For every dollar spent on CRM software, businesses can expect an average of $8.71 back—a 771 percent return on investment (ROI), according to a report from Nucleus Research, a technology research firm. Commercial real estate brokers have a particularly pressing need for this type of organizational tool because of their relationship-based business model, long and complicated engagement cycles, intense competition (which includes new digital alternatives) and commission-based compensation models.
CRMs, or customer relationship management solutions, help companies track, manage and analyze interactions with customers and prospects. Nucleus Research found that CRM’s value increases over time, in the form of increased revenues and operational efficiencies. These gains accrue in large part because of technology advancements and competition in the CRM space, which keeps prices down and ensures a constant stream of new features and capabilities. The firm also reports that cloud-based CRM solutions deliver a 1.7 times greater return on investment than a desktop or server-based software implementation.
The need for this type of solution in the commercial brokerage space stems from the sheer volume of data points brokers deal with daily. They have to store practical information about owners, tenants, leasing representatives, competitors, etc.; market information, including property specifics and area trends; and the type of personal details that help create long-term relationships, such as the names of a client’s children. Brokers also benefit from reaching out to prospects regularly because unexpected business can pop up at any time. For example, an owner could be opening a new location in another market and need help with expansion or subleasing. Just as often, a broker aims to service future need. For example, an owner could intend to sell a building in two years. The broker needs a way to document this information to ensure appropriate and timely follow-up.
Brokers are not only competing with each other but with new digital solutions that threaten the “the middle man,” such as Compstak, a crowdsourced platform for sharing commercial real estate data, and TheSquareFoot, which helps tenants find space online. To avoid becoming disintermediated, brokers need to demonstrate their unique market knowledge, that they understand their client’s needs and that they have the relationships to make things happen quickly and at the best price possible. Advanced CRM solutions allow users to document their own market intelligence, as well as view property records, create complex reports and track industry metrics so they can keep clients abreast of relevant market changes and prove their unique value.
Brokers often work with commission-only compensation models, which makes each prospect, and every data point, all the more important. Their livelihood depends on an effective approach to lead management. They simply cannot afford to forget to send an email when a debt matures or a lease expires. Plus, transaction management is nuanced and lengthy, with various factors affecting the finalization of a deal, which could take 12 to 18 months from the time a broker is retained to lease execution. Technology solutions can help brokers manage these deal pipeline tasks, as well.
It is a generalization, but salespeople across all industries aren’t renowned for their organizational skills. They are known for their confidence, and this confidence can occasionally prevent them from acknowledging a business need. Sometimes, commercial real estate brokers are so sure of their sales abilities that they doubt the advantages a technology tool can provide. Brokers also tend to be technology laggards, and many still rely on Excel spreadsheets to run their businesses. Unfortunately, this often keeps brokers from adopting technology solutions that are helping other sales professionals.
The CRM market will reach $36.5 billion globally by 2017, according to research from Gartner. The analyst firm also reports that the top industries investing in CRM are communications, media, IT services, manufacturing and banking and securities. For large brokerages, the decision to implement a CRM is often made by a corporate office and then rolled out to brokers—but the value of a CRM system is in the data that is put in it, and that chiefly comes from the people in the field. The ROI of CRMs is proven, and commercial real estate professionals have a lot to gain—and to lose. As technology continues to disrupt their field, they would be wise to adopt tech tools themselves to help run their business more efficiently, and to better prove their value to clients.
About the author: Tanner McGraw is the CEO and Founder of Apto, and a former commercial real estate broker