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Most Common Mistakes When Attacking the Property Development Segment
Most Common Mistakes When Attacking the Property Development Segment
About 5 years ago, only a handful of online classifieds/portals took the new development segment seriously. That has changed rapidly as more and more companies start to notice the opportunity, especially in emerging markets where developers and mortgage banks massively outspend brokers on online customer acquisition. But winning in the new development segment is not easy. We operate our own new-home marketplaces and also work with classifieds around the world helping them move into and take over leadership of the new development segment. We carefully study what’s happening in this space around the world, and we incorporate the best practices into our solutions. During the exploration and innovation process, we personally got tripped up at least a hundred times (and we still do sometimes…), and we often see others making the same mistakes we did. Now we want to share our experience with you in the hope that it will help you save some money and time.
Here are some of the most common misperceptions as to building a scalable new development segment:
• Refusing to acknowledge that the same approach which helped you win the broker segment might not work in marketing new-built property.
As one of the industry veterans, Simon Baker, said on one of the conferences “The skills you had to build whatever portal you have today, are not the same skills you need for primary transactions.”
Surprisingly enough when launching a value proposition for the new home segment, the biggest challenge is not the market – it’s the organization itself. Very often we see classifieds applying the same mindset that helped them achieve success in the resale segment to the new development segment. And don’t get me wrong – we used to do the same when we launched… The seemingly logical argument is “at the end of the day, it’s still about selling real estate. With all due respect – that’s like saying that building a chain of hot-dog stands and a Michelin star restaurant requires the same skillset and approaches. After all – “it’s still about selling food”… In principle, it’s impossible to argue: “yes – it’s still real estate.” It still involves acquiring content and converting traffic into leads. But the devil is in the details… and ohh…if you look closer, it turns out that those “details” are the size of elephants in this case.
• Assuming the buyer journey in the broker segment and the new-home segment is the same. Time and again, we hear that “we’ll just add a developer listing to the search, and we’ll be fine – it’s still a flat…”. More often than not, that leads to very limited results. Why? I would inspire you to once try and purchase something off-plan. Before founding Homsters, I tried to invest in real estate in 7 countries. Some of them are highly developed, while some are early stage. I tried to buy both resale and new pieces. I assumed it’s just real estate. I was wrong. I quickly noticed that in my mind, these 2 sets of problems I was facing separated to the point where I had to make a choice: whether I would continue with the resale and dealing with brokers or stick to new homes. Because both paths imply different skills, efforts, questions, and problems to tackles. And most users do the same. Yes, nearly all of them start their journey at the same point: “Google, tell me about 2 bedroom apartments available.” But at some stage – buying an existing flat with the assistance of a broker vs. betting your money on a promise that someone will turn a gaping hole in the ground into a beautiful apartment have very different pain points. These differences cannot be ignored if you want to provide a good user experience and drive engagement, which will be the key to monetization in later stages.
• Let’s simply take our listing page and add some “developer features”. If I may refer to my past metaphor – putting a napkin on the plastic table won’t lead to you having both the hot dog stand customers and the fancy folks there. For the most part, you’ll create a Frankenstein. A unified platform which is a great compromise – it will be easy to manage, but it will try to do everything for everybody – leaves everyone equally unsatisfied… You have a good value proposition for brokers – great. Keep it, improve it, own it. Just don’t break what’s working. As I heard someone saying “If you have a horse, and you want to add a giraffe business – please don’t try to stretch the poor horse’s neck.” Instead, think of what would be a perfect value proposition for the new segment from scratch and in what way you can leverage your existing business to ramp up the new one.
• Thinking in “listings”. In resale, your customer is a broker. Brokers sell listings. But with a new project and especially off-plan, a flatplan/listing takes a secondary role on both user’s and seller’s side. Why? As a user, before I am ready to consider a flat in a new development, I need to know who owns the building, what quality it features, how high the probability of fraud is, when it will be finished, etc. Your platform has to reflect all of these things. If you refuse to do that and simply show a listing first – the probable result is that conversions will suffer. That’s from the user’s side. Now let’s think from the developer’s side. The best developers would tell you – before they can sell a flat, they need to sell a dream, a community, a vision of a better happy life and a smell of fresh paint… They know that they have to sell that before they even present a single floorplan. Which is why developers don’t have “listing marketing budgets”… They have project marketing budgets…And no single development company’s page starts with listings, right? Hence: if that’s how the sellers and the buyers think, but your platform is only built on “listings” and cannot properly present and market projects before providing listings within them – then, becoming a performance leader will be a challenge.
• Applying the same sales approach to brokers and developers: dealing with thousands of brokers and dealing with a small, very intricate group of developers and banks is very different. Especially keeping in mind that developers usually have a very “wolf-pack mentality”. Ruin your reputation with one – and they’ll all know. Developers require attention, especially on the first stage. They require individual pricing. They want attention. They believe “each project is unique” and want a different package. Fail to listen or build a platform without the flexibility to facilitate these individual needs and you might find yourself without inventory to sell.
• Failing to acknowledge your real competition is NOT other classifieds. In the broker segment, your competition is simple: other classifieds. Both horizontal and vertical. Because brokers have no other option – they HAVE to put their listings on some platform to get access to their audience. You know that game. The competition book on this was written a long time ago. But developers are different. Unlike most brokers, each new development has its own online presence, its performance campaigns, its own brand. They can do just fine without you… Therefore, your competition is not some other classified. It’s two things:
– Developers’ offline acquisition channels
– Performance marketing players: Google and Facebook.
Is it possible to beat both of those and take developers’ marketing dollars – it’s a given. It’s not easy. It’s not fast. But it’s worth time and effort because once you do that – you’ll get access to a massive revenue pool and a very defendable position. But the first step to winning anything is… properly realizing who you are fighting against. So, as one of my mentors once asked me: “How would your platform look like if your goal wasn’t to beat other classified’s crappy landing page – but you had to beat Google?” That reshaped our whole product development. Just think about it. Could you explain to a developer why he should spend his money on your platform instead of his own CPC campaign and launch event?
• Launching a business without at least some dedicated resources. I understand – it’s a new segment, revenues are low, resources are always scarce. So logically, we all put them into where the revenue is currently coming from. But getting any business off the ground is hard. Especially at the start. And no matter how good the platform and value proposition you are launching are – at the beginning, there will be issues. You don’t know them yet. You can’t avoid them. There will be 101 small and big problems you’ll have to tackle and do this fast. So if you want to make sure you give your new “rising star” segment a chance – find the most unsinkable, battle tasted persons in your company and make sure that their job for the foreseeable future is focused on one and only one thing: making sure the new development business line is a success. Fail to do that – and I am afraid you are setting yourself up for a world of pain and disappointment.