Why marketing functions in real estate sector should be outsourced
The sector which has seen growth in leaps and bounds in the last two decades is real-estate. Key metro cities have given return of almost 300-400%, making millionaires across cities. With the development projects undertaken by state governments like metro and smart city projects, there has been more fuel to the fire, leading to price increase in real estate projects in these cities.
Some of the investors have realized the profits and invested; and some of them are living in homes valued above INR 1 crore or more. Though investors have made millions, the developer’s status has remained the same, fighting with high cost of capital, reducing margins due to high demand in affordable housing segment. Added to these, the pandemic pain was the last nail in the coffin, especially for first time developers.
Over and above, the land back’s notional value owned by real-estate players is going down. To be efficient and to survive in these conditions, some out of the box ideas need to be implemented by developers. Let us discuss some ideas that can be implemented by the developers to bring in more profitability and future assets.
Outsourcing the marketing function can bring in increased efficiency for developers and real-estate players. The lean teams will help save lots of cost for them and resources can be diverted where they are needed the most. There are lots of companies offering end-to-end customer service. Developers should look forward to bringing in the expertise of these companies, who have a proven record and have done wonders for their real-estate partners at a nominal commission of 1-2% of the property or a fixed monthly retainership.
Real-estate was the only product sold after multiple site visits by customers. One of the challenges the pandemic has thrown at developers is the absence of a tool to aid sales. Various developers had to spend money on the non-core technological products for virtual tools and visits of customer. If this arm of real estate, which forms a core for increasing sales, can be outsourced to professional consultants it can bring in exponential sales growth. Since the outsourced company would provide sales increase as a core service, it will make use of channels that will give optimum results. Some companies offer services for lead generation with a nominal fee, anywhere between INR 1-7000 per lead and post conversion they charge 0.25-.50% value of the property.
Similarly, the function of advertising, PR, outdoor, social media should be outsourced to lower the cost of company. There are specific agencies providing all these services under one roof. These agencies are providing services to different sectors at a cost which is half or one third the developers are spending on building internal teams for the same.
It is time for real-estate to revamp and reap the benefits of not only technology but also benefit from traditional marketing approaches. Gone are those days when the profits were 100-200% of the overall revenues. With the slashing of profits, developers need to be innovative for sustaining their businesses in the longer term.
Guest contributor Divaker Bhalla is the CEO of DNA Ventures Pvt. Ltd., a corporate advisory firm, dealing with fintech, real estate and technology companies. Any opinions expressed in this article are strictly that of the author.