Meeting Investor Expectations: The Age of the Customer
The world of commercial real estate looks drastically different from how it did 20, 10, or even 5 years ago. Impacts from the rise of technology have been seen in most every industry, but CRE in particular has been slower to adapt. Perhaps most influential was the emergence and growth of the Internet, along with which came an increase in the types and amounts of information available. As these systems continued to evolve, relationship-building became increasingly important (even more so than before) and a customer-first prerogative practically required. This era has since become known as the “Age of the Customer”.
What Is the Age of the Customer?
According to Forrester, we are 7 years into the Age of the Customer, a theory that says consumers (including investors) in a buying or investing situation are more empowered now than ever before. They are more informed and have elevated expectations for levels of service and every engagement they have with a company, including their commercial real estate firm. A Salesforce study found that 50% of consumers will switch firms if a company cannot anticipate their needs, so this concept is not one to simply be ignored.
How did we get here? Technology. With technology, two important things have occurred. Because investors are more aware and better informed about opportunities,
- the barriers to switching business providers are much lower, and
- firms have greater pressure (and a bigger challenge) to consistently provide high-value experiences for their investors.
What are the Rules?
Any marketplace operates under a basic set of rules.
The Old Rules
There are three elements:
- The opportunities, controlled by the sponsor
- The information, controlled by the sponsor
- The investment decision, controlled by the investor
In this system, sponsors controlled the opportunities and held the information. They had all the insights, knew about and had access to all the investment opportunities, and chose who they shared that information with.
The New Rules
In the new rules, there are also three elements:
- The opportunities, controlled by the sponsor
- The information, accessible by the investor
- The investment decision, controlled by the investor
In this system, there has been a shift in power, with sponsors now controlling only one of the elements. Consumers are more informed than ever before. The internet, as well as crowdfunding CRE platforms, have made it so that everybody is exposed to essentially the same amount of information … and opportunities. Investors are no longer relying on their long-held connections to approach them with an opportunity – they are empowered to seek out opportunities on their own.
What Does This Mean for CRE?
The Age of the Customer mandates a different way of looking at your relationship with investors, and success depends on how quickly you can adapt. Commercial real estate investors are taking a big risk when they place their trust, and their dollars, in a CRE sponsor, and they want to feel confident that they are making the right decision. Now that investors have more information and more options, sponsors have to work harder to build trusting and meaningful relationships, as well as to insert personalization into all interactions.
As Deloitte says, “The real estate industry is on an accelerating disruption curve that will challenge industry leaders to look differently at the ways they do business and interact with their investors.” Remember: if you don’t adapt, there’s a good chance your competitors will.
To learn more about anticipating investor expectations for experiences and engagements and taking the steps to make sure those needs are met, download this free checklist: 7 Ways to Exceed CRE Investor Expectations.
