Building a solid and intentional brand position involves many moving parts, but there’s one strategy you can apply in any situation — particularly when the alternatives aren’t feasible or practical.
Going the ‘Extra Mile’ is among the secrets (companion to the 1%/Kaizen rule) of extremely successful entrepreneurs in commercial real estate and broader.
Let’s look at what the principle entails, how it benefits operators, and simple strategies to go above and beyond in serving investors and tenants.
1. The root of it
A little under a hundred years ago (1925), Napoleon Hill, a notable personal success and finance writer, distilled the concept of doing “more than what’s paid for” as one of his 17 principles in the Law of Success. He later developed the idea into the ‘Extra Mile’ principle, which he describes as the habit of providing “More and better service than one is expected to render and with a positive mental attitude.”
This notion may seem obvious, but it’s surprising how many professionals we encounter in our lives who are oblivious to this concept. I’m sure you’ve met at least a handful of people who only do what’s asked for and just enough to get by. When you think about those that have risen to success and wealth, the trait of going the extra mile is often apparent in their climb.
At its core, this principle is rooted in observations of nature. There are myriad examples in which life acts in multiples to ensure survival. Plants, fish, insects, reptiles, and birds reproduce in such numbers that regardless of the prevalence of predators, disease, and natural hazards, their continued existence is nearly assured (excepting for asteroid strikes and human interference).
Many animals forage or hunt more than is necessary to get by and will do what it takes to find opportunity and resources. The commercial real estate business is no less demanding, and our work is quite literally how we survive, no matter how far removed from the plow, basket, or bow.
2. Practical benefits and manifestations
Going the extra mile precipitates many benefits for CRE operators. Hill developed the Extra Mile Formula to accompany the principle. Though not mathematically valid, it highlights the components of going the extra mile and their cumulative effect:
Q1 + Q2 + MA = C
Q1 represents the quality of service; Q2, the quantity of service; MA, mental attitude; and C, compensation. In other words, if we do the best work — more than what’s paid or asked for — and perform it in a spirit of positive service, we’ll have the highest growth and earning potential.
The formula makes perfect sense if we’ve been on the hiring or paying side of this equation. It applies equally to how we tip service workers as to how we compensate our executives and vendors.
What are the concrete manifestations of applying this principle as an operator/sponsor:
- Making a strong first impression.
- Creating rapport, trust, and goodwill.
- Fostering loyalty and buy-in among stakeholders.
- Building a competitive advantage.
- Establishing a superior track record.
- Generating leads with the best ROI: enthusiastic referrals.
- Improving performance and attainment of OKRs.
- Attracting and retaining tenants; optimal occupancy.
- Abundant capital and keeping investors on board.
The fact is going the extra mile doesn’t take that much more work. And when you put some passion into what you’re doing and see the positive response and appreciation from stakeholders, the business of CRE becomes a lot more fun — and rewarding.
3. What it looks like in practice
With the principle and benefits noted, how can we apply the concept in commercial real estate?
Start by always focusing on doing the best job for your existing investors and tenants. Of course, we must devote time and money to marketing and other business-generating activities.
However, if we don’t keep our current stakeholders happy (i.e., generating at least the expected results), we won’t build loyalty, positive word-of-mouth, and the track record required to earn new business. Our foundation is the first group of investors and tenants that choose to take the risk in working with us when we’re getting started.
The next underlying component of going the extra mile is attentively listening to the needs and expectations of our stakeholders. We must possess a keen awareness of their desires, objectives, and values to produce the outcome and experience they’re seeking.
Let’s elaborate on what going the extra mile looks like in serving investors and tenants:
- Ask about their expected rate of return and risk tolerance and adjust/craft your offering accordingly.
- Under promise and over-deliver on returns. Be realistic and conservative with projections.
- Keep them in the loop. Provide frequent and detailed updates, reports, and financial statements backed by whole, accurate data.
- Implement a data management strategy and make investors aware of your commitment to leveraging technology.
- Utilize all the available tools to monitor, manage, and optimize expenses.
- Be transparent about your background, story, accomplishments, and values.
- Regularly gather and encourage feedback from current and prospective tenants.
- Adapt your property, management style, space, and terms based on their desires, needs, and preferences.
- Provide more and better amenities and service than competing properties and operators.
- Offer a portal that allows tenants to communicate with each other, management, and staff.
- Show your appreciation for tenants by holding events/parties and giving unexpected perks.
- Be fair with rental rate increases. Do track market rates but keep hikes reasonable (2-3%), and only increase if the market justifies it.
Everything we got
We can do a lot to support the growth of our NOI and portfolio. Some of the common strategies, including marketing/solicitation, repositioning, expense optimization, and lease rate increases, are effective.
Yet, the simplest, most cost-effective, and human way to scale our commercial real estate businesses is by giving our investors and tenants everything we got and doing it with joy.
Even if we’re not the highest-return or least expensive option in the market, stakeholders will partner and stick with us because we recognize, respect, and appreciate their needs and provide a fantastic experience.