Know your customer

Here at Expedio we talk a lot about qualifying the customer; and the times we see a lack of it. Qualifying your customer is simply finding out who they are, and what their needs and wants are. What is the problem that they need to solve?

The first touchpoint an agent will have with a new potential customer is generally an enquiry for a specific building. Perhaps they are calling after seeing an ad in Trade Me. An inexperienced sales person will make the appointment to show them through the building, get a name and phone number, and that’s it. A more experienced sales person will start right away to extract some information. Getting the right information up front will help you identify if the building they all calling for will suit their needs (solve their problem), ascertain whether they are suited to the building, work out if there is  another building better suited; and also can help raise red flags before they become issues.

So what does this process look like when we are talking about Industrial Property?

These are some of the questions that we might ask when we are talking to a prospective buyer for the first time and the reasoning behind the questions, or what we are trying to learn. This is not a script – it’s a conversation, and it changes based on the property they’ve made contact on, and the answers that you get. The questions will be slightly different for a prospective tenant – but the reasoning is the same – to build a picture through information.

So, without wanting to teach anyone how to suck eggs, here is Industrial Property, Qualifying the Customer 101.

The 1st question we might ask is:

Who this property for? Your business, or is it an investment?

If we are talking to a potential owner occupier, we’ll then find out more about their business and why they are moving. Here are some ideas of the questions we might ask, and the type of information we’re trying to get. Sometimes we’ll explain – “If I can just have a couple of minutes of your time to understand your business and what you are looking for, I’d like to send you some information on a few other possible buildings that might work for you”. Some of these questions might be continued in person.

1. What business are you in?

Getting an idea of the business helps you understand the space that they need. The type of industry will impact on access, stud height etc. as well as zoning.What ratio of office to warehouse? How many employees do you have?

This is about understanding the size of the business. This is specific for a reason. A “medium” sized business means different things to different people. It also helps think about practical things like how many carparks they will need.

2. Where are you currently?
   Existing businesses often want to stay close to their current location.
3. How far outside x suburb are you happy to look?
   While many businesses want to stay close to where they are – some might want to move to a cheaper area. We’ve found some established businesses with manual labour requirements moving closer to residential suburbs.
4. Why are you moving?
   Has the business grown and they need more space? Has it become smaller and doesn’t need as much space? Is this through automation (which could be good) or lack of sales (a red flag if you’re leasing a building)
5. Are you currently leasing? Or do you own the building?
   If they own their building, is it currently on the market, or do they have a buyer? Do they have some time pressures?
6. (If currently a tenant) When does your current lease end?
   If the lease doesn’t end for another 2 years, they are “just looking at what’s around” you are probably talking to a time waster.
7. How many other properties have they looked at?
   If they have been looking for 2 years and 20 properties, then again, a time waster and/or extremely indecisive
8. Are you making the purchase decision?
   Are you talking to the right person? How many people need to be involved in the decision and how long do decisions take? Do they need to go offshore to get corporate head office approval – which might take more than 3 months?
9. Do you have any specific requirements such as additional Power?
   Some businesses have very specific power requirements & cost to upgrade is huge.
10. (If they are an importer) Do they de van their own containers and therefore need MPI approval?
    There are specific (and changing) rules for gaining MPI approval.

If your prospective customer is an investor, you want to know about their criteria for an investment property. Again, the questions will depend on the property they’ve called about.

The first question might be: “What’s your criteria for an investment property?”

The answers to this question are going to give you a broad brushstroke idea of how much knowledge your potential customer has, and possibly even where they are in a purchase process. Is price the main criteria? A specific yield? Location? Tenanted? Vacant? Opportunity to add value?  Follow up questions here should be designed to find out how flexible they are with their criteria; and how realistic the criteria are. The investor who wants a tenanted A Grade building, an excellent tenant, a long lease and a 6% yield is probably a dreamer. In our conversation around criteria, there might be several questions, but we are trying to determine what type of investor they are, and therefore what type of property would suit:

Do you have other investment properties? (This might be followed with a question about if they are residential or commercial)

Some investors may not be aware of all the differences. Some followup questions here will highlight how much education a buyer may need – for example, if this is the first time they have bought a commercial investment property.

Do you have finance approved?

Are they a cash buyer, or requiring finance? Do they understand their banks equity requirements? Equity requirements are generally much higher for  commercial/industrial property than for residential. Bank approval timeframes are substantially longer than they were even two years ago. Does the client understand the timeframes?

While each conversation goes differently - again, to reiterate, this is a conversation and not a script – getting as much information as possible at the start of the sales process can save a lot of wasted time down the track. After this conversation – which shouldn’t take more than 5 -10mins - in an ideal world, we would get their name, phone number and email, confirm a time and place to meet, and we would send a brief outline back to them of what we have discussed on email.

The aim of qualifying the customer is to ultimately save us all time and ensure we are dealing with genuine potential clients, who are much more likely to convert into a sale (even if it’s not the building they are enquiring about). 

Here at Expedio we would love to see this information when agents are registering clients. Just add a short summary to your email.