The role of the corporate real estate (CRE) team is changing fast to meet new business requirements, driving those within the function to adopt new approaches to stay on top of what’s going on behind the scenes of the company.
Now, many CRE teams are borrowing a page from their sales colleagues’ playbook, and using customer relationship management (CRM) to improve alignment with their companies’ business units and demonstrate the value proposition of CRE.
More than 40 percent of all CRE departments have CRM programs in place, but not all are equally effective. JLL research shows that only 9 percent of formal CRE CRM programs are considered by their participants to be “very strong.”
Yet they’re becoming increasingly important to big companies amid rising C-suite demands for greater productivity and efficiency in their CRE operations. And since real estate is the second-highest operating cost for most companies, many naturally look to CRE as a key source of cost-cutting and value creation.
In fact, more than half of CRE executives reported increasing C-suite expectations, when surveyed for JLL’s most recent Global Corporate Real Estate Trends survey.
As a result, there’s increasing pressure for CRE teams to assume a greater role in advancing business strategy. “With the low-hanging fruit for savings less impactful, the C-suite still expects the CRE function to further reduce costs, while also improving the quality and productivity of the workplace, of individual assets, and of the CRE portfolio as a whole,” says Meaghan Farrell, Senior Vice President, People and Process Consulting at JLL. “Accomplishing those goals requires very close alignment of CRE with the rest of the business, which is why we are seeing more CRE teams develop programs to align and enhance business relationships.”
CRM meets CRE
Rather than being an “order-taker,” says Farrell, it’s up to the CRE function to become a strategic advisor equipped to align CRE with the needs of the business and drive value for the enterprise. Yet, 45 percent of CRE executives see lack of integration with the wider business as a top constraint inhibiting CRE’s strategic value.
A CRM program can help the CRE team become more proactive and strategic not only with C-level executives, but also with the individual groups that CRE supports within the enterprise. Similar to programs used by companies to inform and engage external customers, a CRE CRM program provides standard touchpoints and methods for helping CRE executives better integrate with the organization’s business leaders and their goals.
A typical program involves one or more people who serve as the strategic point of contact for key business leaders. Operating as advisors, the CRM leaders initiate conversations with business leaders about their goals and priorities for the year.
“Understanding that a particular business unit is anticipating significant growth, entering new markets or launching a new product requiring a highly sought-after workforce gives the CRE team the opportunity to be tightly aligned with the business and proactively collaborate to advance their goals—rather than simply reacting,” says Farrell. “The most effective CRM programs draw upon data and insights to inform conversations with business leaders, who often are very interested to know how real estate decisions impact the bottom—and the top—line.”
A CRE executive might, for instance, be able to show that a business unit’s cost is $5,000 per seat annually versus only $3,000 for a different unit, followed by data-driven scenarios for reducing costs while boosting productivity.
Doing what’s right for the business
However, setting up a CRM program is not a quick fix solution for all business real estate needs. One critical issue is that CRE leaders need to gain access to senior business leaders and earn their trust. Creating strong relationships with the right people is key to success.
“Even when a CRM program is in place, the business relationships are often weak and there is a lack of strategic access and trust at the right levels across the business, and the conversation is not necessarily strategic,” says Eduardo Godinho, Senior Associate, JLL People and Process Consulting. “A key issue is that CRE is often seen as a reactive order taker rather than a strategic partner.”
Furthermore, many CRE teams lack the optimal skills, tools, and processes to balance service to the enterprise with their responsibilities as stewards of the portfolio on behalf of shareholders. A team may be limited in its size and scope, and stretched too thin on day-to-day transactions, project management, moves-adds-changes and other essential, yet not strategic, activities.
While not every CRE department warrants a dedicated CRM person(s), all need a regular mechanism for building relationships with the rest of the business. Companies that lack strong CRE-business alignment are more likely to experience higher real estate costs and less-effective strategies for site selection and workplace management, notes Godinho.
In contrast, effective relationship management and business alignment will improve demand forecasting, create greater business agility and result in a more responsive, adaptive and valuable CRE team.