Litigation, vacant spaces: How COVID-19 is shifting commercial real estate

Litigation, vacant spaces: How COVID-19 is shifting commercial real estate

 

The Advantage Solutions office and parking lot at 1001 28th Street SE in Wyoming remain empty after the company told workers it was moving to a remote working format indefinitely, according to an employee who spoke with MiBiz on the condition of anonymity. The Advantage Solutions office and parking lot at 1001 28th Street SE in Wyoming remain empty after the company told workers it was moving to a remote working format indefinitely, according to an employee who spoke with MiBiz on the condition of anonymity.MIBIZ PHOTO: KATE CARLSON

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When a California-based marketing firm consolidated 450 employees from Grand Rapids-area offices into a vacant commercial building three years ago, the move was celebrated by Wyoming city leaders and supported by a $550,000 state business development grant.

Since the COVID-19 outbreak, however, those Advantage Solutions employees have been working remotely. Although the company still has the space under lease, the offices and parking lot were empty on a recent Thursday morning. 

It’s unclear whether the company’s employees will return to the former Klingman’s Furniture and Roger’s Department Store location, since current state guidelines require employers to promote remote work “to the fullest extent possible.” Companies that require employees to leave their homes must abide by numerous safety procedures, including wearing face coverings in shared spaces, adopting cleaning protocols, and following social distancing practices.

This example is one of many ways the COVID-19 pandemic and ongoing concerns about the virus spreading are causing key shifts in the commercial real estate market, driven by remote working and a decline in business activity. The pandemic-led closures also are leading to new litigation over unpaid rent and raising questions about the future uses of space, all while landlords and tenants seek recourse.

For some commercial properties, the pandemic created immediate cash flow challenges as tenants saw steep revenue cuts. 

Brad Defoe, a litigation attorney at Grand Rapids-based Varnum LLP, said landlords are quicker to work with smaller mom-and-pop tenants struggling to pay rent than larger companies.

“There is a sense of ‘we’re all in this together,’ so some are willing to negotiate with tenants and will let them pay back rent at the end of their lease or defer payments,” Defoe said.

Conversely, Defoe has seen several recent cases filed in which landlords are suing national companies for back rent owed on retail spaces. 

“I think landlords are more likely to file cases like this against larger national tenants because they believe they’ve got the wherewithal to pay,” he said. “It wouldn’t surprise me if we see more and more cases like this.”

Seeking payment

To that end, a pair of local landlords have filed lawsuits against clothing store brands owned by San Francisco, Calif.-based The Gap Inc. over nonpayment of rent for retail locations in East Grand Rapids and Holland.

In one case, an affiliate of Jade Pig Ventures LLC, a Grand Rapids-based real estate investment, development and property management company, sued athletic clothing brand Athleta LLC, for failure to pay at least three months of rent for its retail space at 2213 Wealthy St. SE in East Grand Rapids. With the $30,421.33 in back rent, plus attorney fees and other costs, the landlord says it is owed in excess of $75,000, according to the case in the U.S. District Court for the Western District of Michigan. 

Additionally, an affiliate of Whitehouse, Ohio-based Devonshire REIT Inc. filed a lawsuit against Old Navy for $85,356.46 in unpaid rent at its location at 12635 Felch St. in Holland, according to federal court records. 

Both brands are owned by The Gap Inc. 

“The landlord is not asking for possession of the property, and that approach is consistent with what I’m seeing in my practice,” Defoe said of the Jade Pig lawsuit, which he is not involved with and reviewed to comment for this report. “Landlords are just asking for the back rent.”

This is largely because landlords do not want to lose their tenants, especially during a pandemic when it will likely be harder than usual to fill vacant retail spaces, he added.

Occupancy still high

To date, occupancy trends have held steady across the region, according to second quarter data from the Grand Rapids office of Colliers International. The commercial brokerage reports a 3.16 percent vacancy rate for retail space across the region, although it expects more brick-and-mortar locations to close because of financial issues, leading to an increase in vacancy in the coming months. 

Retail tenants unable to pay rent during the pandemic may attempt to rely on a force majeure clause in their lease, Defoe said. The clauses are generally included in contracts to excuse one party from its lease requirements in cases of a natural disaster.

For the most part, Defoe said the leases he has seen are landlord friendly and would not excuse a tenant from paying rent because of the COVID-19 pandemic. 

“In Michigan, we’re a little different and we don’t have hurricanes or earthquakes,” Defoe said. “But going forward, especially in states like Michigan where we don’t worry so much about natural disasters, I think you’ll see this type of clause negotiated more to account for something like a pandemic in the future.”

‘We have seen a pullback’

Record-high unemployment rates, coupled with Gov. Gretchen Whitmer’s executive order mandating that non-essential employees work from home, have led to a growing number of empty office spaces. 

Across the U.S., about half of the people who were employed pre-COVID-19 are now working from home, according to the National Bureau of Economic Research.

Despite having employees work remotely during the pandemic, Advantage Solutions still has “several years left” on its lease at the former Klingman’s Furniture building, said Kirk Driesenga, leasing agent for property owner Hinman Co. of Portage.

However, two former Advantage Solutions employees told MiBiz the company is moving out of the facility at 1001 28th St. SE. As well, the company told workers it would be switching to a remote working format indefinitely, according to an employee who spoke with MiBiz on the condition of anonymity. 

Advantage Solutions did not respond to multiple requests for comment. 

Driesenga said he has “no knowledge” of whether the company is permanently leaving. Hinman is actively marketing the property, as well as its individual suites.

Jason Makowski, a partner and office specialist at NAI Wisinski of West Michigan, anticipates an influx of office space hitting the market as many companies will likely downsize.

“We have seen a pullback,” Makowski said. “Ever since COVID hit, the office market has been slower. We saw a little bit of a resurgence in the month of June, and from July 4 to today it’s slowed back down.”

According to the second quarter Colliers market analysis, the vacancy rate for office space in downtown Grand Rapids stood at 9.63 percent, and was 6.10 percent for the suburban market.

“Everyone is trying to control costs to the best of their abilities, and office space downtown is more expensive than suburbs, usually because of parking costs,” Makowski said.

Hitting pause

Across the board, companies are slow to “rush back” to occupy office buildings, said Don Shoemaker, managing partner at Franklin Partners LLC. The Oak Brook, Ill.- and Grand Rapids-based commercial real estate firm owns industrial and office buildings in West Michigan, Chicago and metropolitan St. Louis, Mo. Many landlords are saying the pandemic is causing a “flight to the suburbs,” Shoemaker said, which would make sense in a commuter city like Chicago.

“There are a lot of people who don’t want to go to the train station full of people and then walk in a street full of people to get to their downtown office,” Shoemaker said.

Franklin Partners is building out spec suites for suburban offices for what he suspects will be a growing number of employers that do not want to work out of downtown high-rise buildings, he said.

Across all of the Franklin Partners’ properties, Shoemaker is not optimistic the company will lease many vacant spaces in the next year.

“It’s almost like a pause button has been hit and everyone just wants to wait and see what happens,” he said.

Another trend Shoemaker has noticed is that most bigger companies are taking a harder line on employees continuing to work remotely. To that end, tech giant Google last week rolled out an extended work-from-home plan for its employees. The company is keeping its employees working remotely until at least July 2021, according to a report from The Wall Street Journal

Shoemaker’s properties with smaller law firms and boutique shops are quicker to return to offices, he said, while most of the larger corporations do not have plans to come back to their offices until at least September.

Makowski is optimistic that remote working is temporary, and the office space market will start to bounce back because of the benefits of conducting business in person.

“As time progresses and we get vaccines in place for COVID, I think more and more people will start returning to the office,” he said. “Certain companies will continue to test the waters, but I think for a lot of companies, you lose something important when you have all of your employees working remotely.”

Despite the uncertainty of the office space market, Shoemaker said most tenants have continued to maintain rent payments, although tenants in the retail and restaurant industry have continued to request concessions. 

“We have and do work with companies that need it,” Shoemaker said. “Overall, our delinquencies are pretty much limited to first-floor tenants like restaurants and hair salons — none of them are paying rent and it’s kind of, ‘OK, we are working with them.’”

Author:

MiBiz

Kate Carlson

Staff Writer, covers real estate and development and small businesses

Twitter: @BizCarlson
Email: kcarlson@mibiz.com

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What does Denver’s office of the future look like? Landlords, designers are starting to get an idea

What does Denver’s office of the future look like? Landlords, designers are starting to get an idea

Airy layouts, open windows, staggered work schedules among steps companies taking as they re-imagine their workspaces in the age of the coronavirus

RJ Sangosti, The Denver Post

 Luke Lee, left, and Bill Sinclair Chris work in Joyne’s new 600-square-foot space at the Flight building in the Zeppelin Development in Denver on July 28, 2020. The company decided to move its offices recently, lured to Zeppelin by athe option of a six-month lease. As the novel coronavirus pandemic continues, companies are rethinking their office space.

What will the office of the future look like in the wake of the novel coronavirus pandemic? What do office users want and need in a space to feel safe and secure in signing a lease?

In Colorado, the offices of companies in “nonessential” fields are capped at 50% of capacity under the state’s “safer at home” guidelines. State health officials recommend allowing employees to work from home as much as possible. Some of the world’s largest companies like Facebook and Google are telling many of their employees to continue working from home into 2021 at least.

For Denver-area companies, essential and otherwise, that have moved into new spaces during the pandemic, some early answers to those big questions are starting to emerge. For some small firms, there is an increased focus on open spaces the give employees room, windows that open and let in fresh air and more privacy than prior arrangements — say at shared office or co-working spaces — may have afforded them. Outside of the makeup of the physical space, affordability and lease flexibility are paramount at a time when the country’s economic recovery appears to be sputtering and stalling.

“Certainly the opportunity to save money during this period was a factor,” Chris O’Halloran, CEO of Denver-based startup Joyne said Monday, the day his company was scheduled to move into a suite at the Flight office building in River North Art District. “We’re all trying to minimize our cost at the moment because there is a heightened level of unknown.”

But money was hardly the only consideration in Joyne’s move. The company, which provides contractors with an online platform for generating cost estimating, ordering materials and other pre-construction tasks, is growing. It closed on a $2.5 million seed funding round in April. Its Denver headquarters housed just O’Halloran and one other staffer when it opened in the Spaces co-working space near Coors Field but has since grown to four people. The company eventually absorbed a neighboring office inside the co-working space to use as a private conference room, growing Joyne’s footprint in the building to more than 700 square feet.

Its suite on the fourth floor of the Flight building is 600 square feet but feels and operates bigger than the two offices in Spaces, O’Halloran said. It came furnished with items including adjustable standing desks and already has a private conference room inside, a must for Joyne, which in addition to its team in Denver has employees in Sri Lanka, O’Halloran’s native Australia and elsewhere.

“It’s got windows. Every office is external,” O’Halloran said, adding that he looked into another co-working space before signing on at Flight but the only room available in that space was in the middle of the building with no access to an external wall. “Certainly, it feels like a bigger space. Whether that’s just the shape of the room or what. It’s a bigger space for a third less money.”

RJ Sangosti, The Denver Post

Chris O’Halloran, CEO and founder of Joyne, recently moved his company’s new 600-square-foot space at the Flight building in the Zeppelin Development on July 28, 2020 in Denver.

Flight, part of Zeppelin Development’s mixed-use Taxi project along the South Platte River, has 35 suites like the one Joyne just moved into. Leasing discussions have been steady late despite the pandemic, according to Adam Larkey, Zeppelin’s director of sales and leasing.

Zeppelin hasn’t changed much about its physical spaces because of the pandemic, save for commissioning of some local artists to paint murals in stairwells with aims of making them that much more inviting than cramped elevators that make social distancing difficult if not impossible. But that company is finding that the hallmarks of its office projects — high-ceilinged spaces in walk-up scale buildings with ample natural light and, in many cases roll-up garage doors — are well suited to the demands of a public health crisis during which confined spaces are high-risk.

“It’s just very different experience being here on urban edge as opposed to being in a hermetically sealed office floor that you have to take an elevator to,” Justin Croft, Zeppelin’s vice president of development, said last week.

The main thing the company is doing right now in light of the pandemic is embracing simplified, short-term leases. No fluctuating utility costs or fees folded in, but flat-rate agreements that fill up no more than a couple pages. Zeppelin is letting potential tenants know it is offering one- and two-year leases. In Joyne’s case, O’Halloran said Zeppelin allowed him to sign a six-month deal.

Zeppelin has felt some of the sting from the economic fallout that has accompanied COVID-19. Its 700,000-square-foot office portfolio was 97% leased six months ago, Larkey said. Now, it’s about 93% leased, with some companies choosing not to renew as others grow.

In Denver metro-wide, vacancies ticked up only slightly in the second financial quarter of 2020, hitting 13.6% at the end of June, according to research from real estate services firm CBRE. But that doesn’t tell the whole story. A mass of space hit the sublease market this spring, according to CBRE’s research.

The amount of official “occupied” space that is available to secondary tenants rose 33% in April through June over the first three months of the year, hitting 3.4 million square feet. Half of that is downtown, according to CBRE.

D Bergin, who oversees office occupier services in Colorado for CBRE, said that massive subleasing availability was due mainly to a contracting oil and gas sector crushed by not only falling demand because of COVID-19 but also a price war earlier this year between Russia and Saudi Arabia. Bergin is confident that Denver will still be an attractive place for companies to lease office space in the coronavirus age, especially as a lower-priced alternative to coastal cities.

“While there weren’t a lot of new deals getting done in the second quarter we are still a very strong market that has seen a lot of activity from groups outside of Colorado wanting to be here,” he said earlier this month.

O’Halloran and his Denver-based Joyne team spent six weeks working from home when the novel coronavirus first spread across Colorado, even though the business fell in the essential category as part of the construction industry. Many companies in Joyne’s investor network are planning to work remotely for at least the next year, but for a company that’s just over 3 years old and is focused on growth, O’Halloran felt that having an office was essential.

“You can’t build a culture and a team working remotely as easily as you can if you’re working in the same building,” he said.

Company culture was also at the heart of Ware Malcomb’s thinking when the international architecture and design firm built out its new 13,000-square-foot office in the Broadway Station building just south of Interstate 25 on Broadway. The firm, which is rotating staff members between working in the office or from home to meet state COVID-19 protocols, moved in earlier this month.

“Having a physical office allows us to review large documents easily (especially for our civil engineering team members), and have clients engage with us as we present design solutions,” Tom Jansen, the company’s principal in charge of civil engineering in Denver wrote in an email. “It is important to not only have a physical presence in the Denver area to promote our culture and connect our team members, but to also support the local community.”

In designing the new Denver space, Ware Malcomb sought to use germ-resistant antimicrobial surfaces wherever possible, but when it comes to combating COVID-19, Matt Chaiken, another principal in the Denver office, said the focus has been on clear rules around wearing masks, social distancing, self-sanitizing and other safety protocols.

Ware Malcomb has developed a healthy workplace assessment protocol, which it applied to its Denver office and is offering to clients. The assessment produces a report recommending actions on regulating office occupancy, distancing and in-building interaction, proper signage, the potential for using safer materials and other elements of operating an office during the pandemic.

“Clear and concise communication about safety protocols to employees and visitors, including the capacity of spaces, entry/exit direction of travel and policy reminders, are key to addressing the risks,” Jansen wrote.

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How to Reinforce Sales Training and Maximize Your ROI: 6 Tips for Success

How to Reinforce Sales Training and Maximize Your ROI: 6 Tips for Success

Many organizations invest a hefty portion of their budget in training the sales force. While it’s a worthwhile investment to improve your team’s performance, it’s critical that you take the necessary steps to maximize the return on your sales training dollars.

Without effective reinforcement, you risk implementing training that’s viewed as the “flavor of the month” — something that your team engages with but fails to apply to their ongoing routines. To create permanent behavior change and protect your sales training investment, be sure that you’re following your training with a high-quality reinforcement program.

Sales training introduces new techniques and skills. A sales training reinforcement program gives your sales reps the structure to implement, practice and strengthen those techniques and skills on the job — preferably with guidance from an expert sales coach.

Sales training reinforcement helps reps translate their training from the classroom to the real world and convert their new knowledge into well-honed skills, long-lasting habits and effective behaviors. To permanently shift the performance of your sales team and maximize your training investment, use the following six steps to design, implement and optimize a sales training reinforcement program.

1. Strategically Develop Your Reinforcement Structure

The forgetting curve shows us that learners typically forget new knowledge within days or weeks of training — unless they consciously review the material. Give your sales training the best chance to succeed by planning reinforcement ahead of time.

An ideal reinforcement structure includes regular opportunities for salespeople to review key concepts during sessions with their coaches, either virtually or in person. In addition, there should be opportunities for reps to practice skills with a customer or prospect, with access to the coach to answer questions and assist with any challenges that arise.

This active learning approach cements new skills and turns them into habits. Communicate to participants that the follow-up is a mandatory part of their training. In most cases, sales reps will enjoy post-training coaching, as it allows them to practice applying their new skills with real accounts — and to see firsthand the success that it brings.

2. Prioritize New Capabilities for Reinforcement

People typically learn best when they can focus on a few key items rather than trying to retain everything all at once. Organize your reinforcement program to focus on one or two key skills at a time so that reps can master them. You should also identify lower-tier capabilities to reinforce when learners have mastered the high-priority capabilities. This approach helps ensure that all of your salespeople continue to improve, regardless of their current level of performance.

Reinforcement technology can help you measure the progress your reps are making and provide insight into areas that coaches need to focus their attention on.

3. Enlist Expert Sales Coaches With Real Selling Experience

A good sales coach can make an enormous difference in the success of your sales training reinforcement program. The person coaching your sales team should not only be highly skilled at coaching but also have real industry experience to draw from. Your salespeople must trust their coach and his or her advice, and they’ll quickly be able to tell whether a trainer or coach has real selling experience or not.

To be most effective, sales coaches should meet the following requirements:

  • Closely understand your sales strategy and business objectives.
  • Understand adult learning best practices that increase knowledge retention and help salespeople take ownership of new skills.
  • Be highly educated in the sales process you teach.
  • Be familiar and comfortable with the sales enablement tools that will make reinforcement successful.

4. Train and Enable Your Frontline Managers

After you deliver your training and reinforcement programs, your sales managers will be the primary source of direction and leadership for your sales reps. Setting them up for success sets the entire team up for success, yet many organizations fail to adequately invest in this step.

Sales management training is critical to give your sales managers and leaders the coaching and reinforcement skills they need to be a resource and guide for your salespeople. Your managers need a practical coaching system and a framework for keeping the new selling skills alive inside your team, so be sure to provide them with the appropriate training and resources.

5. Establish and Maintain a Consistent Reinforcement Cadence

Behavior change doesn’t happen overnight. On average, it takes 66 days (approximately two months) for a new skill to become a habit. This means you must expect to reinforce new skills consistently for six to eight weeks — ideally beginning right after training — at a cadence that is appropriate for the material and your sales team’s existing capabilities and knowledge. Without a dedicated cadence, reinforcement tends to erode over time, leaving salespeople to rubber-band back to old habits.

Regular reinforcement check-ins and skill refreshers help make skills learned in training the “new normal” for your sales team. Your documented cadence should include:

  • The frequency of reinforcement sessions. (Holding sessions on the same day each week improves attendance and accountability.)
  • The length of reinforcement sessions (ideally no more than an hour, to prevent loss of interest).
  • The material covered in reinforcement sessions.
  • The structure of reinforcement sessions.
  • The frequency and structure of individual coaching and other forms of reinforcement.

6. Measure and Track Success

A strong, strategic training and reinforcement system is one of the most effective ways to improve your sales organization’s performance in the long term. Reinforcement is key to maximizing the return on investment in training, and it’s important to measure and track success at various intervals along the way.

Effective sales enablement tools can give coaches and stakeholders insight into how each participant is progressing. This information reveals challenge areas that need more attention and helps to develop ongoing coaching plans for the future. In addition, consider measuring your ROI by evaluating critical success markers, including:

  • Additional sales that reps attribute to training.
  • Increase in sales volume as a result of training and reinforcement.
  • Increase in average sales amount.
  • Improved performance compared to quota.
  • Changes in the length of sales cycles.
  • Specific sales behaviors, activities and key performance indicators that yield the largest changes in results.

To maximize the return on your investment and give your sales enablement project the best chance of success, you should follow up with a quality coaching and reinforcement system. When choosing a training partner, look for one that provides best-in-class reinforcement tools and systems to help you build on the momentum of the training and solidify new behaviors. Doing so will maximize your ROI and make your short- and long-term goals easier to reach.

Author:

Training Industry

Michelle Richardson

Michelle Richardson is the vice president of learning services at The Brooks Group, a corporate sales training and sales management training company helping organizations build top-performing sales teams. In her role, Michelle leads the strategy, design and delivery of training and assessment solutions to support clients in their talent development needs.

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Your Customers Have Changed. Here’s How to Engage Them Again.

Your Customers Have Changed. Here's How to Engage Them Again.

 
The coronavirus makes your customers less able and less willing to spend than before. How should you re-engage with them? Advice from Rohit Deshpandé and colleagues.
 
The coronavirus shock has disrupted more than jobs, supply chains, and financial markets. Your customer has changed fundamentally, too. The number one task for many companies now is discovering where their B2C and B2B customers have moved to and re-engaging with them.

COVID-19 is a different beast than recent economic crises and recessions such as the Great Recession of 2008 and the Mideast oil crisis, whose causes were financially driven. The fundamental driver of the pandemic is health and safety concerns and hence customer driven. Customers’ immobility and desire to be safe in the current environment has resulted in volatility in purchases and productivity across idiosyncratic product categories, resulting in a net economic crisis of a type that has not been witnessed by anyone alive today.

Government-imposed quarantines, self-isolation, and closures of stores and offices have further forced changes to customers and hence firm-based behaviors. The outcome of customers’ health and fears has resulted not in a traditional recession but a “deaccession,” where supply and demand exist, but customer-access to products and services has been significantly shut off.

“RESEARCH DEMONSTRATES THAT FIRMS WHO MAINTAIN OR ACCELERATE CUSTOMER-CENTRIC PHILOSOPHIES CONSISTENTLY OUTPERFORM FIRMS THAT DO NOT.”

All in all, this set of circumstances and stricter budget constraints make customers less able and less willing to spend compared to past recessions. How will you find them? How will you engage them?

How should firms adjust?

What is clear in the COVID-deaccession is that this change in customer behavior is pushing firms into a new “directional reality.” Firms need to adapt to shifting customer wants by engaging a more customer-centric philosophy. Rather than expecting their customers to come to them, they need to go to their customers.

Past research demonstrates that firms who maintain or accelerate customer-centric philosophies consistently outperform firms that do not. In fact, they gain market share from competitors who cut back on customer-centric investments.

During this COVID-deaccession, it is even more critical for firms to become more customer centric by researching and understanding their customers’ new problems caused by fear, isolation, physical distancing, and financial constraints, and attempt to structure their offerings to meet these new unmet wants and needs.

The velocity or rate of adaption that firms need to adjust to a new directional reality will depend on customer demand. Industries with decreasing customer demand—offline entertainment, hospitality, real estate, industrial commodities, and suppliers to these industries—need to adjust rapidly to give them a better chance of surviving.

In contrast, industries with increasing customer demand—grocery stores, online entertainment, teleconference providers, and their suppliers—need to adjust to this directional reality at a slower, yet definitely needed, pace to help sustain growth for the longer term.

Whether industries are experiencing decreases or increases in demand, all firms and organizations need to take a step back or forward and ask themselves: What should be my minimally viable strategy to get through these unprecedented times?

Which directional reality should your firm pursue?

To adapt to a new customer-centric directional reality, we propose an alternative to Ansoff’s (1965) growth strategy matrix (see table below). The proposed 2 x 2 matrix is categorized by whether the firm is competing with existing versus new or modified products and services, and whether it is competing in current or new markets (i.e., new customers and/or new geographies).

 
First Quadrant: Firms stay in the status quo or pre-COVID situation. As discussed earlier, times have changed, and business cannot be run as usual. Firms must go to their customers instead of just relying on their customers coming to them. Thus, maintaining the status quo or first quadrant behavior is not advised. We need to go beyond status quo in the new abnormal.

Second Quadrant: Firms create new products or services. Firms may consider adding new services or tiers of products that meet customers’ deaccession-based basic unmet needs. Walgreens allowed customers to purchase a number of products at their drive-through because of their fundamental utilitarian-based health and safety needs. TechSee is providing European organizations free access to their artificial reality (AR) annotation products on mobile phones. AT&T, Cisco, and Zoom have enhanced their network capabilities for increased demand in bandwidth. In addition, numerous small businesses like restaurants and home goods retailers try to match increased demand by allowing customers to purchase by email, messaging services, or phone orders. While the first quadrant, or status-quo, is dead, the new normal is the second quadrant.

Third Quadrant: Firms expand into new customer markets with their existing products or services. For many companies, demand in the first quadrant has dropped sharply—they must find new markets to grow. Hence, American, Delta, and United Airlines are now employing airplanes previously targeted for passengers to fulfill cargo deliveries. For some firms, their products or services are now useful and in demand by new customer bases. Cintas is expanding its business-cleaning offerings to new markets to match new demands and unmet needs. Zoom removed time limits from basic accounts for primary school educators who now need to use its teleconferencing software for teaching. Fan Interactive Marketing, which provides customer relationship management and digital marketing tools for entertainment venues and sports teams (largely unused during the pandemic), switched to targeting small- and medium-sized traditional businesses struggling to survive.

Fourth Quadrant: Firms diversify simultaneously into both new markets and new products and services. Firms whose customer demand for their core products and services has decreased need to find new customers for new products and services in segments experiencing steep increases in demand. Thus, Dyson, GM, Ford, Volkswagen, and Tesla attempted to produce ventilators for hospitals, British Honey Company is making hand sanitizers, and Louis Vuitton, Nivea, and Zara are making surgical masks, disinfectants, and other medical-related devices.


 

What principles should your firm employ?

So far, we have discussed and proposed high-level strategies firms should employ to navigate the COVID-deaccession crisis. We now provide five customer-centric principles for firms to deploy.

    1. Expand your digital footprint. Companies need to adjust to the new reality that customers prefer not to come into their stores. B2C firms must enhance their delivery and pickup options and provide incentives to customers to reward them using these options. Dunkin’ provides extra loyalty points to customers who pre-order on mobile apps. HBO made numerous shows available for free on its app to drive subscriptions for its services in the near future. Opportunities also exist for B2B technology firms. Suppliers can provide customers with enhanced ecommerce services that are in great demand. Shopify provides multiple services to small businesses to enable greater digital footprints. Hootsuite provides their professional service platform for free to small businesses for a good reason; business growth by these firms is expected to increase soon. Similarly, Alibaba, Baidu, and Tencent have made cloud services in China free to small businesses.

 

    1. Reward your loyals. Firms can introduce special offerings to customers requiring special considerations because of their risk level, creating more loyal customers for the longer term. The Knot Worldwide is providing financial assistance to its vendors (like caterers, flower companies, and apparel brands) to help them get through hard times. Netflix set up a $100 million fund to help creatives like actors, producers, and writers whose jobs are affected by COVID—making Netflix the likely preferred destination for future work by creatives. Walmart is paying suppliers more quickly. Costco, Whole Foods, and Dollar General introduced shopping hours for senior citizens while Woolworths Supermarket in Australia closed a number of stores with less traffic to better enable deliveries to seniors, those with disabilities, and those in quarantine or self-isolation.

 

    1. Connect emotionally. To accommodate such demands, firms such as Deliveroo, Uber Eats, UPS, and FedEx, are providing touchless end-point delivery. Maersk, a leader in shipping services, kept its sailors on ships to ensure their safety and continued cross-national shipping. Alibaba and JD.com employed mandatory health checks and use of safety equipment in its factories and delivery trucks so suppliers could get their products to their end-customers. Finally, Dettol created the #HandWashChallenge to encourage proper washing techniques while using its product, garnering over 20 billion views on TikTok. Firms that connect emotionally with their external and internal customers and emotionally and physically with employees are expected to perform better than firms who just connect with their customers physically.

 

    1. Recognize financial constraints. Many customers are facing financial hardship caused by layoffs, furloughs, and a reduction in their employment hours due to the COVID-deaccession. Firms should initiate crediting and financing, deferral of payments, new payment terms, and renegotiation of rates to those in need. Such efforts will encourage longer-term relationships and loyalty, which will increase revenue and reduce transaction costs. DoorDash is temporarily waiving commission fees to restaurants for its services in multiple countries with expectations the restaurants will likely employ DoorDash in the future. M-Pesa implemented fee-waivers in Kenya and other African countries to encourage use of its financial services and reduce the need for a physical exchange of currency. IAG and many other insurance firms are offering refunds, deferred payments, and no charges to small businesses experiencing financial hardship, knowing these companies are likely to continue as long-term clients.

 

  1. Turn threats into opportunities. Instead of waiting for their customers, firms need to proactively reach out to their potential and current customers about products/services, digital and delivery options, health safeguards, and payment plans. 7-Eleven advertises on Spotify about its availability of daily staples, attracting a new segment of customers. Staples offers free delivery and special promotions to individual home-office customers. Alibaba increased training offerings to a broader set of customers in China on how to use its platforms.

 

Making sense of it all

As the COVID-deaccession crisis has fundamentally shifted customer behavior toward fulfilling more utilitarian-based demands for fundamental needs, firms need to adjust their directional reality to one of three proposed growth strategies. The pace firms should use to adapt to this directional reality will be based on their level of demand, with those with decreasing demand required to urgently adjust, while those with increasing demand adapting at a slower pace or with more limited offerings.

And whether demand has declined or increased during such unprecedented times, all firms and organizations need to ask: What is my minimum viable strategy going forward during this period?

About the Authors

Harvard Business School

Rohit Deshpandé is Sebastian S. Kresge Professor of Marketing at Harvard Business School. Ofer Mintz is Senior Lecturer and Associate Head of External Engagement of the Marketing Department at the University of Technology Sydney Business School. Imran S. Currim is UCI Distinguished Professor, Professor of Marketing, and Director, Beall Center for Innovation and Entrepreneurship, at the Paul Merage School of Business, University of California, Irvine.

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4 Lessons in Customer Service From the Real Estate Industry

4 Lessons in Customer Service From the Real Estate Industry

Interact with a few successful real estate agents and you’ll discover one consistent thread between them: they’re all skilled at customer service. As someone who works in another profession, there are a number of lessons you can learn by studying how they handle this important aspect of business.

4 Customer Service Lessons You Must Learn

 

It doesn’t matter your industry – you’d do well to spend a day riding around with a top real estate agent in your market. Simply being a fly on the wall will give you a chance to see how they treat their clients, as well as how their treatment positively influences their business. Here are a few of the lessons you’d likely discover:

1. Always Pick Up the Phone

A real estate agent’s phone rings all day, every day. As tempting as it may be to ignore a call, leading agents make a point to pick up the phone as much as they possibly can. Having a real person answer the phone speaks volumes and ensures a positive relationship.

Even if you can’t personally answer the phone every time someone calls your business, you should have someone who can. An automated answering system might save you a little bit of time, but it removes some of that personal touch your customers want. Even if you have to pay an hourly employee to sit by the phone, it’s worth every penny.

2. Provide Specialized Content

It’s impossible to provide outstanding customer service in today’s business world without having some sort of online presence. Furthermore, you need more than a basic website. You need to supply your customers with specialized content that answers questions and provides tangible value.

Check out agent Michael Flynn’s website as an example of what it looks like to provide specialized content. Notice how all of his content is centered on Pierce County, Washington – his target market. The specialized nature of his content keeps his clients coming back for more.

Can you provide specialized content to your clients? Instead of location-specific, your content may be pain point-specific or price point-specific. Whatever your customers want, that’s what you need to provide.

 

3. Let Empathy Guide Decision Making

It’s easy to get cynical when you’re dealing with emotional people all day every day. Successful real estate agents know this better than anyone, yet they tend to be the most empathetic people around. Regardless of how many times they’ve dealt with the same issue in the past, leading agents are willing and able to put themselves in the shoes of their clients.

Being empathetic doesn’t make you weak. Instead, it helps you connect with your customers. Even if you feel like the customer is wrong, you need to think about the situation from their perspective.

“Studies have shown that people judge an experience based on its most intense point and its end. In customer service, that means ending each interaction on a high note so customers come away feeling great. That may mean solving the problem, it may not,” entrepreneur Gareth Goh says. “I have personally had experiences where the service rep was unable to accommodate my request, but I still came away with a good feeling because I know she did everything she could and she genuinely cared about helping.”

4. Be Patient

Patience is huge in customer service. Real estate agents – especially those who work in residential real estate – have to be super patient. There’s no purchase decision that’s more emotionally charged than buying a house. As tempting as it is to say something like “make up your mind already,” agents patiently and carefully walk through the decision making process with their clients.

In your own business, there’s tremendous value in being patient with your customers. While it takes some discipline on your part, patience ultimately fosters a stronger connection between you and your clients. It also makes them feel cared for and understood – something that’s especially important in service-based businesses. This is probably something you’ll have to continually work at in order to eventually master, but the benefits far outweigh the inputs.

Prioritize Customer Service

Did you know that 81 percent of companies that deliver excellent customer service outperform their direct competition? In other words, if you commit to providing outstanding customer service, you’re going to see results.

 

A real estate agent stands no chance of being successful if he doesn’t place a heavy emphasis on customer service. Keeping clients happy and engaged is half the battle. Whether you’re in retail, ecommerce, a service-based business, or anything in between, learning how to master customer service will all but guarantee growth. Now’s the time to refocus your attention.

Author:

CustomerThink

Larry Alton
Larry Alton is an independent business consultant specializing in social media trends, business, and entrepreneurship. Follow him on Twitter and LinkedIn.

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The Importance of Scheduling Nothing

The Importance of Scheduling Nothing

If you were to see my calendar, you’d probably notice a host of time slots greyed out but with no indication of what’s going on. There is no problem with my Outlook or printer. The grey sections reflect “buffers,” or time periods I’ve purposely kept clear of meetings.

In aggregate, I schedule between 90 minutes and two hours of these buffers every day (broken down into 30- to 90-minute blocks). It’s a system I developed over the last several years in response to a schedule that was becoming so jammed with back-to-back meetings that I had little time left to process what was going on around me or just think.

At first, these buffers felt like indulgences. I could have been using the time to catch up on meetings I had pushed out or said “no” to. But over time I realized not only were these breaks important, they were absolutely necessary in order for me to do my job.

Here’s why:

As an organization scales, the role of its leadership needs to evolve and scale along with it. I’ve seen this evolution take place along at least two continuum: from problem solving to coaching and from tactical execution to thinking strategically. What both of these transitions require is time, and lots of it. Endlessly scheduling meeting on top of meeting and your time to get these things right evaporates.

Take coaching, for example. It’s often quicker for senior leaders to solve people’s problems for them. You’ve amassed years of experience solving the issues being brought to you. But doing so provides short-term relief at a longer time cost. As the organization gets larger, so too will the frequency of those issues, yet there remains only one of you. Unless you can coach others to address challenges directly, you will quickly find yourself in a position where that’s all you’re doing (adding even more meetings to your day). That’s no way to run a team or a company.

Learning what makes people tick — their unique perspectives, fears, motivations, team dynamics, etc. — and properly coaching them to the point that they can not only solve the issue on their own the next time around, but successfully coach their own team takes far more time than telling them what to do. The only way to sustainably make that investment in people is by not jumping from one meeting to the next but rather carving out the time to properly coach those who stand to benefit from it the most. Equally if not more importantly is taking time in between those meetings to recharge. I want to ensure I’m at my best when coaching the next person who needs it.

The same can be said of the transition from tactical execution to thinking strategically. There will always be a need to get things done and knock another To Do item off the list. However, as the company grows larger, as the breadth and depth of your initiatives expand — and as the competitive and technological landscape continues to shift at an accelerating rate — you will require more time than ever before to just think: Think about what the company will look like in three to five years; think about the best way to improve an already popular product or address an unmet customer need; think about how you can widen a competitive advantage or close a competitive gap, etc.

That thinking, if done properly, requires uninterrupted focus; thoroughly developing and questioning assumptions; synthesizing all of the data, information and knowledge that’s incessantly coming your way; connecting dots, bouncing ideas off of trusted colleagues; and iterating through multiple scenarios. In other words, it takes time. And that time will only be available if you carve it out for yourself. Conversely, if you don’t take the time to think proactively you will increasingly find yourself reacting to your environment rather than influencing it. The resulting situation will inevitably require far more time (and meetings) than thinking strategically would have to begin with.

Above all else, the most important reason to schedule buffers is to just catch your breath. There is no faster way to feel as though your day is not your own, and that you are no longer in control, than scheduling meetings back to back from the minute you arrive at the office until the moment you leave. I’ve felt the effects of this and seen it with colleagues. Not only is it not fun to feel this way, it’s not sustainable.

The solution, as simple as it sounds, is to periodically schedule nothing. Use that buffer time to think big, catch up on the latest industry news, get out from under that pile of unread emails, or just take a walk. What ever you do, just make sure you make that time for yourself — everyday and in a systematic way — and don’t leave unscheduled moments to chance. The buffer is the best investment you can make in yourself and the single most important productivity tool I use.

Author:

Jeff Weiner

Jeff Weiner

Executive Chairman at LinkedIn

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RETAIL A risky bet by America’s mall owners: Plucking retailers out of bankruptcy to salvage a pandemic-hit industry

RETAIL A risky bet by America’s mall owners: Plucking retailers out of bankruptcy to salvage a pandemic-hit industry

KEY POINTS
  • Dozens of retailers, some of them the lifeblood of America’s shopping malls, have filed for bankruptcy during the coronavirus pandemic. 
  • America’s biggest mall owners are increasingly looking to do deals to salvage them. 
  • “I think this is an opportunity for the Simons of the world,” said Scott Stuart, CEO of the Turnaround Management Association. “They’re acting like their own private-equity firms. They are sitting on a lot of cash and they are testing the waters.” 
Big mall owners are looking to do deals to salvage bankrupt retailers
 

Dozens of retailers, some of them the lifeblood of America’s shopping malls, have been pushed to the brink and filed for bankruptcy during the coronavirus pandemic. 

 

Apparel brands like J.Crew, Brooks Brothers and New York & Co. parent company RTW Retailwinds. Department store chains Neiman Marcus, J.C. Penney and Stage Stores. The health chain GNC. The kitchen supplies company Sur la Table. The list goes on. And there are more coming. 

 

Now, it’s some of America’s biggest mall owners that are increasingly looking to do deals to salvage them. 

In many instances, as it plays out, these bankrupt retailers are major tenants in malls, with sprawling store counts. Meanwhile, some of the biggest retail real estate owners in the country, like Simon Property Group, are sitting on cash. A lot of it. On June 29, in an investor update, Simon said it had roughly $8.5 billion of liquidity on its balance sheet, including about $3.5 billion of cash on hand. It issued another $2 billion in senior secured notes on July 7

In one of its latest deals, Simon, which is the biggest U.S. mall owner by the number of malls it operates, has teamed up with the apparel-licensing firm Authentic Brands Group to supply financing to carry Brooks Brothers through bankruptcy.  

The $80 million loan from the duo that refers to itself as Sparc LLC (made up of Simon and ABG) comes, in a rare deal, with no interest or fees. However, the loan offer required the Brooks Brothers’ branding and trademarks be used as collateral to the lenders. And so in the event of an entire Brooks Brothers liquidation, Sparc would keep the intellectual property, according to court documents. 

Meantime, ABG and Simon have put up a stalking-horse bid of $191 million for the bankrupt denim maker Lucky Brand’s assets. The duo has until July 27 to come up with funding, according to a court document. 

 

And a trio of ABG, Simon and the mall owner Brookfield Properties have also explored acquiring department store chain Penney out of bankruptcy, CNBC previously reported. The three came together before to save the apparel chain Forever 21, which went bankrupt in September 2019, for $81 million. 

The future of Penney is still up in the air, though. As of this week, the company continues to hash out a plan in court with its lenders to emerge from bankruptcy. It has pushed back a key deadline and now has until July 31 to evaluate potential buyers for its business, in a bid to attempt to avoid a complete liquidation. 

ABG Chief Executive Jamie Salter told CNBC last month that he viewed Penney as a brand worth saving. He said the same about Brooks Brothers. 

ABG already owns a slew of other once-defunct retailers including Barneys New York, Nautica, Nine West and Juicy Couture. Partnering with someone like Simon then adds expertise in real estate, in addition to brand licensing and apparel manufacturing, Salter said. 

A representative from Simon did not respond to a request for comment. 

‘Acting like their own private-equity firms’

The Covid-19 pandemic, which temporarily forced malls across the country shut and continues to keep some of them dark, has clearly presented a very unique buying event for these landlords. Analysts say they’re getting these deals on the cheap. 

“I think this is an opportunity for the Simons of the world,” said Scott Stuart, CEO of the Turnaround Management Association. “They’re acting like their own private-equity firms. They are sitting on a lot of cash and they are testing the waters.” 

“I think Aeropostale laid the foundation that this could work,” Stuart added. 

In 2016, Simon and the mall owner General Growth Properties, which is now owned by Brookfield, teamed up with ABG to rescue the embattled teen apparel retailer. The three won an auction to buy the Aeropostale brand out of bankruptcy court, salvaging hundreds of stores, for a price tag of $243.3 million. 

Roughly a year ago, during a conference call with analysts, Simon CEO David Simon explained the company had “made a ton of money” in its Aeropostale deal

“I think it’s very possible — we’re going to be very smart about it,” Simon said at the time, when asked if he would consider investing in more of the company’s tenants. “We’re certainly as good as the private-equity guys when it comes to retail investment. And so, I wouldn’t rule it out.” 

“We’ll work together on other distressed situations.” But, he added, “we’re only going to buy into companies that we think have brands and that have the volume that is worth doing it.” 

Still, not everyone loves the idea. Some real estate analysts have said Simon could be moving too far away from its core expertise, in real estate. 

“I think investors would rather see them spend capital on their business,” Mizuho Securities analyst Haendel St. Juste said. 

“It feels like it is a slippery slope,” he said. “I get it, these are large tenants. But that’s not your business.” 

“I didn’t like it when they bought Aeropostale,” he added. 

 
America will emerge from coronavirus pandemic with fewer department stores
 

Brookfield is seemingly looking to do more deals, too. Back in early May, the company said it had created a new fund and was targeting spending as much as $5 billion to help struggling retailers. 

“The view is, these are good brands that need to be preserved,” said Byron Carlock, the head of PwC’s U.S. Real Estate practice. 

“Now, is there a new normal that better manages the financial risk of being in retail?” he said, referring to real estate companies versus private-equity firms. 

“Take Brooks Brothers,” Byron said. “Nothing is wrong with the brand. The owners just over-expanded.” 

Private-equity firms have been chastised in the past for buying retailers, saddling them with debt, not managing the businesses well, and ultimately pushing them into bankruptcy. When it filed for bankruptcy earlier this year, J.Crew had roughly $1.7 billion in debt, and Neiman Marcus almost $5 billion, from leveraged buyouts led by private equity firms. 

Two family-owned investment firms that have made a name for themselves in the mall world, Namdar Realty Group and Mason Asset Management, are taking a similar view on investing in retail. 

The two have come together over the years to amass a portfolio of dozens of suburban shopping malls. Their business strategy, in sum, is to acquire distressed assets from either banks or other owners, and refurbish them enough to keep them running. 

Even during the pandemic, they have acquired three malls — Belknap Mall in Belmont, New Hampshire; Mesilla Valley Mall in Las Cruces, New Mexico; and Meriden Mall in Meriden, Connecticut, Mason Asset Management President Elliot Nassim said. 

And they’ve also acquired a local furniture chain, Jennifer Furniture, out of bankruptcy, along with the Grand Rapids, Michigan-based movie theater chain Goodrich Quality Theater, Nassim said, not disclosing the financial terms of those deals. 

“We are looking at investing in more retail chains to become a little more vertically integrated,” Nassim explained. “We believe in the future of brick and mortar.” 

“We look at it as a wonderful opportunity to be involved in a new sector with promising returns,” he added. 

Still, with so few case studies on these types of deals, analysts agree it needs to play out over more time to see if this strategy really can work. 

“The advantage of Simon is they are so big, they can make these bets,” Green Street Advisors mall analyst Vince Tibone said. “But they have to be selective.” 

Dozens of retailers, some of them the lifeblood of America’s shopping malls, have been pushed to the brink and filed for bankruptcy during the coronavirus pandemic. 

 

Apparel brands like J.Crew, Brooks Brothers and New York & Co. parent company RTW Retailwinds. Department store chains Neiman Marcus, J.C. Penney and Stage Stores. The health chain GNC. The kitchen supplies company Sur la Table. The list goes on. And there are more coming. 

 

Now, it’s some of America’s biggest mall owners that are increasingly looking to do deals to salvage them. 

In many instances, as it plays out, these bankrupt retailers are major tenants in malls, with sprawling store counts. Meanwhile, some of the biggest retail real estate owners in the country, like Simon Property Group, are sitting on cash. A lot of it. On June 29, in an investor update, Simon said it had roughly $8.5 billion of liquidity on its balance sheet, including about $3.5 billion of cash on hand. It issued another $2 billion in senior secured notes on July 7

In one of its latest deals, Simon, which is the biggest U.S. mall owner by the number of malls it operates, has teamed up with the apparel-licensing firm Authentic Brands Group to supply financing to carry Brooks Brothers through bankruptcy.  

The $80 million loan from the duo that refers to itself as Sparc LLC (made up of Simon and ABG) comes, in a rare deal, with no interest or fees. However, the loan offer required the Brooks Brothers’ branding and trademarks be used as collateral to the lenders. And so in the event of an entire Brooks Brothers liquidation, Sparc would keep the intellectual property, according to court documents. 

Meantime, ABG and Simon have put up a stalking-horse bid of $191 million for the bankrupt denim maker Lucky Brand’s assets. The duo has until July 27 to come up with funding, according to a court document. 

 

And a trio of ABG, Simon and the mall owner Brookfield Properties have also explored acquiring department store chain Penney out of bankruptcy, CNBC previously reported. The three came together before to save the apparel chain Forever 21, which went bankrupt in September 2019, for $81 million. 

The future of Penney is still up in the air, though. As of this week, the company continues to hash out a plan in court with its lenders to emerge from bankruptcy. It has pushed back a key deadline and now has until July 31 to evaluate potential buyers for its business, in a bid to attempt to avoid a complete liquidation. 

ABG Chief Executive Jamie Salter told CNBC last month that he viewed Penney as a brand worth saving. He said the same about Brooks Brothers. 

ABG already owns a slew of other once-defunct retailers including Barneys New York, Nautica, Nine West and Juicy Couture. Partnering with someone like Simon then adds expertise in real estate, in addition to brand licensing and apparel manufacturing, Salter said. 

A representative from Simon did not respond to a request for comment. 

‘Acting like their own private-equity firms’

The Covid-19 pandemic, which temporarily forced malls across the country shut and continues to keep some of them dark, has clearly presented a very unique buying event for these landlords. Analysts say they’re getting these deals on the cheap. 

“I think this is an opportunity for the Simons of the world,” said Scott Stuart, CEO of the Turnaround Management Association. “They’re acting like their own private-equity firms. They are sitting on a lot of cash and they are testing the waters.” 

“I think Aeropostale laid the foundation that this could work,” Stuart added. 

In 2016, Simon and the mall owner General Growth Properties, which is now owned by Brookfield, teamed up with ABG to rescue the embattled teen apparel retailer. The three won an auction to buy the Aeropostale brand out of bankruptcy court, salvaging hundreds of stores, for a price tag of $243.3 million. 

Roughly a year ago, during a conference call with analysts, Simon CEO David Simon explained the company had “made a ton of money” in its Aeropostale deal

“I think it’s very possible — we’re going to be very smart about it,” Simon said at the time, when asked if he would consider investing in more of the company’s tenants. “We’re certainly as good as the private-equity guys when it comes to retail investment. And so, I wouldn’t rule it out.” 

“We’ll work together on other distressed situations.” But, he added, “we’re only going to buy into companies that we think have brands and that have the volume that is worth doing it.” 

Still, not everyone loves the idea. Some real estate analysts have said Simon could be moving too far away from its core expertise, in real estate. 

“I think investors would rather see them spend capital on their business,” Mizuho Securities analyst Haendel St. Juste said. 

“It feels like it is a slippery slope,” he said. “I get it, these are large tenants. But that’s not your business.” 

“I didn’t like it when they bought Aeropostale,” he added. 

Brookfield is seemingly looking to do more deals, too. Back in early May, the company said it had created a new fund and was targeting spending as much as $5 billion to help struggling retailers. 

“The view is, these are good brands that need to be preserved,” said Byron Carlock, the head of PwC’s U.S. Real Estate practice. 

“Now, is there a new normal that better manages the financial risk of being in retail?” he said, referring to real estate companies versus private-equity firms. 

“Take Brooks Brothers,” Byron said. “Nothing is wrong with the brand. The owners just over-expanded.” 

Private-equity firms have been chastised in the past for buying retailers, saddling them with debt, not managing the businesses well, and ultimately pushing them into bankruptcy. When it filed for bankruptcy earlier this year, J.Crew had roughly $1.7 billion in debt, and Neiman Marcus almost $5 billion, from leveraged buyouts led by private equity firms. 

Two family-owned investment firms that have made a name for themselves in the mall world, Namdar Realty Group and Mason Asset Management, are taking a similar view on investing in retail. 

The two have come together over the years to amass a portfolio of dozens of suburban shopping malls. Their business strategy, in sum, is to acquire distressed assets from either banks or other owners, and refurbish them enough to keep them running. 

Even during the pandemic, they have acquired three malls — Belknap Mall in Belmont, New Hampshire; Mesilla Valley Mall in Las Cruces, New Mexico; and Meriden Mall in Meriden, Connecticut, Mason Asset Management President Elliot Nassim said. 

And they’ve also acquired a local furniture chain, Jennifer Furniture, out of bankruptcy, along with the Grand Rapids, Michigan-based movie theater chain Goodrich Quality Theater, Nassim said, not disclosing the financial terms of those deals. 

“We are looking at investing in more retail chains to become a little more vertically integrated,” Nassim explained. “We believe in the future of brick and mortar.” 

“We look at it as a wonderful opportunity to be involved in a new sector with promising returns,” he added. 

Still, with so few case studies on these types of deals, analysts agree it needs to play out over more time to see if this strategy really can work. 

“The advantage of Simon is they are so big, they can make these bets,” Green Street Advisors mall analyst Vince Tibone said. “But they have to be selective.” 

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Here’s how much Covid has crushed global RE investment

Here’s how much Covid has crushed global RE investment

Worldwide decline in real estate investment tallied 33%, though industrial and residential sectors have been weathering storm

 
The coronavirus has been crushing global real estate investment for months, but there are a couple of sectors weathering the storm (iStock)

The coronavirus has been crushing global real estate investment for months, but there are a couple of sectors weathering the storm (iStock)

Global real estate investment was slammed over the first six months of the year, falling by a third compared to the same period last year.

But amid the coronavirus-fueled hurricane a couple of sectors have been holding up, according to a new report from Savills, cited in Bloomberg.

First the bad news: The Asia-Pacific region, where the virus first flared, saw real estate investment fall 45 percent from January through June, according to the report. In the Americas, investment dropped by 36 percent and in the Middle East, Europe and Africa, the overall decline was 19 percent.

Simon Hope, head of global capital markets at Savills, said investment is “expected to remain well below pre-pandemic levels for the rest of 2020 as investors wait for market clarity.” Overall, the International Monetary Fund predicts a decline in global GDP of 4.9 percent this year. Through the end of 2021, the IMF estimates a loss of $12.5 trillion globally.

Still, as bad as things have been, declines have been less severe than the January through June period in 2008, when global real estate investment fell by 49 percent, according to Savills. That number kept falling through the middle of 2009.

And despite the grim outlook, “certain sectors are expected to outperform as investors focus on secure assets, namely logistics, residential and life sciences,” Hope told Bloomberg.

Industrial and residential properties have fared better than hotels and retail, where investment declined 59 and 41 percent, respectively, since government lockdowns halted the global travel industry and forced stores to close down.

In late February, the Blackstone Group agreed to buy a $3 billion portfolio of Japanese rental properties from Anbang Insurance, boosting the market there, according to Savills.

While Congress gears up to debate another massive stimulus bill — potentially including low-cost loans for real estate companies — the European Union remains divided over its latest spending plan, and British Prime Minister Boris Johnson has promised new infrastructure spending, potentially creating more opportunities for real estate investors. [Bloomberg— Orion Jones

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12 Direct Sales Techniques to Sell Pretty Much Anything

12 Direct Sales Techniques to Sell Pretty Much Anything

If someone can sell even the most unremarkable of items, we call that great salesmanship. But direct sales virtuosity lies not in making people buy something they don’t need. It lies in making them feel their decision is right. Persuasion, not manipulation.

The ordinary pen is a popularly illustrated example. A pen doesn’t have to look special, it doesn’t require extraordinary features. It overall doesn’t have to do much but write. Hence, a pen is hard to pitch.

I sell ice in the winter, I sell fire in hell
I am a hustler baby, I’ll sell water to a well

Jay-Z

Anyone who makes that sale, though, most certainly came well-prepared . Here are some direct sales techniques to sell pretty much anything.

1

FAB (features – advantages – benefits)

The famous FAB technique consists of three consecutive steps that give a clear structure to sales talks. First you name features, attributes of your company or product. Then come advantages, what the feature actually does, then benefits, the positive impacts of that for the customer.

This technique addresses a common mistake among salespeople. Being too convinced that features automatically translate to benefits for the customer.

They disregard the customer’s individual needs and overestimate their knowledge of the product offered. They end up presenting product attributes explaining the positive implications for their prospects. Who then think “Great! Now why would I need that?”

An example of the FAB technique in action. Naming features of our own live chat software could sound like this:

1. “Our software is optimized for mobile.”

This feature description sounds nice but doesn’t target a customer’s problem nor offer a fix. It doesn’t incite to make a purchase. Thus, the FAB suggests to continue with advantages :

2. “Many of your customers are mobile when they enter your site. Serve them through a mobile-optimized chat window.”

Finally, explain how that advantage benefits your prospects:

3. “Offering your customers support wherever they are and whatever device they use will boost your sales.”

Sticking to the FAB structure will prevent you from empty feature bragging and make your product more comprehensible for your customers. They’ll receive a solid reason to buy.

2

The “I’m on your side” technique

With this technique out of Robert Cialdini’s Influence you pretend to team up with the customer against your own company.

In Cialdini’s example, the salesperson tells the customer he would like to make a deal for her, but that he has to convince his boss first. So, he puts the customer on hold for some minutes, while ostensibly talking to his superior in another room. Then he returns, worn out but happy to have sealed a deal for the customer. The assumed fraternization with the salesperson makes the customer trust the salesperson – a fertile ground for future sales.

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Of course, you don’t have to be in the same physical place as the customer, of course. Whether you’re on the phone or in live chat, you can create the impression of being on the customer’s side.

3

The favor upfront

The concept of reciprocity describes our intrinsic tendency to return in kind favors we receive by other people. This tendency remains fascinatingly stable, even when the favors are of rather symbolic value or of no real use.

Indeed, many experiments have shown how powerful a seemingly altruistic favor was in making the receiver want to return it. Free coke cans mints or christmas cards all reliably activated reciprocity.

As the donation-seeking letter by a health care foundation showed over the course of a decade , the system even works when a transaction between two parties is later reframed as a favor of one of them.

So, to leverage reciprocity, start your sales talk with a favor. Think of the countless things that can force a smile on your own face and you get an idea how versatile this technique is. Free samples, other gifts, or exceptional content made with dedication, like that of the SEO wizards of Moz , are sure-fire methods

We despise no source that can pay us a pleasing attention.

Mark Twain

But as social psychologist Naomi K. Grant and her team proved in a 2010 study , the non-material compliment ensures compliance by the complimented through increased liking. So, also consider dropping a few nice words in a sales conversation.

4

The because justification

As the Xerox machine line experiment by psychologist Ellen Langer showed , the likelihood of a favor being granted is dramatically increased if a reason for the request is given. Langer found that even silly reasons, like “because I need to print”, work as solid justification to be allowed to cut the line.

So, when dealing with a lead, justify your request with the open sesame word “because”. This will get you to the first base, from which you can follow up with the next direct sales technique.

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For instance, imagine you’re reaching out to a prospect who’s likely never heard of you to sell them your software. Your first base would be getting the opportunity to introduce your product. Request that opportunity with a justification: “I think you’ll be very interested in hearing about our software, because we have many of your competitors as customers.” or “I’d like to introduce you to our product in detail because we are running a special deal until tomorrow that you could benefit from.”

Among because justifications, scarcity is one of the mightiest. If you’ve been wondering why your local carpet store has been running their ‘final’ clearance sale for years on end, yet never actually went bust, read this post by Nir Eyal . Customers will be more tempted to buy your product if they believe the availability is or could be going down.

Still, don’t grab the sledgehammer by saying that you’re on the absolute last item. Rather casually mention how your stock will probably run dry or bring up the interest of another customer. Play on the scarcity principle in a subtle manner.

5

Gather – respond – deliver – close

This four-step technique introduced by abovementioned Ian Adams focuses on using information to navigate through any sales talk:

  1. Gather information
  2. Respond to information
  3. Deliver information
  4. Ask for something, the closing

Employed on the pen example in a more general way, Adams holistic four-step approach looks like this:

  1. Find out how they last used a pen (gather info)
  2. Emphasize the importance of the activity they last used a pen (respond to info)
  3. Sell something bigger than a pen, like a state of mind (deliver info)
  4. Ask for the buy (closing)
6

Questioning the status quo

Look at this technique as a sibling to the because justification. It’s ideal when you lack information about your counterpart and seek to reach a first common ground with them. Thereby, it protects you from the darkest spell uninterested buyers cast on salespeople: “Nah, I’m good.”

The because justification suggests dropping just any reason for asking for a favor. Questioning the status quo is a sharper blade and consequently requires special care. Your reason for offering a product is that the prospect’s current situation needs fixing.

 

Wouldn’t you say signing those new customer contracts is an important event for the business? ( nods head ) Then shouldn’t it be treated like one. What I mean by that is, here you are signing new customer contracts, an important and memorable event. All while using a very unmemorable pen.

If you take another look at Ian Adams’ pen selling example (above), you’ll find that he did exactly that. First, he uses a highly agreeable, in fact nearly irrefutable statement to create agreement on his prospect’s side: of course signing customer contracts is an important event.

His prospect probably used to successfully sign such contracts with normal pens. In fact, he could put his name on contracts with pretty much any pen and never care about the item in his hand.

But Adams came up with an issue that requires a fix, by questioning the status quo: memorable events, like signing a customer contract, require a memorable pen, not just any pen. As it happens, Adams has such a memorable pen on him at that very moment – and it’s up for sale.

7

The “but you are free” (BYAF) technique

Backed up by 42 psychological studies with a total of more than 22,000 participants , this technique lacks no validation. In his blog post , Jeremy Dean described it as “the one (really easy) persuasion technique everyone should know”.

Of course this post would be pointless if I’d agree with that. But I do think it has some huge benefits, like its simplicity and subtlety.

To gain compliance with the customer, the BYAF suggests, finish your sales pitch by reminding them of their freedom of choice.

The BYAF technique is so effective because it makes the receiver feel like she’s not persuaded but given additional information for making a sovereign decision. A rare occurrence in sales talks.

Ian Adams, after handing over the pen to sell to his prospect, says: “Try it out. If you’re not happy with it, I will personally come back next week to pick it up. And it won’t cost you a dime.” In this example, Adams’ “if you’re not happy, you can easily step back” is the BYAF technique at work. The customer now knows that he can make the final call.

Interestingly, throughout the studies, the researchers found the exact phrasing to be rather irrelevant. Anything from “but it’s your choice of course” to “it’s your call” or “if you’re not happy, you can of course return the item free of charge” should work.

8

Low-balling

The low-balling technique, famously reproduced by Robert Cialdini , consists of two main steps when applied in a sales setting:

  1. Offering a product for a hot price below the actually intended one
  2. Subsequently raising the charge.

The psychological concept at work here is that of commitment . You reach loose agreement over the low price first, then follow-up with the actual higher quotation. Once the appealing idea of the great deal and owning the product has settled in the buyer’s mind, the higher price is more likely accepted as well. They just can’t shake the auspicious feelings induced by your initial price.

Imagine you got a freshly maintained JEEP at hand that easily goes for $7,000 on the market. You meet with a potential buyer and, despite the car’s actual value, offer it to him for $6,000. The guy is a little puzzled but happy to make a serious bargain considering the great condition of the vehicle. You agree to meet the next day for signing the contract.

When you meet again, though, your offer is $7,000. You explain the higher price with the vehicle’s great condition and a heated market, perhaps with saying that a friend just sold the same car for no less than eight grand. After thinking on it for some minutes, the prospect finally exhales and accepts, teeth-gnashingly.

The first offer is no more than your hook to make buyers think they’re grabbing a bargain. It should not, however, make them believe you’re unaware of the product’s value or that there is some catch on it. Your entry level price should therefore be very attractive, yet not ridiculously low. In order for the low-ball to be effective, the buyer must not entertain suspicion.

The second offer should not be too high either, otherwise it will hit the buyer like a sucker punch and ruin your deal. Trivializing the additional money to be spent is a good way to prevent this. Also, of course, don’t use this technique to rip people off, but to reach a fair market-value price.

9

The door-in-the-face technique

This direct selling technique follows the same systematics as the low-ball, only here they’re inverted. Another study by Cialdini found that if people first refuse an extreme initial request, they are more likely to comply with a smaller subsequent request.

His findings are instructive for any direct sales context. First, set the price for your product or service so high that you force your prospect to decline. Then come back with a lower price that inevitably seems super legit in the light of your previous demand.

The idea behind that is the principle of making a concession, Cialdini describes this in Influence as well. If you make a concession, the other party feels obliged to do the same. You’ll often encounter this system in face to face situations on bazaars of the Orient and markets throughout South East Asia. It also works via phone. But when direct feedback options are limited, you’ll risk losing the customer more easily.

10

The foot-in-the-door technique

Did you know that if you want to borrow your new neighbor’s car, you better ask her to lend you her bike on a previous occasion? The foot-in-the-door technique suggests exactly that.

Another technique similar to the low-ball, it consists of making a low initial request and then following up with a larger one. The difference is that here the first request is not to be rejected and replaced, but much rather paves the way for them by being accepted.

The same works for selling. You place your foot in the door with an attractive first price. Then you widen the door crack inch by inch with higher requests of comparable nature. This is a particularly effective technique for upselling.

It was first proven effective by Freedman and Fraser in 1966 and plays into our urge to be consistent with previous behavior and opinion. Higher second and third requests are accepted because – and as long as – they are similar in kind to the one before.

11

SPIN selling

Before turning it into a book , consultant Neil Rackham based this technique on the results of his analysis of over 35,000 sales calls in the 1980s. It suggested that sales pitches are successful when the customer talks while the seller listens intently, following up with questions of these four types:

  • ituation: Attempt to establish a common understanding of circumstances and background information, searching leverage points for relevant more in depth-questions.
  • roblem: Question to center in on the prospect’s implied issues, troubles and dissatisfactions.
  • mplication: Question about the consequences and impact of the issue.
  • eed-payoff: Question asking about the need for a solution and the potential value of making the problem going away.

Using these questions as stages to progress on, the seller creates comfort on the prospect’s side, making him gradually open up and unveil his needs. Only after moving through all stages, the own product is introduced as a solution.

Profitworks has summarized this technique comprehensively on their blog with example question for each stage of the sales talk.

12

The referral technique

Sometimes people simply refuse to buy. Instead of dropping prices and walking away without profit, experienced salesmen will often use the customer’s natural tendency for making a concession. Instead of asking the customer to buy, they ask him for the second best thing: a referral. The contact details of friends who might be interested in the product are especially valuable for future sales.

When in talks with the next prospect, drop the friend’s name who referred you to them. “Jim told me you might be interested”. This creates proximity and gains you trust. From here on, making a sale will be much easier.


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Social Media Marketing – Powering Sales

Social Media Marketing – Powering Sales

The use of social media within digital marketing and inbound marketing has become an important gear in the sales and demand generation engine. The sales and marketing engine needs fuel (supply of traffic or prospects) which the engine turns into visitors and leads where sales converts to customers.

social-media-marketing

The use of social media and lead generation are the gears which powers the engine. The bigger the social media gear size the harder the marketing gear works. And the harder the marketing gear works, the faster and more productive the sales machine will work to generate revenue.

Social media (blog, content marketing, and articles) is the gear that gets the marketing and sales engine working. Social media pulls in the traffic and prospects and converts them to visitors or leads. When driving a car, we push the pedal to the metal in the highest gear to get to a destination faster. The same logic applies to inbound marketing and lead generation. A business needs to work the biggest gear, social media, to ensure a constant supply of visitors, leads and buyers to power the business growth.

Social media also impacts SEO and long tail keywords. So if social media is the gear, then content marketing and blogging platforms like WordPress, Medium, Svbtle, Postach, Ghost, LinkedIn Pulse, Storify, Tumblr, Blogger, Buzzfeed etc. and the traffic they can generate is the fuel that turns the social media gear.

To put the potential impact of social media into perspective, here is some insightful statistics’ on buyer decisions.

  • “57% of the purchase decision is complete before a customer even calls a supplier.”
  • “67% of the buyer’s journey is now done digitally.”

Big business or small business, it is vital to have social media in the marketing plan for lead generation and inbound marketing strategy. Every marketing team has to see social media and inbound marketing tactics as a critical gear in the buyer’s journey.

Social Media Marketing Is Critical for Inbound Lead Generation Success, so is Sales.

The days when demand generation meant only using paid search or media placement and email marketing are over. Today’s buyers are on a different journey where business buyers and consumers are using keyword search and social channels to find content upon which to make informed choices. In fact, they are now in control of the buying process where they are start the demand generation process without any seller being involved.

Social media does not replace selling, good sales or selling practises, as research shows that talking to a sales person still has a strong influence on buyers vendor selection. Social media and inbound lead generation is just a gear (a vital gear) in the lead-to-revenue path that enables marketing to funnel leads to the sales machine, which turn them into customers.

Another reason that social media is a gear which needs to be connected to the sales engine is that while social media and inbound marketing can deliver more leads at a lower cost than outbound marketing or sales, inbound leads take 30 to 40% longer to move through the sales funnel.

The other Digital Marketing Gears

Like any engine, the sales and marketing engine needs more than one gear to power it, gears like social media selling, SEO gear, paid search (SEM) and email marketing gear all play a key role in lead generation and lead nurturing. Successful inbound marketing is about getting the mix right between short term tactics, longer term tactics and tactics that deliver demand now.

The Actions and Actives in getting the Social Media gear moving.

  1. Publish and Attract. This is about pulling in the fuel (traffic, prospects, suspects) into the engine. The greater the reach via multiple blogging platforms for content marketing, research papers, articles, the bigger the awareness a business can generate by posting the content via Facebook, Twitter, LinkedIn, StumbleUpon, Pinterest, SlideShare, Google+, Reddit and other content marketing sources. But attracting traffic and visitors is only VANITY, leads and customer engagement is SANITY.
  2. Convert. This step is about getting the traffic into visitors who will convert into at least repeat visitors to gather more information or as leads (newsletter signup, free trial, landing page, and request for information form). This convert point means the traffic the social media gear is attracting is the right profile plus they like the content or messaging pushed out. Other good convert points should include the visitors who follow, shared, liked, commented or republished the content. This convert point means a business has taken a step closer to building a relationship and nurturing the lead through the sales process.,
  1. Lead Nurturing. The lead and customer nurturing process fits between the attracting and closing stages. Returning visitors will seek out fresh content or product information, people who signed up for newsletters or email updates need to be influenced. The sales team should now be engaged with social selling to the prospects. This stage is where prospective buyers are sourcing, digesting and reviewing information and content. A recent report by Act-On showed that 85% of Business-to-Business buyers said it takes three or more pieces of relevant content to help make a decision on progressing with a supplier. So, a business can lead nurture by influencing the buyer to take action by feeding them with relevant content on their terms or personalised preference.
  2. Close. This stage is where leads are moved through the pipeline to become customers. Returning visitors will reveal themselves to enter into the sales funnel and existing lead nurturing prospects move down or out of the sales funnel. The key measure here is conversion, what is the lead-to-revenue conversion rate? What is the cost of customer acquisition? Closing is both a sales process and a workflow process so marketing and sales management need to work together to audit the attract, convert, lead nurturing and closing stages to ascertain what is working and what is not.
  3. Pipeline Replenishment. Reduce the cost of marketing by getting customer referrals or customer net promoters. The stage has to do with social media monitoring and sales teams using social selling to stay in touch with customers and expand their network. This stage can include surveys, feedback, and publishing new content and listening to social media chatter

Social media marketing is a process to generate leads via well written content that is published across multiple social channels resulting in lead nurturing activity by marketing and sales where strangers become customers

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