Asset Developments & Holdings LTD: Managing the Relationships

Inception

Mr. Selim Akhter Khan, CEO & President of Asset Development & Holdings LTD (ADHL), was well known in the real estate development industry even before the companys formation while developing apartments personally. He became a prominent figure in the real estate business after forming the ADHL. One day, he was out on a morning to walk in his local area Dhanmondi where he made friend with a landowner who owned a piece of land in a prime location of Dhanmondi, Dhaka. After casually conversing with him, Mr. Selim proposed to the landowner to develop a residential building on his land and share the apartments. The landowner did not have enough money to construct the building himself, so he found Mr. Selims proposal attractive. The relationship with this landowner was the basis of the formation of ADHL and the beginning of success.

Real Estate Business Development Process

As a real estate developing company, Asset Development & Holdings Ltd (ADHL) started its journey in 1999. In Bangladesh, the real estate developing companies generally acquire a power of attorney from the landowner(s) and then develop a building rather than purchasing a piece of land directly. ADHL is one of the pioneer companies to utilize this system in the real estate business development process. In the modern context, Bangladesh's real estate development industry operates its businesses by creating a synergic relationship between the landowners and the customers who purchase readymade apartments. The development company pays a down payment to the landowner and then acquires a power of attorney to construct the building on that land. The deal also includes giving the landowners a certain percentage of spaces after completion of the construction while the development company keeps the rest. The percentage that the owner would get depends on the location, the size of the land, and the amount of signing money. Most of the projects funding comes from selling these spaces (either for residents or offices) by the development companies. The buyers also pay the costs on an installment basis for a certain period with the negotiation after a certain amount of down payment. Within this industry, it is known that some development companies sometimes misuse the power of attorney for their gains. Mr. Selim said, Convincing landowners to agree to a deal as such was once deemed impossible as many could exploit power of attorney. Therefore, building relationships throughout the negotiation process was a key turning point for our company. Starting from day one, all the success we have had so far was due to the customer relationship management with the landowners as well as with the apartment buyers. In Bangladesh, the same lands are usually used generation-to-generation, where the utilization of the land is one of the biggest decisions one will ever make in their life. He further perceives, These negotiations are huge! For the landowners and also for us. Building trust is a crucial factor in doing business in this industry as well as keeping a commitment to the landowners and the customers.

Bangladesh's real estate development industry is worth BDT 58,000 Crore, and its annual growth rate is about 15-17%. Real estate development companies do 42% of all constructed buildings in Dhaka City. Currently, there are 1073 registered real estate development companies in Dhaka. DHLs top management already has years of experience in this particular industry. The company has completed about 500 projects with 5000 apartments in the last couple of decades. This puts Asset Development & Holdings Ltd at the top amongst other competitors, and they are considered a significant contributor to the countrys economy.

Customer Relationship Management (CRM) and ADHL

ADHL practices three stages of relationships for managing customer relationships- building the relationships, maintaining the relationships, and extending the relationships.

Building the Relationships

One of the more difficult challenges that ADHL faces regularly is to align the need requirements of the landowners and the apartments customers. The first step is to convince the landowners to give ADHL a power of attorney to develop a building on the land as per the negotiation between them regarding signing money to be given to the landowners and the specification of the apartments. This negotiation involves the trade-off between the costs and expected revenues. The next is to find the target customers to sell the apartments, whose needs would align with the specifications set by ADHL and the landowners and the nature of the customers accepted by the landowners. The CEO of ADHL asserts, We spend many hours trying to meet the requirements of the landowners as well as the requirements of our target customers. Generally, we have to conduct multiple meetings, discussing every detail possible with landowners and prospective customers. These meetings help us to build the relationships with both parties. The first of these focuses on satisfying both parties (landowners and apartment buyers) and fulfilling their needs in the expectation that the cementing relationships and resulting increase in customer loyalty enhancing profits.

Maintaining the Relationships

For the real estate development industry in Bangladesh, trust and commitment are crucial factors on the one hand for convincing landowners and, on the other hand acquiring, managing, and maintaining relationships with apartments buyers. To complete the project as per customers requirements and handover in time are the key to the customers satisfaction. As the Sales Director of ADHL perceives, People do not make impulsive decisions regarding handing over their lands or buying apartments. Finishing the project within a given time builds the credibility of the company. However, there may be certain inevitable hiccups along the way. This is where ADHL recognized the importance of maintaining the relationship with both sides, reassuring them in every step that the projects are well underway, explaining any delays that may be for unavoidable circumstances like corona, natural disaster or any political unrest. ADHL follows-up the project regularly through a careful audit by the project engineer and maintains customer interactions. As he further asserts, We visit the project continuously and send out regular emails to the landowners and our apartment customers about the progress of the construction of the building. We also connect to them through email and social media and consult with over the telephone to give them up-date of the project. We also arrange the transport facilities for the stakeholders (landowners and customers) if they would like to visit the project to assess the progress. In addition, we ask the customers regarding their requirements of building design and painting color, lawn and garden design, apartment doors, floor tiles, kitchen, dining space, bathroom fittings, corridor(s), and any other facilities they expect from us while we are constructing and finishing the building. All these processes of customer engagement and entailing intimacy are resulting the highest level of customer satisfaction. Thus, ADHL customizes the services that are ensuing the life time value (LTV) and long-term relationships with customers. According to IT Manager, We have a complete list of existing customers. We record all the data about the needs, requirements, expectations, and complains of the customers for managing present and potential customers more efficiently and effectively. Based on these data the management of ADHL develops and implements the segmentation policy and designs the buildings and provides the services.

Extending the Relationships

Word-of-mouth has been considered one of the strong points of ADHL. Both trust and commitment are the key factors in acquiring land, developing and selling apartments, and maintaining the relationship with customers. ADHL is cementing the trust and maintaining the commitment to continue the satisfaction of the existing customers by taking a unique strategic decision to provide after-sales-services to the apartment owners. To this end, ADHL makes an effort to provide the services to the existing customers for the maintenance of constructed building even after the handover of apartments. ADHL has a dedicated team working towards extending the relationship with existing customers to ensure ongoing services for their satisfaction in the name of after-sales department. The team provides them with services such as security for the property, building maintenance, and backup generator at a reasonable price. According to CEO, Although, this incurs the additional cost for the organization, we will continue to provide these services for the satisfaction of the customers. Thus, ADHL strategically embedded CRM in their organization. The after-sales-team appears an integral part of ADHL in building long-lasting relationships with existing customers. Through after-sales services, the company acquires the loyalty of existing customers. This is how ADHL satisfies the existing customers, and the customers refer to their friends, relatives, and business partners as the prospective customers through positive word-of-mouth to purchase the apartments from ADHL. Thus, the company appears as a brand in the arena of the real estate business in Bangladesh. As the Head of After-Sales-Department perceives, A crucial part of our business is to extend relationships with the customers after we complete a project. We have found out that these customers refer to other customers to us, and in such cases, we do not have to put too much efforts in acquiring and managing the relationships with prospective customers while the key aspect trust and commitment is already formed there.

CRM Challenges

During the companys initial stage, ADHL had no brand value as like as the value of today. This made it challenging in early stage for them to convince customers on both ends, landowner and apartment buyers. Initially, there was a lot of training involved. The intense training programs allowed all of their staff to understand the emphasis that ADHL puts on customer relationship management (CRM). To this end, we were always ready to response to stakeholders in developing and maintaining the relationships with them. There were many stakeholders who would call us even at 9.00 pm for a random meeting and would remain indecisive. The CEO asserted. One of the major dealings of the company took place during their initial phases to acquiring a large piece of land in a prime location in Dhaka city called Dhanmondi, and the owner was hesitant in the beginning to come to a deal. The deal was solidified by building rapport with the owner as well as with his family by explaining them to understand how they would be benefited from this deal. The entire process of building this relationship took about 7-10 different exclusive meetings.

ADHL mostly develops lands within Dhaka City such as Gulshan, Banani, Baridhara, Dhanmondi, and Bashundhara as the prime locations. They have certain unique selling point (USP) that follows a common theme and making different than other competitors. They specialize in creating luxury apartments that appeal towards a unique lifestyle that ensures comfort. They provide additional benefits to apartment owners such as luxurious lifts, bigger parking spaces, aesthetic views etc. It gives the customers a sense of prestigious status. Therefore, the target of ADHL is to high-income group and upper-middle-income group of customers as the niche segment(s). The CEO assesses, Our customers not only prefer quality but also the status, prestige, comfort and lifestyle for the aesthetics flavor of the apartments. Since people have the different perceptions, it creates a big challenge to match the requirements of the landowners with the requirements of apartment customers. Moreover, while the location and the size of the lands that ADHL acquires differ from one project to another, it is difficult to implement a fixed business model that works for all the customers. It is a big challenge for ADHL to convince the landowners to agree with apartment buyers requirements to fulfill their dream. According to CEO again, Another challenge of our company is the required changes of data management have not been achieved while the CRM software is not introduced yet.

As of today ADHL target customers are only the high income group and upper-middle-income group and within the selected posh area of Dhaka city. However, they have the vision to expand their business to other metropolitan cities and build apartments for middle-income group of customers at reasonable prices. Bangladesh is one of the fastest-growing countries within South Asia as the economic growth has been about 6-7% last ten years. It is expected that the customers of other cities of the country also will be able to buy the apartments like the people of Dhaka city in a near future.

Conclusion

Their core values and principles of customer relationship management have been an integral part of their business policy since day one. They have built a good model for building, maintaining, and extending relationships in a niche market by ensuring quality, stratus, prestige, lifestyle and aesthetics flavor. In addition, ADHL is satisfying the existing customers providing a range of after sales services that in resulting the benefits of branding the company. One of the challenges they face regularly is to match the demand of the landowners about the specifications of the apartments and the demands that the buyers of the apartments have. ADHL has found that aligning demands between the two sets of customers, retaining relationship, sticking to commitment, and delivering on time has helped ADHL reach the heights they have reached today.

Answer the following Questions

1. What should be the strategies for Asset Development and Holdings Ltd (ADHL) in developing, maintaining, and managing relationships with customers?
2. What should be the strategies to grow the relationship with existing customers?
3. How could ADHL better align the demands of the landowners to match the demand of the apartment buyers?
4. What are some of the challenges that ADHL face, and how could they overcome these challenges?