While customer loyalty programs are used to increase sales and create better brand recall in many industries, we examine how well it works in real estate
Right from consumer goods to automobiles, marketing and brand-building initiatives of industries include customer loyalty programs. However, it has not gained ground in Indian real estate, since the predominant mindset is that the home is mostly a one-time purchase product. Nevertheless, a Track2Realty pan-India survey recently noted that no less than 0ne-third of the buyers with most of the top-class brands are repeat and/or referral buyers. In a market where sales are slow, the importance of customer loyalty programs, hence, cannot be underestimated.
Here are some examples:
- A developer in Noida, which is arguably one of the most challenging markets in India, gets 30%-40% repeat and/or referral buyers in almost all of his new residential project launches. The developer has a unique customer loyalty program, where he offers early-bird invitations at a special price to the existing customers and investors before the project is officially launched at a higher price.
- Another developer in Bengaluru has a customer loyalty program, where existing buyers get an incentive of 1% of the sale value if they refer the developer’s projects to their friends and family. This developer also organizes consumer connect programs at his projects that have already been handed over to the RWAs. The strategy is to get the buyers’ feedback and push the incentive schemes to satisfied home buyers.
- Some other developers offer home interiors and furnishings, to bring more buyers to their projects. One developer has also offered a refund of the CAM (common area maintenance) charges during the COVID-19 pandemic since many of the amenities and services were non-functional.
Do rewards really create loyalty?
Aditya Kushwaha, CEO and director at Axis Ecorp, agrees that it has been a common notion that customer loyalty helps only in securing repeat sales. In real estate, getting repeat business from the same customer is rare and hence, not a lot of emphasis was laid on orchestrating good customer loyalty programs. However, he maintains that in India, real estate is a sentiment-driven sector and a well-planned customer loyalty program, can go a long way in helping a developer secure referral sales. “Positive word-of-mouth is an important aspect of the real estate business. With the help of a robust customer loyalty program, developers can develop positive word-of-mouth for themselves. Many developers organize engagement activities that lead to better customer satisfaction. However, these schemes need to be nurtured over time,” says Kushwaha.
Vipul Shah, MD, Parinee Group, disagrees that the industry is not adopting consumer loyalty programs. According to him, the developers are focused on improving relationship management through these measures. “A majority of reputed real estate brands advance their profit margins through their prevailing set of customers, either through referrals or repeat buying from the customers or through their loyalty programs. Such developers ensure that their customers get first-hand information on new launches, offers, and attractive payment plans, during such programs,” he says. A satisfied customer is significant for marketers since their word-of-mouth recommendation can help in developing the brand’s image. To achieve this, however, the developers must first ensure that they offer a quality lifestyle and an experience that is worth communicating, he adds.
Vinit Dungarwal, director, AMs Project Consultants, points out that real estate works on different parameters than most other sectors. The relationship between builders and buyers is based on fulfilling the need and requirements and the consideration involved is significantly large. “There is a need for new-age customer loyalty programs in real estate. The idea behind these should be to reward clients for repeat sales. In addition, there could be certain benefits that the customer gets entitled to as a result of his long-standing relationship with the developer. The existing customers should get the best offers and first refusal on any offer,” opines Dungarwal.
Pros and cons of loyalty programs
Strategic marketing, relationship, and loyalty marketing have been considered as a potential ROI activity in real estate and work well to amplify profits and build brand image. Retaining an existing client is directly related to the improved customer experience and engagement that is being offered by the developers and businesses.
There exist diverse ways by which the developers can build consumer connect – from utilizing digital media to staying in touch with a referral or repeat buyers. Their word-of-mouth advertising helps in creating a ripple effect for the brand.
To further help in forming a considerable database of trustworthy customers, developers can take extra efforts to engage with customers through consumer connect programs, by holding vaccination camps for buyers, incentivizing referrals with free products, offering value-added schemes like assured cashback on every booking, or giving financial benefits by way of loyalty discounts.
Customer loyalty programs have been a potent weapon to not only accelerate sales but also create a better brand recall and thereby attract a premium. However, the only caveat here is that it has to be a transparent offer that is known to the existing buyers, as well as the new buyers.
Source- https://housing.com/news/customer-loyalty-programmes-in-real-estate/
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