I'm sure your analogy is right. It's worth noting that iPhone is not just a device, it is a seamless experience that delivers a consistent, high level of usability and capability. The mobile phone has gone from being a tech device to a means to do the things you want in your life, and people buy Apple's offering because it delivers it with the least amount of hassle. In effect, Apple has made the tech disappear. Android devices can't do this - which is why they are discounted and/or appeal to those who like to be able to 'get under the hood'. I'm happy to pay the premium because I want to do stuff, not spend time and effort figuring out how the tech works. It's not just about lock-in, it's about getting premium pricing and profitability. (It's also worth noting that Apple are the No.1 logistics org in the world and are not too shabby at retail either. Excellent execution is also required.)
Researching and designing your workspace experience | Associate Director, Head of Workspace Experience & Strategy | Advisory & Transaction Services | CBRE Hungary
2 年"You build something, you measure how well it performs against specific criteria, you learn from this data, and then you re-build. And you repeat this constantly. A tweak here, a tweak there, on a rolling basis, based on feedback from users, and from the building itself." This is brilliant, I've been telling our clients for years that the answer to their question of when does their office project/change management process end is: never.
Hospitality | Operations Management | Customer Experience
2 年Antony Slumbers if I may, I'd add "services" as well as part of the critical factors. Unfortunately, too often, workplaces are run by people who do not grasp the concept of "service" as a value add.