During the last 3 years, Copenhagen based PropTech start-up Hococo, has become known for their disruptive approach to property management by focusing on how the tenant can become an important asset in the tenant-landlord relationship. Based on the 4 co-founders’ own personal frustrations in the Copenhagen rental landscape, they set themselves on a mission to change how tenants are looked upon by the landlords.
“It definitely is first and foremost a cultural change”, explains William Shaw, Hococo Co-founder and CEO, before he continues: “We were asking ourselves: How is it that you still experience such terrible service, despite your monthly rent probably being the single most expensive subscription you ever will be paying? I mean, I get a much better service when paying for my TV streaming services that costs not even a percentage of what I pay each month in rent. It just didn’t make sense to us.”
Hococo set themselves on a mission to make it the new normal to offer great customer service in the rental context by bringing customer-centric tools to the tables of those who work professionally with property management. “We want to shift the mindset from rental transactions to rental relationships. Why do the landlords still refer to tenants as tenants and not customers or maybe even go a step further and refer to them as guests?”, asks William Shaw and continues: "We are going to change that".
Operating in one of the more traditional industries — the real estate rental space — Hococo often experiences multiple dogmas when speaking to landlords, asset- and property managers.
One being that tenants are just a necessary means to bring in profit — the more you interact with the tenants, the worse the business case becomes. Hococo can’t make a lot of sense of that approach.
“We often notice that property owners are scared of including the tenants, mainly because they believe that it will mean more work and thereby cost more. The fact is, however, that focusing on the tenants can be great business. On average a tenant turnover costs around 2,5 months of rent in void periods, refurbishment, listings, showings, agents fees, etc, so the longer you can make your customers stay, the better”, says William Shaw.
If you take a look at the customer review sites, where 1-star ratings are more common than not, it makes you start thinking that something is wrong. Most other industries have shifted towards a customer centric approach, but the rental industry hasn’t yet.
“We’ve asked ourselves why that is many times because for us it’s an obvious way to go. Of course you can’t eliminate all contract terminations, as there will always be situations that you can’t do anything about such as changes in your life situation: You can get a new job in a different part of town or you can get a kid that requires more space. These things are uncontrollable”, William explains.
If you turn to more controllable factors, the first thing that comes to mind is rent levels. However, most don’t want to lower rent since it’s the most important part of the investors business case.
“The second most controllable factor is customer service, and that is something you actually can do something about. Good customer service isn’t only important for tenant retention, but also for attracting new customers”, William Shaw finishes off.
William Shaw: We are a technology company, first and foremost. We enable a closer bond between the property owners and their customers (the tenants) via innovative data-driven technology. We offer a SaaS-solution for the property professionals that enables them to interact, engage, reward and service their customers — primarily via a Resident App. As a tenant, the app helps you interact with your building managers, but also connect with neighbours. You can create tickets, book amenities, pay your rent or additional services and so much more. We are constantly adding features and will never stop improving our services.
What we are seeing now is a whole new generation of tenants — the so called Millennials — that are challenging the traditional way of doing things. Not only as tenants, but also as professionals. Real estate is desperately calling for digital transformation to catch up with the new needs.
House prices have skyrocketed, and more and more people choose to live for rent, but they are much more conscious and critical than previous generations. Convenience, flexibility and mobility are key factors. At the same time we are seeing societal, environmental and also other external factors influencing the tenants decisions of how they choose to live.
Technology has in many ways made it easier to move if you’re not satisfied. It’s also easier to make a stir. You can now also compare different offerings and do your homework before moving into a new space. There are even new, more affordable ways to move and to take care of deposits. Also, how you choose to live has all of a sudden become more of a lifestyle decision and despite the majority still wanting to live centrally in the capitals, there is also a movement towards living outside the urban areas as more and more work from home. Likewise — maybe triggered by the competitive landscape — more disruptive housing concepts are popping up where new tenant constellations are formed. The real estate landscape is changing very drastically right now and we believe Hococo is more relevant than ever.
"Well they are and they are not. With that I mean that property management has been running a fine machine for years, but the industry is changing rapidly and if you want to stay relevant and come out on top in the years to come, you need to adapt", William explains. We highly believe that change is inevitable, it’s not a nice to have transition, it’s a need to have. If you don’t prioritize a digital strategy, we truly believe that you will be overtaken by more progressive players. It is a bit simplified, but if you don’t adapt, you will die.
It’s all about securing high retention rates by surpassing expectations and keeping your tenants happy. I think that the property professionals are starting to realise this due to recent events. For example, more and more people spend a lot more time in their homes, causing a boom in the amount of inquiries to the administrators. A lot of real estate companies have simply not been geared towards these challenges, resulting in dissatisfied customers and therefore understand they have to do things differently. Generally speaking, there is just so much untapped potential in terms of digitalization, automation and creating new revenue streams, so it’s not only a cost savings game. The technology is there and it’s mature, but it still needs to be adapted in the organizations.
First of all, our team. We’ve spent great effort in getting a competent founder team in place so we have a good foundation for the future. We all come from different backgrounds. Katrine, who is a lawyer, has previously worked at top insurance firms and lately at the biggest law firm in Denmark as a product owner within legaltech, so she has a good understanding of the tech backing our platform. Caspar, our CTO, started coding as a 11-year old and has worked at a top Danish IT-consultancy company. Then there is Peter, our CCO, who is in charge of our Sales and Marketing initiatives and has experience from running his own digital agency. And finally myself, coming from a management and consultancy background in enterprise E-commerce. We are really good match. None of us have experience from real estate, but we see this as a huge benefit, as long as we have good people on our board that knows the industry — which we do. Our team is our most important asset, and we will go far to attract talent so we can bring the best people on board and build a great product.
The second aspect to our success is that we have a strong customer-centric approach. We spend a lot of time understanding our customers and end-users. We arrange pizza nights and make sure to send out surveys on a regular basis, so that we ensure that we create a product that brings value to our users. We don’t want to be just another app that nobody uses. We are on a mission to change how we live, and for that to happen, we need to be the best at what we do. That starts by understanding our users.
It’s definitely accelerated the demand for technology in real estate, so despite the tragic circumstances, it’s really given us tailwind. It’s also given us a more powerful incentive to enable even more communal spirit and promote a good neighbourship as the usual way we see family, friends, colleagues and familiar faces has changed drastically. Mental health and loneliness have now become widespread challenges of our generation and we feel that our platform can do good and help fight this negative development.
The millennials are the biggest age group in the current world. They know what they want and how they want it - which mean that the real estate industry needs to adjust the way of operating. Download a free guide that will serve as insight into the generation and outline some of the important aspects of this generation - as people, consumers and renters.