An Original Essay by Nathan Land
Competition through lowering the management fees per lot. It is the most common (and in some cases easiest) way for Body Corporate Management companies to attempt to gain new business. But is this the best way to gain new business?
As we are aware, customer service is at the core of the Body Corporate industry. However, with management companies constantly basing their priority on competitive price point to gain new business, we are not only limiting our ability to provide good customer service, but we are:
1 devaluing our industry;
2 making it difficult for companies to remain profitable;
3 creating angst between management companies and staff; and
4 adding further pressure to ourselves and the industry, in the pursuit of market share.
The question then becomes, how do we compete without relying on a price point difference. In a study conducted by HubSpot in 2020, it was found that 68% of consumers reported that they were willing to pay more for services from a brand known to offer good customer service.
In this respect, in order to progress the industry and promote sustainable competition, management companies need to move away from competing on a price point. Competition instead needs to be healthy and revolve around aspects that will provide benefit, not only to our client, but to our staff, management companies and the industry. As such, competition points should be based around:
1 providing excellent customer service;
2 improved interactions with our clients;
3 improved technology;
4 improved operation within the industry;
5 improved education and skill levels of our staff.
It is therefore difficult to create healthy competition when management companies continue to undercut each other and thus lowering the relative margins for providing the Body Corporate management service.
It is time for standardisation of management fees.
In doing so, it will invariably enable management firms to focus on what is important, being the customer service experience for the client. At the end of the day, we are in the business of providing our client with a stellar customer service experience and assisting in the cohesive operation of our clients’ community. We need to be considered a value add, instead of a necessary contact point.
In taking a quote from Jeff Bezos, owner of Amazon and formerly the richest person in the world,
‘It’s our job every day to make every important aspect of the customer experience a little bit better.’ In viewing the customer, Mr Bezos provides that ‘We see our customers as invited guests to a party, and we are the hosts.’
Much can be taken from those two sentences but, ultimately one thing is clear, the customer is our priority. However, with the way the industry currently promotes competition, through a race to the bottom for management fees, we are limiting our ability to view the customer in this manner.
By standardising management fees, it will enable a completely level playing field (cost wise), where the focus of the competition is providing the customer with the best possible service we can, being comfortable in the fact that we do not need to be concerned with competing companies undercutting our costs.
In doing so, it will enable the industry to grow and develop in a manner that has not been possible before. It will also encourage and reward those management companies and staff that go the extra mile for the client. There are numerous surveys supporting the results of good customer service; however, the following three statistics are telling:
1 72% of customers will share good experiences with others, often 6 or more other people (Salesforce, Esteban Kolksy)
2 67% of customers report a terrible customer experience as the reason for switching businesses (Esteban Kolsky)
3 Nearly 4 in 5 people will forgive a bad experience from a company where the service is rated as ‘very good’ (Qualtrics XM Institute)
It is easy to see that by removing the ability to undercut competitors, those management companies who do not focus on customer service, will quickly be at a disadvantage, which can only be positive for the industry.
While it would be a process to implement, I believe if it were to be proposed, many management companies would welcome such a pivotal change.
One example of a general standardisation of fees is in the legal industry. Many firms charge much the same per hour for the various levels of experience of their respective staff. While this does not entirely remove price point competition, but more often than not, clients are willing to pay for exceptional customer service and skilled staff.
Such standardised pricing could easily be based on a lot count basis for the building, with an example being as follows:
1 $350 per lot for buildings with 10 lots or under;
2 $250 per lot for buildings between 10 and 20 lots;
3 $220 per lot for buildings between 20 and 50 lots;
4 $175 per lot for buildings between 50 and 200 lots; and
5 $140 per lot for buildings over 200 lots.
The Body Corporate industry needs to evolve. At current, it is difficult for management companies to devote funds and time for education and training of staff, a problem which is affected by the cut-throat pricing in the industry. If we are charging less, we cannot expect to deliver more to the client, or our staff.
Our staff are on the ‘front-line’ and by ensuring management companies can make a profit, it will then enable better investment into the staff, technology and the systems used to perform their role. This will also assist in ensuring that skilled staff stay within the industry and assist in developing and training inexperienced and new staff commencing their career.
It is time for the SCA as the leading body for the industry, to take an unprecedented approach, and implement standardised management fees, which must be adhered to in order to remain a member of the SCA. While such a stance could be considered a hard-line approach, such a step is required for the future of the industry and the staff within it, and ultimately, for the benefit of the customer.
It is time to work together for the betterment of the industry. We cannot continue to devalue the industry by enabling competition based on cut cost management fees.