Starting 7/19/24 and continuing through at least 7/25/24, there has been a major disruption in the airline industry as the result of a software update gone bad [1]. There are many lessons that will be (re-)learnt from this on the software engineering side, with some airlines recovering quickly and others struggling to get back to normal operations.
For purposes of this article, however, I want to focus on the customer service opportunities and how we can apply them to real estate investing.
For context, I was caught up in this mess, but fortunately the impact on my life was minimal – I know that isn’t the case for everyone so I consider myself very fortunate. On the return from a vacation in Norway, my flight home was cancelled and automatically rescheduled for 2 days later. That meant I had 2 extra days to enjoy Oslo. The rebooked flights went as scheduled and both I and my luggage arrived safely based on the new plan. Unfortunately, it took 5+ hours on hold, being ping-ponged between airlines to make sure we had seats and all of the information required to be reimbursed.
A few things that I took away from that experience:
- Timely communication is important. We were notified of our flight cancellation the night before our scheduled flight, so I didn’t have to get up at 4am and head to the airport only to turn around. Not wasting my time that day was really important. It allowed me to take advantage of the day doing tourist stuff in town instead of waste it hanging out at the airport. Also automatically rebooking the flights gave me a schedule I could work around instead of having to guess when I needed to show up or having to call to get on the next flight.
Take away: No-one likes hearing bad news, but you build trust when you tell people quickly and give them as much information as you can to allow them to make decisions.
Application to real estate investments: As a sponsor you should reach out to your investors when you have bad news. Email may be a good way to reach everyone all at once, but take the time to contact each person directly through phone in order to make sure they have all of the information they need and understand what your plan is.
As an LP, talk to the sponsor about their communication strategy and make sure you have the level of transparency that you are comfortable with. You shouldn’t be involved with regular property management issues, but if something will impact your investment you want to make sure you have the information you need to make effective decisions. - Have single points of contact for issues. My flights were across 2 different airlines whose systems didn’t interact well together. That wasn’t much of a problem with the initial booking, but turned into a major source of problems when the new flights had different operators. In particular, I had paid for “premium economy” seats originally but was expected to pay again to get that class of seats on the new flights because they were with a partner. It took me over 5 hours on the phone, speaking to each airline at least twice, to get seats at the same class that I had already paid for.
Take away: Don’t make your customers go between you and your partners when you have screwed up. Even if it isn’t part of your normal processes, when things go wrong you need to take ownership of the problem and streamline communications to give the best possible experience to your customers.
Application to real estate investments: As a sponsor, you need to make sure that there is someone who will be the POC during any crisis. Depending on the specifics of an event it may be you or a delegate, but a single person needs to be coordinating across teams and companies to ensure that a single, unified, and complete story is being told to each set of customers. For example, if there is a fire on your property, the property manager should coordinate with the local authorities, your insurance company, the customer support team, and your customers to ensure that everyone is getting the same information and roadblocks are removed. At the same time, the sponsor should be working with the property manager and the investors to keep them in the loop as well.
As an LP, make sure you know who your POC will be if something unexpected happens and how you should be expected to be contacted. This should be an unusual occurrence, with most communication occurring through standard mechanisms, but it is worth making sure the sponsor has thought through their strategy. - SOPs and documentation need to be clear to be useful. I was referred to the company web page for details on the reimbursement process. Unfortunately, the web pages didn’t contain the information I wanted to know (for example, if there were limits on the reimbursements for food, whether they would cover drinks, etc.) and the people I was talking to had no idea either. They just kept referring me to the website.
Take away: It is critical to have good documentation and SOPs so you don’t miss things in crisis mode. Make sure that the information is as complete as possible and the SOPs should be able to seamlessly handle requests that cannot be addressed by the existing documentation. Referencing incomplete documentation and using SOPs that aren’t a good fit for the situation does not build trust or strengthen the relationship.
Application to real estate investments: As a sponsor, it is important to ensure that your operators and customer service teams have solid SOPs and documentation in place that can support them when (not if) things go wrong. These processes should be reviewed after each event to identify any areas where they can be further strengthened.
As an LP, you will not be aware of these SOPs, but it is worth checking to ensure that at least some of them exist and that your sponsors are planning for crisis before they occur. - Empower your people to do the right thing. After 5 hours and 4 agents, I finally reached someone who was able to address my problem in about 5 minutes. She understood exactly what I was trying to do and the position I was in. Instead of trying to generate an extra $50 in revenue for the company, she simply took care of things – going above and beyond. She single-handedly raised my impression of the company. In contrast an agent with the other company refused to answer even the most basic questions and transferred my call to the other company without permission.
Take away: Your front line customer service team has the ability to turn a bad situation into a good one, but only if they are able do the right things. SOPs should have steps to follow when a crisis occurs that may be different from normal situations. When your customers are facing problems of your making, make sure your SOPs give the support team the authority to make things right for the customer – going outside of the normal processes as appropriate. Nothing will alienate a customer more than having to follow a process that doesn’t account for the exceptional circumstances that you have put them in.
Application to real estate investments: Real estate is a long term investment strategy, you need to have a solid customer and investor base to be successful. Making sure that your team does the right thing when something goes wrong will build your reputation and strengthen your brand over time.
Whether you are an airline, a property manager, or a sponsor dealing with investors, it is worth keeping in mind your customers perspective and taking small steps in advance of a crisis to minimize the impact of a problem on your customers – like establishing POCs, reviewing your documentation, and creating crisis support SOPs. This builds trust with your customers and strengthens your relationship with them.
Providing great customer service is a major differentiator and can separate you from your competition. As the saying goes “Never let a good crisis go to waste” and instead take the opportunity to make your handling of it build you raving fans.
For additional reading:
This article is my opinion only, it is not legal, tax, or financial advice. Always do your own research and due diligence. Always consult your lawyer for legal advice, CPA for tax advice, and financial advisor for financial advice.