Stricter lending standards, regulatory pressures and changing consumer sentiment have dampened the property sector over the last few years. As the property sector has softened, buyers have become more discerning around the purchase of property, especially apartments, with some buyers delaying settlements. This is causing significant cash flow challenges to developers and others in the property sector.
Developers need to be innovative to remain relevant and profitable in challenging economic times. To gain an edge, some organisations are leveraging the power of data and analytics to proactively navigate the challenges that come with a volatile property sector.
All organisations collect information about their customers, which can provide valuable insights to unlock business opportunities and more effectively manage existing business. For property developers, this could mean reducing settlement delays, improving customer engagement, more efficiently using marketing resources and more.
There are three key steps in leveraging the power of data and analytics to manage your customers – know, predict and engage. We look at each in more detail below to show you what each step could mean for your business.
Step 1: Know
With so much data now being captured you can better understand your customers, including their purchase habits, needs and preferences. Knowing this information enables businesses to treat customers in a more personal way, enabling one-to-one interactions and the ability to customise offers and communication based on the customer segment.
For property developers, high-level segmentation typically yields three distinct groups: homebuyers, investors and foreign investors, each with unique drivers. While this is a start, effective segmentation goes much deeper, looking at segment subsets, drivers and behaviours. For example, homebuyers may include first-time buyers, upgraders or downgraders, and each of these has different needs and drivers, and, most importantly, different budgets.
Step 2: Predict
By having a deeper knowledge of your customer, you will also be able to better understand their journeys and begin to predict their behaviours to support them in a meaningful way.
Data in the property sector can be used to predict events including settlements, renovations and the likelihood that a homeowner is ready to sell. Using settlements as an example, the data shows that there’s a correlation between settlement duration and the purchaser’s country of residence. Specifically, data shows that foreign purchasers often take longer to settle. This being more pronounced with some foreign buyers.
Conversely, domestic purchasers on average settle faster and show lower risk if they’ve added additional amenities to the property (such as appliance and fixtures upgrades).
As detailed in the graphic below, settlement risk can increase in proportion to property value, depending on the buyer’s residency status, agent or the amount of money they’ve spent upgrading their property’s amenities. Using data to draw these conclusions allows property developers to assess the settlement risk amongst their customers, so they know where to focus extra care and attention.
Step 3: Engage
By leveraging the insights gained from knowing your customer and then predicting their behaviour, businesses can deliver a tailored experience at the right time and through the preferred channels.
As noted in the example above – a developer may be able to predict the segments of buyers they are going to have challenges with when it come to settlements, so they may increase the level of engagement with these buyers to manage their payments or incentivise their agents differently knowing their customer’s risk profile.
Better understanding customers through collecting and analysing data enables businesses to predict customer behaviour, which can assist in developing and delivering the right products, to the right audience, at the right time. It also ensures businesses remain proactive and competitive in even the toughest of business environments.