By Shelley Cernel, Director of Marketing, IMS
According to Forrester, we are 7 years into the Age of the Customer, a theory that says consumers are more empowered now than ever before and have elevated expectations for every interaction they have with a company, including their commercial real estate (CRE) firm. Technology has been a powerful driver of this concept, lowering the barriers to switching business providers and simultaneously presenting a challenge for firms to consistently provide high-value experiences for their investors. Indeed, 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. After all, choosing the right sponsor with the right portfolio opportunities can be the difference between success or failure. The sponsor, on the other hand, needs the skills, knowledge, experience, and tooling to manage the portfolio in an effective and trustworthy manner and to keep investors informed and satisfied.
Need further evidence that the investor experience should be a priority for 2018? A Salesforce study found that 1 in 2 consumers will switch firms if a company cannot anticipate their needs. And today’s clients have expectations for engagements and level of service that they never would have even imagined just five years ago.
Commercial real estate has long been an industry based on relationships where networking and face-to-face interactions are not optional.
Want to enhance client experience and engagement? Read ahead for four steps to understanding and exceeding investor expectations.
Build Meaningful Relationships
Commercial real estate has long been an industry based on relationships where networking and face-to-face interactions are not optional. Investors want to work with somebody who they trust, who has a solid track record and reputation, and who is similarly aligned in terms of values and business priorities.
Traditionally, raising capital would involve mass emailing your closest family members, friends, and peers. To build your web of contacts, you would need to attend networking events or connect with friends of friends. But now technology is making it easier and more efficient for sponsors to connect with and contact potential investors or vice versa. On the flip side, sponsors need to make a point to personalize engagements and continuously work towards building meaningful and ongoing relationships.
Invest in Technology
Investors, particularly those from younger generations, are increasingly less likely to work with people and companies that aren’t investing in their technology infrastructure or tech stack. Investors are looking for sponsors who have upgraded their operation, similar to other investment industries. They see things being done faster, smarter, or more cost effectively in other markets and expect to see the same in the commercial real estate industry. After all, you can manage your bank accounts and play the stock market online 24/7, so why shouldn’t you be able to also access your CRE investments?
Unfortunately, over 1/3 of the CRE industry still uses outdated technology on a daily basis. But many investors have already seen the progression of technology and its ability to monitor and track as key to the success of their portfolio. Further, it helps to streamline processes and drive efficiencies.
Effective and constant communication benefits both parties. The industry has started to shift from a demand perspective. Investors are starting to ask for more information; they want insights into deal flow, deal interaction, deal progress, and distribution history. That is why communication with investors is so important. An informed investor is obviously a good investor, but a well-communicated investor is a great investor. The more engaged and connected investors and sponsors can be, the more benefit both parties will receive from the relationship.
Today’s sponsors need to consider how they can better interact, engage, and communicate with their investors, ensuring they have the data, insights, and control that they need in real-time. Further, technology enables sponsors to communicate and provide information and data much more quickly than traditional methods, such as snail mail, enabling them to engage more readily with their investor base. Technology will lead to a deeper connection and enable effective engagement between sponsors and their investors.
Investors in today’s on-demand, instant gratification culture expect accessibility and transparency about their CRE investments, with real-time, on-demand availability offering both convenience and control.
Provide Accessibility & Transparency
Related to communication is the idea of transparency, something which 2/3 of investors cite as being an important consideration when making an investment. Investors in today’s on-demand, instant gratification culture expect accessibility and transparency about their CRE investments, with real-time, on-demand availability offering both convenience and control. Reinforcing this point is the fact that CRE is an increasingly global business. Regardless of your firm’s time zone and business hours, investors across the country or even the world need instant access to key information. Similarly, people need access beyond just their office, such as while working remote at home, while on the road for business trips and conferences, or even during their commute. With these requirements, investors expect to have their portfolio readily available online with 24/7, on-demand, real-time access, at any time and from anywhere.
Transparency also enables sponsors to build credibility with their investors. Ultimately, this open exchange of information facilitates a smoother transactional process and strongly factors into having successful long-term relationships.
It’s more important now than ever before to meet and exceed investor expectations, leveraging technology to create a value-add investor experience. 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.” If you don’t take steps to make changes now, there’s a good chance your competitors will.