Commercial real estate and the changing dynamics of customer experience
By Prabhu Ramachandran, Founder & CEO, Facilio Inc.
A new era of technology has ensured that the contemporary customer expects real-time, on-demand services, readily available at their fingertips. As customer experience (CX) expectations grow, businesses are adopting value-over-volume and people-centric approaches to stay competitive. Within the facilities management function of the commercial real estate sector, which traditionally focused on physical assets, the spotlight has shifted to facilitating enhanced occupant experiences, instead.
This shift is not entirely surprising given the pace at which customer preferences are evolving. For an end user accustomed to free Wi-Fi along with their Starbucks cappuccino, on the go self-promotion on Instagram and co-working premises from which to launch the next start-up unicorn, convenience is a bare necessity. In this climate, better CX translates into better Return on Investment (ROI), for CRE owners. Everything from higher occupancy rates, tenant retention and brand perception is tied to delivering exceptional end-user experiences, as the primary differentiator of a commercial real estate business. By using operational data to uncover insights that drive continuous efficiencies, the next generation of agile, responsive and real time facilities management can empower building owners wishing to cater to this new, value-focused generation.
The new wave of CX expectations
According to a recent KPMG report, which reviewed the annual statements of several prominent commercial real estate companies around the globe, there is a 160% rise in the use of the word 'customer' in such documents(1). This observation attests to a growing customer-centricity in the CRE space. As tenants become increasingly conscious of the quality of experiences on offer, CRE owners are turning to the innovations offered by the Proptech revolution. It’s on the basis of this promise that Proptech attracted $4 billion in added investments, in 2018. One technology driven trend that is gaining momentum in particular, is the move to more efficient, data-driven and unified Operations and Maintenance, deployed at a portfolio-wide scale.
Revolutionizing Operations and Maintenance
Commercial real estate businesses are looking to use technology to evolve from the existing model of siloed and building level operations, with multiple tools that are not properly integrated, to more data driven and unified operations across their entire portfolio. This is also an area in which CREs are particularly keen to innovate, as operations and maintenance directly impacts both tenant experiences and the property value. As legacy FM services fail the test of time, data-driven and enterprise-scale platforms are coming to the fore, as the solution of choice. A combination of AI, Machine Learning and IoT is at the core of this approach, which gives CRE owners the opportunity to simultaneously enhance their asset efficiencies and customer experiences, while running leaner more agile operations at lower cost.
The strategy involves leveraging data that existing building automation is already generating, but which is currently lying unused in siloed systems operating in isolation from each other. IoT technology is used to collate this data, which AI and Machine Learning based analysis turns into actionable insights, in real time. Such an enterprise wide platform enables CRE owners to make informed decisions,take unified control and deliver seamless and delightful customer experiences across their entire portfolio.
The majority of respondents to a Deloitte survey, which interviewed 750 CRE executives from 10 countries, acknowledged the benefits and the disruptive potential of groundbreaking technologies like AI and Machine Learning(2). Although most respondents rated customer experience as a "top priority" for their organization, 36% expected to hold the line for the time being, before prioritizing customer experience above anything else. Fortunately this ‘wait and watch’ attitude virtually disappears when respondents are asked to speculate over the medium term and longer. For instance, an overwhelming 92% of respondents planned to either maintain or perhaps increase their tenant experience-related technology investments, over another year or two. Looking at specific regional markets, the United States continues to helm this new tech and data driven Facilities Operations and Maintenance revolution, with CRE firms across the APAC region also beginning to make significant headway.
Investing in a smart, connected future
As the commercial real estate sector begins to embrace the self-image of being a provider of services, facilities and experiences, the relationship between CX and ROI is being acknowledged more and more. Investors are increasingly identifying the next generation of data-driven operations and maintenance, as the key to building better brands. When KPMG surveyed 60 global investors, who represented over $1.3 trillion in combined venture capital, 96% of the respondents unequivocally agreed that customer and end-user experiences are critical to successful commercial outcomes in the next five years. There’s good reason to consider these beliefs well-informed, the same survey also established that businesses that improved CX increased their revenue by 10 - 15%, while reducing expenses by 15 - 20%.
The CBRE Group, a US-based full-service CRE firm, has an enterprise-scale platform called Host, which drives smart workplace experiences and portfolio-wide efficiency by connecting data from previously unconnected devices and sensors in a building, and incorporating Machine Learning algorithms. The platform enhances routine workplace interactions like organizing a meeting, liaising with clients and ordering coffee, by making them easier and more intuitive. Similar in-house platforms have been deployed by companies such as JLL, Alibaba as well. It’s as though CX factor is shaping as the differentiator between future-proof companies and those falling behind the times.
As contemporary customers embrace a more connected future, the businesses that interact with them need to follow suit. We are entering an era in which billions of smartphones and mobile devices will be the interface to embedded building automation - such as HVAC systems, smart lighting, CCTV cameras, automated doors and more - as part of integrated portfolio-wide networks. Those real estate owners and services providers that capitalize on this emerging interactive model, redefined CX expectations and data-driven intuitive control will be able to run leaner and more profitable businesses that their customers respond to preferentially. The layer of digital technology that enterprise scale software platforms add to physical assets immediately upgrades their functional capabilities to being far more predictive as well as responsive. Ultimately, providing customers exceptional experiences comes down to engaging with them, responding to their needs and being able to do so with virtually at once. The modern consumer has evolved to a new level of convenience in their virtual lives, and they expect their real world services and amenities to follow suit.
About the author
Prabhu Ramachandran is the founder and CEO of Facilio Inc, an Enterprise platform for data-driven Facilities O & M (Operations & Maintenance) across real-estate portfolios, headquartered in New York (US) and with operations in USA, Middle East and India. Prabhu’s career spans over 18 years of product, business and customer experience focused on enterprise-scale software for IoT-based connected services, sustainable building solutions, and telecom network management. For more information please visit:https://facilio.com/
Headquartered in New York (USA), with operations in UAE and India, Facilio offers an Enterprise platform for data-driven real-time facilities operations & maintenance (O&M). Facilio harnesses IoT and AI to centrally consolidate existing building systems and automation data across portfolio, onto the cloud. It offers applications and modules for property owners and service providers to manage and control portfolio-wide O&M activities and outcomes, such as maintenance, tenant experience and sustainability, in real-time.