Consumerism is changing buyer behavior throughout the world. Today, customers want instant gratification and more value with every purchase, be it in the form of discounts or additional offers. In this fast-changing world, value addition is the foundation of any loyalty program. Great customer service is the foundation of any loyalty program.
Real estate is still new to loyalty programs as an industry, and developers need to figure out what works and what does not. Loyalty programs are for repeat purchases however housing is not that kind of product. Customer loyalty in housing is referrals.
To make this process easier, we will break down customer loyalty and the effect it can have on real estate sales.
Why customer loyalty is important?
With real estate loyalty programs, developers can reduce cost of sales to less than 2% vs. 5-7% in other verticals. When real estate developers invest in a loyalty program for their homebuyers, they can increase their referral sales by up to 30%.
Also, customer behavior statistics from 2018 in India show:
⦿ 40% of baby boomers are more likely to spend on brands with a loyalty program
⦿ 39% of generation X prefer brands with loyalty programs
⦿ 46% of millennials prefer brands with loyalty programs
Why brands use loyalty programs?
Brands work on customer retention because customers are likely to buy from the brand repeatedly if they increase customer delight.
However, in India the average investment while buying property is around 77% of their personal wealth. Naturally, this reduces customer lifetime value to the brand, and hence they feel that their product is not loyalty programs friendly. But is that the case?
⦿ Customer loyalty in other big-ticket purchases
Property is the only big-ticket purchase that appreciates. So, unless the current apartment does not fit a customer’s needs anymore, they do not need to upgrade.
Cars are the only other high-value item that comes close to similar penetration among people and ticket size. However, cars require servicing from time to time, and this provides an opportunity for brands to give customers points based on their spending on original parts, accessories, and brand merchandize.
Indeed, customer loyalty in real estate is unique and cannot be compared to any other product. Therefore, real estate developers must look at customer loyalty in a different way than any other industry, whether it is cars, retail, or services.
⦿ Value addition through experiences
Value addition has to be different for customers at different stages of homebuying. Homebuyers can primarily be divided into booked customers, pre-possession customers, and post-possession customers.
Each of these categories likely expect different kinds of benefits, and a real estate loyalty must accommodate them all. For example, a booked customer might get excited when they receive a discount offer on a lunch experience whereas a pre-possession customer might enjoy an intimate meet-and-greet on-site where they can get familiar with their neighbors, have a good time, and find out more about construction progress.
⦿ New homebuyers
The feel-good factor of buying a new home is accompanied by worries of delivery, EMI burden, and product quality. The customer loyalty cycle of real estate starts immediately after they complete booking and registration and ideally lasts forever. If developers add value from the moment leads become homebuyers, then the level of trust will increase.
These value additions can come in the form of benefits that are specific to that period. For example, developers can help customers find out more about the locality their buying in, notify them with construction updates, and make moving-in a seamless experience. In addition, maintaining frequent contact with homebuyers creates a sense of security and eliminates buyer’s remorse.
⦿ Existing homebuyers
Existing homebuyers, on the other hand, do not require moving-in assistance at all. However, other promotional offers that create value and enhance their experience can add to their delight factor.
How does that benefit the developer?
A Nielsen report states that recommendations from family and friends are 92% more effective than any other form of advertising. Additionally, 74% of consumers list word-of-mouth as a key influencer in purchase decisions, but only 33% of brands seek to use it.
With a well-designed real estate loyalty program, developers can eliminate the customer lifetime value dilemma and create WOMM through value addition through promotions and experiences.
When done right, this system can increase sales for real estate developers by up to 30%, and it is also recession-proof. In addition, real estate brands that have implemented loyalty programs have generated 16% referral sales during the pandemic year.
It is just about creating the correct value for your homebuyers.
For more information on how you can transform your real estate referral sales and open a new vertical, get in touch with Loyalie today.