Does word-of-mouth marketing strategy work in real estate?

Developers in India are trying to maximise sales through referrals. However, not only does this strategy not work for all the segments; it also may create artificial communities

One of the most effective sales tools available in the Indian real estate sector, is word-of-mouth publicity. Consequently, developers are trying their best to create ‘artificially induced neighbourhoods’, for communities, professionals and other like-minded groups, to sell their inventory through referral marketing. However, the challenge for builders, lies in creating a pool of buyers that have a similar demographic profile and financial standing, and also ensuring that each buyer in the social circle has adequate privacy in the project.

Living close to friends can also strain relationships, points out Archana Dalmiya, a communication professional in Delhi. “Do you want your friend living downstairs? Maybe not. My home is a place, where I need my privacy. I would not like to have my friends invading into my private moments. Moreover, if the friendship sours, the future could hold countless uncomfortable encounters in the neighbourhood. Too much familiarity, is not good for any relationship,” she cautions.

Nevertheless, there are many home owners, who bond closely with their neighbours over the years, thereby, turning apartment buildings into de-facto neighbourhoods. This has given rise to a trend, where home buyers often opt for new houses, and also bring members of their peer group to the same building, without paying too much attention to privacy concerns.

See also: Should you believe all marketing brochure claims?

It seems like we are going back to an older style of living, feels Nopur Nritya, a documentary film-maker who works for an NGO in Bengaluru. “Socialising does not mean that one has to invite the social circle to one’s home. With cut-throat competition, if not rivalry, in today’s professional world, no one would like to carry the office back to their neighbourhood. Weekends are meant to unwind and not stress out with same set of people,” Nritya asserts.


Tapping into word-of-mouth publicity

AS Sivaramakrishnan, head – residential services, CBRE South Asia, maintains that word-of-mouth publicity can do wonders for a developer, in an unorganised business like real estate. However, it has to be handled well, as it also has the potential to ruin a developer’s image. According to Sivaramakrishnan, referrals account for around 30% of the sales. Hence, the marketing budget should also take into account methods to please the existing buyers. Assessing the impact of word-of-mouth marketing, depends on how you look at the goodwill factor, he explains. “Direct recommendation of existing home buyers, often works in the affordable and mid-segment housing. However, in the ultra-luxury and premium housing segments, endorsements by celebrities who have booked units in the project, work better for the developer,” explains Sivaramakrishnan.

Developers nowadays, often rely on market research, to evolve strategies that can attract people from similar social profiles, to invest in their housing projects. Entry of the right target group during the initial phase of a project, does attract similar gentry at subsequent stages. A painting exhibition, car show, book release, yacht party, etc., which showcase a product offering, and may be followed by a cocktail and dinner, are some formats that are commonly used to encourage networking, and spread word-of-mouth publicity. Developers too, can leverage such social gatherings, events and functions and add a marketing flavour to it.

However, word-of-mouth publicity can be a double-edged sword. Moreover, it has achieved little success in the luxury segment, owing to the high price tag of units, and privacy concerns over one’s lifestyle and amount of investment. Word-of-mouth marketing therefore, is still at a very nascent stage in the Indian real estate market, with developers experimenting and learning on a trial-and-error basis.

(The writer is CEO, Track2Realty)


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