About five years ago, only a handful of online classifieds/portals were taking the new development segment seriously. That changed rapidly as more and more companies began to notice the opportunity, especially on 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 leadership of the new home segment.
We carefully study what’s happening in this space around the world and we build best practices into our solutions. During the exploration and innovation process, we personally stepped on at least a 100 “landmines” (we are still finding new ones) and we often see others making the same mistakes we did. We wanted to share them with you in the hope that it will help you save some time and money.
Here are some of the most common misperceptions regarding building a scalable new development segment:
1) Refusing to acknowledge that the same approach which helped you win the broker segment might not work in marketing new homes.
As one of the industry veterans, Simon Baker, said at a recent Property Portal Watch 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 apply the same mindset that helped them achieve success in the resell 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 selling real estate”. With all due respect, that’s like saying that building a successful chain of fast-food stands and a Michelin star restaurant requires the same skillset and playbook. After all, “it’s still selling food”. In principal it’s impossible to argue: “yes, it’s still real estate”. It is still acquiring content, converting traffic into leads. But the devil is in the detail, as the saying goes, and if you look closer, compare the customer's journey, it turns out that in this case, those “details” are the size of elephants.
2) Assuming the buyer's journey in the broker segment and the new-home segment is the same.
Often we hear that “we’ll just add 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 to purchase something off-plan. Before founding Homsters I tried to invest in real estate in seven countries. Some of them very developed, others at an early stage. I attempted to buy both resell and new properties. I assumed “it’s just real estate”. I was wrong.
I quickly noticed that in my mind the two set of problems I was facing separated to the point where I had to make a choice: do I continue with the resell and dealing with brokers or stick to new homes. Because both paths require different skills, efforts, questions, problems to tackles. And most users do exactly the same as I did. Yes, nearly all of them start their journey at the same point: “Google: tell me about available 2 bedroom apartments”. However, at some point, 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 can not be ignored if you want to create a good user experience and drive engagement, which will be the key in monetization on later stages.
3) Trying to turn a broker listing page into a new development / off-plan listing.
If I can relate to my past metaphor – putting a napkin on the plastic table of a fast-food restaurant won’t lead to you having both the hot dog stand customers and the fancy folks there. More often than not, you’ll create a Frankenstein. A unified platform which is a great compromise: it will try to do everything for everybody – leaving every user equally unsatisfied… So if you have a good value proposition for brokers – great. You worked hard to build it. Keep it, improve it, own it. Just don’t break what’s working. As I heard someone say “If you have a horse, and you want to add a giraffe business – please don’t try to stretch the poor horse's neck…”.
So please don't think how you can stretch your broker platform to cater to everyone. Instead - treat it as a user-sourcing platform, access to which will help you cut down the time needed to create a market-dominating player in the new-home space.
4) Thinking in “listings”.
In resell, your customer is the broker. Brokers sell listings. But with new projects, especially those sold off-plan, the flat plan/listing takes a secondary role both on the user and seller side. Why? As a user, before I am ready to consider a flat in a new project I need to know: who’s building, what’s the quality, what’s the probability of fraud, when is it ready. etc. Unlike in resell, I can't simply go and look around and get those answers. Your platform has to reflect that. 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 that before they can sell a flat they need to sell a dream, a community, a vision of a better, happy life and the smell of fresh paint. They know that they have to sell that before they even present a single floor plan. Which is why developers don’t have “listing marketing budgets”. They have project marketing budgets, and no single developer company page starts from the view of the listings, right? It's always a story or a dream. Consequently, that’s how sellers and the buyers operate. At the same time, your platform is only built on “listings” and cannot properly present and market projects – becoming a performance leader will be a challenge.
5) Applying the same sales approach to brokers and developers.
Dealing with thousands of brokers and dealing with a small, very complex group of developers and banks is very different. Especially that the group of developers usually has 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…
6) 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 listing on some platform to get access to the audience. You know that game… The competition book on this has been written a long time ago. But developers are different. Unlike most brokers – each new development has its own online presence, it’s performance campaigns, it’s own brand. They can do just fine without you. Therefore your competition is not the other classified. It’s two things:
a. The developers' offline acquisition channels.
b. Performance marketing players: Google and Facebook.
Is it possible to beat both of those and take the developer’s marketing dollars? Sure. However, it’s not easy. It’s not fast. But it’s worth the time and effort, because once you do that – you get access to a massive revenue pool and a very defendable position. But the first step to winning anything is… properly realizing whom 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 the 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?
7) Launching a business without resources, at least at the ramp-up stage.
I understand it’s a new segment, the revenues from it are low, quarterly revenue targets are high, resources are always scarce. So, logically we all put resources where the revenue is currently coming from. But taking any business off the ground is hard. Especially at the start. And no matter how good of a tech solution and value proposition you are launching – 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 fast. So if you want to make sure you give your new “rising star” segment a chance – find the most unsinkable, battle-tested person in your organization and make sure that their job for the foreseeable future depends on one and one thing only: 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.
I hope this article has been of some help. Maybe it will be instrumental in saving you some money. Perhaps it will ignite an internal discussion. Or it may spark a new product idea. Either of these would be great. Moving forward - if you would like to have a chat about new developments or you feel like your company has uncovered potential in this area - please do not hesitate to drop me a line. After all, this is what we do at Homsters - our goal is to make the new home industry more efficient and to help everyone in this segment generate more revenue. That's what we are here for. Always happy to share, support and cooperate.