KINGSLEY INSIGHT
>> December 2005
INSIDE THIS ISSUE
What Real Estate Professionals Can Learn from JetBlue
JetBlue, a five-year young company, with over $1billion in annual revenue, is redefining success in a decades-old industry, succeeding while the old guard falters. What parallels are there between their success and innovations taking place in real estate? What can we learn from innovators like Jet Blue?
- Proactive customer service. Recently, JetBlue flight 292 had to make an emergency landing after taking off from the Burbank airport because the plane's landing gear would not retract. The entire plot unfolded on TV for the entire nation to see, including the passengers in the plane. While this situation proved to be a very harrowing experience, the passengers left the accident citing JetBlue's praises. "The flight attendants and pilots were amazing" stated one passenger. Kingsley Associates research indicates that any problem is an opportunity to demonstrate a proactive approach to customer service, which will ultimately build customer loyalty.
- Serve all customers. Even with their single-class planes, JetBlue efficiently serves all types of customers. Many in the real estate industry are recognizing that they often have two customers in one tenant: the day-to-day contact and the decision-maker. By working to cultivate and build loyalty with both groups, they’ll have everyone on board when it comes time for renewal.
- Understand your customers and reduce overhead. JetBlue figured out that food service was expendable to their customers, but that onboard entertainment was key. Similarly, successful real estate groups are learning what is really important to customers and that some traditional service offerings aren’t critical. For example, some management firms are considering consolidation of management offices, realizing it is more important to their tenants to have someone walking the property and knocking on doors than to have an office in the building.
- Employ technology. One of an air traveler’s largest pains is downtime; JetBlue has helped reduce this inconvenience by installing live satellite TV at every seat. For tenants, slow problem resolution is a frequently cited source of pain. Many management groups are eliminating this through use of the Internet, BlackBerrys, and various software to follow-up and deliver promptly on customer requests.
- Embrace employees. JetBlue is known for its employee-centric culture. When the CFO of this thriving company states his primary concern of the company’s growth is that they may “screw something up with people,” it becomes clear why every JetBlue flight seems to go so smoothly. Happy employees are loyal employees. As a result, they have an interest in treating customers well and doing their job efficiently. Investing in employees and company culture can be one of the best courses of action a company can take to increase the bottom line.
Tenant Areas Requiring Attention
“The temperature in unit #102 is too high… The cleaning crew did a poor job on the fourth floor bathroom this morning… The elevators take too long.” Are these things important to tenants? Of course. But, are they the most important issues to be dealing with on a daily basis? Well, maybe not.
Kingsley Associates finds that the items most commonly cited as requiring attention are: 1) heating and A/C, 2) quality of cleaning, and 3) elevators. And while 4 out of 10 respondents indicate that HVAC requires attention, the proportion of tenants who cite concerns with HVAC is relatively consistent regardless of the tenant’s overall satisfaction. In other words, a satisfied tenant is just as likely to indicate that HVAC is a problem area as an unsatisfied tenant.
On the other hand, satisfied tenants are much less likely to indicate that property management needs attention as compared to unsatisfied tenants. Less than 2% of satisfied tenants note that property management requires attention, compared to 27% of unsatisfied tenants. Put another way, unsatisfied tenants are over 17 times more likely to say that property management is an area of concern.
Things like temperature control, cleaning, and elevators matter to tenants. But, the way management interacts with tenants – accessibility, professionalism and courtesy, responsiveness, and problem resolution skills – are the factors that will greatly affect a tenant’s long-term satisfaction. With the proper focus on management’s interaction with tenants, all the other “minor” nuisances will seem like just that.
Commercial Real Estate Compensation: A Simple Lesson from the Maestro
“I have found no greater satisfaction than achieving success through honest dealing and strict adherence to the view that, for you to gain, those you deal with should gain as well.”
– Alan Greenspan
That simple philosophy of the departing chairman of the Federal Reserve speaks volumes, and is applicable to a variety of client, supplier, and most importantly, employee relationships. The desire for an engaged workforce has long been a basic goal of management, and recent research shows strong links between employee engagement and company balance sheets that prove the related financial benefits. But, the question remains – what is the best way to enhance employee engagement?
Kingsley Associates' employee survey data reveals that the three most influential factors of overall employee satisfaction and engagement are compensation, career growth opportunities, and interesting/challenging job functions. That compensation heads the list is no surprise, but there are certainly right and wrong ways to go about using pay as a means to increase employee engagement.
A Special Thank You from Kingsley Associates
As 2005 draws to a close, we want to extend our appreciation to those whose friendship and business we value so highly. In this spirit, it is our honor to say "Thank you." May your upcoming year be filled with happiness, fulfillment, and improved performance! We look forward to a partnership of continued success.