Is Your Strata Management Business Ready for Change?

Macquarie research shows that strata managers have enjoyed strong revenue and profit growth, driven by favourable macro-economic trends. Yet, according to one industry leader, change is just over the horizon. In this interview, Doug O’Mara, Managing Director of Civium Property Group, explains why Civium seeks to re-invent itself from the ground up every year.

Times are good for strata managers, with most businesses enjoying healthy revenues and strong ongoing growth. Macquarie’s 2019 Strata Benchmarking survey found that strata businesses grew revenues by an average of 21% in FY2018, while 71% also saw profits increase. That’s a record that many other industries would envy.

Yet, according to one industry leader, strata managers should be prepared for change. Doug O’Mara is Managing Director of Civium Property Group, a diversified property services business with offices in four states. O’Mara believes that the next few years will see a gradual transformation in the strata sector, as large businesses with strong balance sheets invest in new technologies that will push down the cost of strata services. He believes that will put many business margins under pressure, unless they are ready to respond.

“There are opportunities for players that understand the segment to further improve and drive prices down for the general public, but at the same time maintain the profitability we’re currently enjoying,” he says. “There will be a point in time where revenues are put under pressure because larger and more nimble organisations will be able to deliver a far more cost-effective solution if they embrace the innovations available in AI [artificial intelligence].”

“For the smaller firms that make up 90% of providers in our segment, it will be difficult for them to continue to keep up when they have larger firms investing heavily in platforms that will deliver a more economical solution,” he says.

Civium’s response has been to continually re-invent itself, using new technologies to drive efficiency and automate key processes. “We break our structural model often,” says O’Mara. “Just when we get to the sweet spot, we break it and try to improve it again. We’ve probably changed or enhanced our model three times over the past three years.”

Here are some of the key ways Civium has reshaped its business model.

1. Generating efficiencies through automation

Civium is investing heavily in information technology and AI to eliminate manual processing and create efficiencies across all areas of the business. “We’ve tried to automate as many roles as we can,” Doug explained. “Our online system triages our client interactions, directing them into an automated process that engages with the various services we provide.” One result is that Civium’s staff costs are now less than 40% of turnover, well below the industry benchmark.

2. Focusing on client service

By automating key processes and creating teams of specialist support staff accounts, insurance and finance, Civium frees up strata managers to concentrate on delivering better customer service outcomes. “We’ve segmented our roles so that our strata managers are client service managers, rather than having to work in multiple areas,” Doug said. “When they’re out in the field, they can really focus on customers.” That also helps Civium to solve one of the biggest issues facing the sector: recruiting and retaining skilled staff. Rather than paying a premium to hire experienced strata managers, Civium actively recruits people from outside the industry with a client services background.

3. Creating a diversified service offering

Civium has added insurance broking and property management arms to the business, with plans to further expand their service offering. However, Doug highlights the importance of firms maintaining a strong performance in their core focus area. “You can’t effectively sell other things you can do for your client unless they’re happy with what you’re already doing,” he says.

4. Measuring and improving performance

Collecting and analysing data at every level of the business offers insights into how successfully strategies are being implemented. Civium sets goalposts for success and actively tracks their performance. Doug said, “We monitor every metric at a very granular level: from total revenue per staff member to total resources per dollar of profit. That’s why we run a successful business.”