How stable is that property ladder looking right now? Well, we can’t deny we’re living in a time of economic instability. High interest rates and elevated cost of living are certainly having an impact on the property market, with many people remaining firm on their current rung of the ladder or reluctant – or unable - to climb onto it in the first place.
Like many businesses, when the economic forecast is looking stormy, marketing budgets start getting slashed. In the Estate Agency field, Prop Tech can also take a hit when times are tough. Whilst it may seem tempting to save costs by reducing spend on data analytics and marketing, in this blog we are here to explain to you why this is an extremely short-sighted view – and a very wrong one to adopt.
Why you shouldn’t cut marketing and Prop Tech during economic uncertainty
Marketing and PropTech are the key to long-term growth. When times are tough, marketing is more important than ever, and technology is an essential part of modern marketing. When you stop prospecting, you are blocking the lifeblood of your business. It is the ultimate death move for an estate agent.
What you should be doing, is ramping up your marketing to ensure you survive during more challenging times. What’s more, you need to be using your time wisely. And the right tech can save you time. Actually, having the right tools and strategy in place when times are tough is a much sounder strategy than just cutting costs left, right and centre.
“Stopping advertising to save money is like stopping your watch to save time.” Henry Ford
It may go against your instincts, but when times are tough, you should be marketing more. Your bravery will be rewarded! Marketing is a long-term investment so don’t expect to see results overnight. However, the minute you pull that marketing rug away, you’re putting your business in jeopardy.
The property market is still functioning, it’s just that buyers are now more cautious. The key is that you need to identify the motivated buyers and sellers and then go after them.
Christopher Watkin stated; “Estate Agents – Cutting your marketing budget when sales are low is like pressing the brakes while driving on ice.” To ensure a steady flow of revenue, you need to continue marketing to help bring those leads in.
Why should you continue marketing?
There are still people moving home
It’s not like the property market has come to a standstill. There is still ample activity occurring. There are couples planning on having children who are looking for a family home, those relocating due to a new job and homeowners downsizing after finding their mortgage repayments unaffordable in the current climate. There are also people moving to locations that are less expensive to live in. Our latest Property and Homemover Report (PHMR) for Q3 2023 revealed that we expect to see over 1 million transactions this year. We also identified that buying a home was more affordable than renting in all but one region in the UK. Therefore, you have renters motivated to purchase. The PHMR identified that the main activity was coming from both ends of the spectrum, with a lot of movement in those properties over £3 million. For lower-priced properties, it’s likely that homeowners are downsizing and motivated to find somewhere more affordable to live.
Whilst many homemovers may be holding off, there is still a whole market full of motivated buyers that do want to move home. You just need to find them. TwentyEA’s Forecast tool uses AI to predict who will come onto the market and can put you in touch with these potential homemovers to help you win new business. These types of tools are invaluable when it comes to sourcing leads.
Gain a competitive edge
There were 21,092 estate agency branches in the UK between August and October 2023 (source: TwentyCi), and many of these will stop or cut back on marketing during economic instability. If you do the same, you’ll lose some of your share of voice to your rivals. A slower market opens up an opportunity for savvy estate agents who are willing to carry on maintaining a presence. Ultimately, if you carry on marketing, you’ll stand out from the crowd.
Taking retailers as an example, the pandemic is a good example of where cutting marketing leads to a loss of revenue. Coca-Cola went radio silent during the pandemic, cutting advertising by 35% and reducing its budget by £2 billion. The consequence? They saw a fall of 11% in net revenue in 2020. Meanwhile, its biggest rival, PepsiCo, maintained ad spend and as a result, net revenue increased 5%. Similarly in the first covid year, Proctor & Gamble saw revenue growth of 4% for 2020 because they increased their marketing, knowing from past recessions and economic instability, that marketing is still key. This shows that marketing during economic instability can, in fact, lead to growth.
IPA stand firm that boosting marketing expenditure during a recession accelerates profit growth during the subsequent recovery. Companies that did continue to market reported higher average profits and market share when the economy recovered. As evidence of what happens when companies switch the advertising lights off during tough times, see the graph below.
Maintain brand awareness
It’s paramount to stay visible. Drip-feeding marketing keeps you in front of everyone’s mind. Economic uncertainty is the time when consumer confidence is reduced. By consistently promoting your brand, you can instil trust and familiarity among potential clients. You can maintain the presence of a strong reputation that will position you for long-term success.
Reinforce brand stability
In times of instability, clients will seek out a reliable and trustworthy estate agency. By consistently marketing, you give the perception that your business is stable, and this gives prospects a sense of security, making them more likely to instruct you. It signals to the client that you are providing a consistent, high-quality service.
Leverage slower times to fill up your pipeline
You want to stay at the top of the minds of customers in slower economic periods, ensuring you’re the first choice when they do decide to buy or sell. This proactive approach will help you to capitalise on future opportunities when things stabilise. Marketing in slower times, is essentially an investment in the future. You can gain a steady flow of business ready for when the market begins to regain momentum. Trust is key in the estate agency-client relationship. Clients are more likely to choose an agent that they're familiar with.
You won’t need to work harder when things recover
When you cut back on marketing, it actually has a huge long-term impact on your brand. Nielson estimated that it can take you 3-5 years to catch up again. It really sets your business back when the economy starts to recover. Cutting your marketing spend is simply not worth the risk.
Why you shouldn’t cut back on PropTech when times are tough
PropTech can be a game-changer for estate agents. It can be tempting to see technology as an easy target to cut back on to save costs but just as with reducing marketing, this can be a counterproductive approach. You should resist the urge to cut back on PropTech as it is a crucial tool for staying competitive.
PropTech can help you to:
- Provide accurate pricing and valuations
- Improve your risk assessment
- Predict trends
- Improve operational efficiency
- Personalise marketing campaigns
Benefits of PropTech
Helps you to make more informed decisions
PropTech offers access to comprehensive information and insights. PropTech platforms can analyse market data, providing real-time trends, property values, and demographic information. This wealth of information enables estate agents to make data-driven decisions, from pricing strategies to targeted marketing campaigns. It is a game changer for uncovering hidden opportunities and guiding informed decisions. This is crucial for the future success of your business. Take TwentyEA’s tool Insight. It allows agents to track over 99.6% of all residential listings in real-time. You can make decisions faster and identify any opportunities in your marketplace.
Enhances efficiency
One of the main advantages of PropTech is that it improves the efficiencies of various processes. This allows you to focus more time on value-adding activities such as client interaction and less time on mundane tasks that can be automated. Efficiency is essential when times are tough as you'll likely have fewer resources. PropTech can ensure that your operations remain smooth even in challenging times.
PropTech allows agents to quickly assess market trends and property value, providing timely insights without the need for lengthy research. TwentyEA’s Search tool provides you with information on over 32 million residential properties including listing history, property type, tenure, council tax band and so on. It also flags any risks associated with the property that may prevent mortgage approval, as well as access to street view. With all this at your fingertips, it just means less time is wasted searching and gathering this information.
PropTech improves the customer experience
Clients expect a seamless experience and PropTech can help facilitate easy communication and simplify the process through technology like online portals. It can create a more personalised service. Take our Search tool; you can bring up any property and provide all the necessary details about this property to your client, showing yourself as a well-informed expert.
Data is key
In times of economic uncertainty, data becomes an invaluable asset. Being able to analyse and leverage data to make informed decisions is vital for success. Data-driven insights can guide strategic planning and help agents to navigate through a difficult market. If you cut back on your PropTech, you're left scrambling around in the dark without the critical information you need to guide you.
You can use TwentyEA’s Spotlight tool to showcase your strengths and inform your clients why you’re the best agent to sell their property or find them a new one. Discover how fast you sell, your market share and how likely you are to achieve a sale.
Risk mitigation
PropTech is a necessity for risk management. It can safeguard sensitive information and ensure you're compliant with regulations. Economic instability can be accompanied by increased risk. Data can help identify these risks, so you can take steps to mitigate them. This will give your clients confidence in your service offering.
Adaptability
PropTech helps you to stay agile. When the market is experiencing fluctuations, this is essential. Data analytics can quickly identify shifts in demands, pricing and supply, so you can adjust your strategy quickly in accordance with changing conditions. You need to adapt to survive.
Gain a competitive edge
PropTech like TwentyEA’s Forecast platform can provide you with information on which properties are likely to come onto the market in the next two months. With 16 years of machine learning behind it, it’s an award-winning tool to help you get ahead of your rivals. Similarly, our Match tool can help reveal hidden leads in your CRM to help you stay competitive.
What should you do instead of cutting back on marketing and PropTech spending?
Targeted marketing
Optimise your strategy by focusing on targeted campaigns. Use market insight to see what the best segment is to market to. There’s still ample movement in the property market. You just need to identify who is still moving. It may be first-time buyers as they are often motivated to move to start a family or move out of their parent’s home. It may be those relocating due to work or those downsizing due to high mortgage costs. With market insights, you can identify emerging opportunities and target the right customers.
As we stated, in our latest PHMR for Q3 2023, we identified that those in the lower-priced properties and those in the higher ones are still experiencing high levels of movement in the property market. These types of insights can highlight where to target your marketing.
You can also use PropTech to find potential customers such as distressed sellers. You could target those that have reduced their listing price for fear of not selling. These sellers may want to switch agents. Our brand comparison tool in our Spotlight platform, can help you to create marketing collateral that outlines the reason a client should instruct with you instead. Similarly, you could target those whose sale has fallen through or those who have been on the market for a long time. They too, may want to switch agents.
Our PHMR also identified that renting is less affordable than buying in all but one region in the UK. This suggests a sound strategy is to target renters who may be encouraged to buy a home.
With TwentyEA’s tool Prospect, marketing and PropTech go hand in hand. With Prospect, you can explore available property listings and implement impactful, focused marketing campaigns.
Encourage people to move with social proof
During a challenging economy, the media go all out with scaremongering about property market crashes. Headlines like this can put many people off moving. With data obtained from PropTech, you can show proof that people are still moving and what prices properties are achieving. This can give potential movers the encouragement to instruct. Take our Insight platform. You can use this tool to show how many properties you’ve sold lately or how many properties are selling in the local area. This type of insight will encourage those who are reluctant to go ahead with their planned move.
Invest more wisely in PropTech
Rather than scrapping your PropTech, you should evaluate your existing system and ensure that it is providing you with value. Do you have the best tools available on the market? Ensure that the dataset that underpins your PropTech is strong. Here at TwentyEA, we cover 99.6% of all residential properties. Ask your provider what percentage of the property market their tools cover. If it’s in the 70% range, for instance, that’s a lot of missed marketing marketing opportunities. How long has the provider been in the market for? Or how far back does their data go? Is their data accurate? Ensure that the tools you’ve invested in are high quality and that your provider can prove their expertise.
Does your PropTech solution provide ROI figures? Some providers don’t understand how to analyse the data. How can you be sure your tools are effective, if you’re not receiving figures to back this up? TwentyEA provides clients with reports so that they can track their ROI and know where to allocate your budget. One of our large multi-branch clients stated that,
“...our return on investment has now soared to an impressive 300%, a testament to the effectiveness of TwentyEA’s tools.”
You need to ensure that you’re using your PropTech to its full advantage. Invest in training your employees to maximise the utilisation of the PropTech tools. Here at TwentyEA, we offer a consultancy service, and we'll happily talk you through how each tool works and how you can use them to your benefit. We can help with competitor analysis, network planning, acquisition profiling and more.
Conclusion
The key thing to remember is that economic downturns are temporary. To have long-term success you need to maintain a strong foundation of data-driven insights and continuous marketing. Refine your strategy and market smarter by leveraging PropTech tools.
Don't look at PropTech and marketing as just optional enhancements but as an integral part of your business strategy. If you weather the storm, you'll emerge stronger when the economy starts to regain stability.
If you’re interested in finding out more about TwentyEA’s tools, get in touch. We can provide both property data for estate agents and offer estate agency marketing to help your firm to succeed.
