As the commercial real estate (CRE) industry undergoes an unprecedented transformation, real estate companies throughout the entire value chain are approaching a crossroads.
They can stick with established ways of working and face falling under the feet of disruptors (think Blockbuster) or embrace opportunity and transform the industry on their own terms.
Personally, I vote for the second approach. There is a huge opportunity for those companies that can evolve with the world around them and respond to changing customer demands. In fact, one could argue that real estate is in a beneficial position as it is not the first to be affected by disruption. By assessing other industries that have also experienced substantial change, CRE landlords and agents can learn valuable lessons to help ensure that they end up as part of the transformation rather than a casualty of disruption.
Looking outside real estate, a clear playbook has emerged. The most successful businesses have followed four golden rules:
1. Invest in providing an exceptional customer experience
Above all else, the in-product experience for the customer has to be amazing. Every winner starts here. Airbnb. WeWork. Netflix. And I don’t mean just the product – from first contact to the very end, the whole experience is superior to what came before. If people are not delighted, they won’t return.
2. Reduce friction
How do you get customers to switch to you and, better still, stay with you? Make it easier to buy from or work with you. Think Amazon’s ‘1-Click’ ordering, which was an ecommerce game-changer. An innovation WeWork has introduced is simplified pricing and contracts.
3. Be transparent
Many companies think: ‘If I give pricing up front, I could leave money on the table!’ However, what you are introducing here is distrust in the process, which turns away more potential customers and is real money lost. Potential customers need to feel confident they have access to all the information they need to make the best decision.
4. Use technology
Finally, today’s most successful companies are powered by tech and, importantly, it is the basis of the entire customer experience. Manual processes don’t scale and customers expect you to know what they like and dislike.
You might think this playbook is the roadmap for up-and-coming tech firms, but it’s far more versatile. Take Domino’s Pizza as an example. In 2006, its share price was at $13.83, but by applying these four rules, it grew its market share and now dominates its space with a $281.01 share price. How?
It invested millions in improving its pizza recipe. It enabled zero-click ordering via its smartphone app and made its availability, time until delivery and pricing transparent.
While real estate is in the midst of unprecedented change, we all have a decision to make – do we embrace change or continue down the same path and fall behind? I’d argue there’s only one decision to make – be like Domino’s.
Nick Romito is chief executive and co-founder of VTS