In today's day and age, businesses everywhere are continually at risk of being disrupted. We’re finding disruption is industry agnostic and real estate is no exception. If one waits too long, the risk increases for getting left behind by both customers and the competition.
Did you know that Airbnb was valued at $30B? Talk about a simple concept that is disrupting everything from hospitality to real estate. Think about that for a moment, one of the world’s largest lodging listers, doesn’t own a single property.
What are the trends happening today and how can real estate businesses stay the course? This post explores real time examples of companies faced with disruption and how they are staying relevant.
Let’s first look at Zillow and Redfin. They have both found a niche in real estate tech, an industry that–until late–was lagging in innovation. Now, both companies are multi-billion-dollar businesses, and they first brought mobile and data analysis capabilities to the industry2. Both are good at making meaning of big data and are transforming the way people make decisions on homes. Interestingly enough, both are based in Seattle and are publicly traded.
Other newcomers such as Bowery and Flip are changing the way age old real estate functions have been performed including appraisals and sublets1. According to an article in TechCrunch, others are jumping on the bandwagon to make life easier for home sellers by offering tools to reduce time on the market. Knock, for example, is a service that guarantees to sell homes in six weeks or less2.
With startups and upstarts changing the game, there are increasingly more digital service-based amenities designed to help renters and homeowners alike. While homeownership has declined in recent years, many have seized the opportunity to appeal specifically to renters. Their main value proposition? Saving customers time. Hello Alfred, for example, is a new service that provides housekeeping and errand running for building residents2.
Startups are not the only ones innovating. In fact, some of the country’s largest home builders are experimenting with new strategies to enhance the overall customer experience. Take The Pulte Group for example. They have been around since 1950 and recently started using virtual reality as a way for potential homeowners to interact with a new home design. According to a September 2017 press release, "PulteGroup has recently deployed a virtual sales center at one of its highly-anticipated communities in Atlanta.”
With increased saturation in the market, it only makes it harder to compete for legacy businesses and new companies alike. It can be daunting to navigate the ever changing landscape for real estate owners and operators. So how does one keep up?
At AArrow, we have three suggestions to win in today’s ecosystem.
- Use Innovative Marketing to Build Your Brand - Almost a decade removed from the innovative financial instruments that led to the housing crisis, it is clear who the winners and losers were. Victorious were the innovators that came up with new strategies; ceasing to exist are those that failed to change with the times. The tightening of the financial markets forced the real estate industry to focus on new marketing efforts to attract the few remaining customers and retain the ones they had. Max Durovic, chief executive officer of The AArrow Sign Spinners, has been able to witness the trend firsthand, providing advertising services for hundreds of realtors, developers and property management companies. “Our most successful clients have combined outdoor advertising with online advertising, featuring website domains and prompting calls to social media sites on their signage. This creates an online community surrounding properties and provides an entire new source of prospects.
- Put Meaning to Data - Consumers today are more tech savvy than they have ever been. They research on their own, find more answers on the web and rely on social media to vet their findings4. If you know what is important to your customer and have a dynamic online presence, you can position your brand more effectively and increase engagement with your brand more cost effectively. “We use traffic counts and demographic data to help our clients identify ideal times of the day to advertise,” Durovic said. AArrow provides detailed case studies on performance with a breakdown of traffic counts, impressions made and cost per impression as evidence that a sign spinner can outperform other forms of outdoor advertising. Using information available from local governments–combined with 10 plus years of qualitative data–AArrow continues its push to put a meaning to experiential marketing. They are continually experimenting with new marketing tactics and what is most important to measure whether that be incoming calls, walk in traffic or online engagement. This reporting functionality and customized approach has allowed their company, along with thousands of others, to have a better understanding of their own customers: what they want to see, and when.
- Look at What’s Ahead and Who’s Coming - When it comes to the future, start thinking of Gen Z. According to MarketWatch, "Generation Z is almost on the cusp of being able to buy homes, with the first Gen Z–ers reaching their 18th birthdays in 20173." They will be equipped with more knowledge of what they want and ideas of how to get there. We recommend getting to know them; what they expect, what they demand, and what is most important to them. Speak with them and bring them into your company. Run focus groups, innovation labs, hold best idea contests, experiment and learn from them. Let them bring their ideas to the table and innovate.
Homeowners and renters are increasingly demanding accelerated innovation from all companies, including those in real estate. This period of rapid innovation will continue to put pressure on owners and operators to remain relevant and ahead of the times.
- "6 Real Estate Startups Poised To Disrupt The Industry" Forbes. March 31, 2017.