The Peak-End Rule in Property Development
How will customers remember you?
Did you ever visit Disneyland?
How did you like it?
You’re probably thinking of the fabulous parades, thrilling roller coaster rides and your favourite childhood characters coming to life.
How come you didn’t immediately go to the hour-long queues where you had to wait in the pouring rain? Say hello to the peak-end rule.
The peak-end what?
Psychologist and Nobel Prize winner Daniel Kahneman first described the peak-end rule in 1999 along with researcher Tversky. They discovered that people judge an experience based on two key elements: (1) the best or worst moment, known as the peak and (2) the ending.
In other words, we are less inclined to judge an experience by the average of every moment. Both the most negative and most positive memories remain, while the duration of those moments doesn’t play a part.
Lessons to be learned for property developers
As a property developer you often engage in a long relationship with your customers. They always start out very enthusiastic after signing the contract, but time and time again, you see that level drop over the course of construction. After all, invoices have to be paid and we all know that delivery may sometimes be delayed.
The peak-end rule brings good news, because it teaches us that we should not give up hope. We can still make strong brand ambassadors, as long as we deliver greater peaks.
For example, a customer will remember that you have communicated quickly and clearly about a delay. Or that you have called her within a few hours to take away her worries about an unclear invoice.
Our survey among 400 homebuyers clearly showed their biggest pain: a lack of transparency. In addition, people quickly become nervous when it comes to the largest purchase of their lives.
So the most important thing you can do is to quickly resolve concerns and keep your customers well informed about the progress on the site. Act proactively.
“By involving and engaging our customers more, we positively impact their level of satisfaction. In return, those customers are reacting faster and making decisions more proactively”
Damien Janssens de Bisthoven
Project Manager BESIX RED
Also, remember that creating peaks during the construction phase will offer you a buffer for the delivery phase. After all, this is another typical moment where satisfaction rates can take a hit. The customer discovers various details in their new home that are not 100% in order or according to their expectations. At that time, the peaks from the past months help to temper the negative experience. You have built up a buffer of trust.
Finish with a bang
It’s important to close the sale with a final peak. If this isn’t possible when handing over the keys, consider which added value you can offer afterwards.
Let’s take IKEA as an example. Passing by the register can hardly be described as a high point in the customer journey. Yet, a few steps further, they manage to make your jaw drop. One last time they reassure you: “We are the cheapest”, while customers are stuffing their stomachs with 70 cent hotdogs.
Many developers already offer a nice bottle of champagne at the end. Others even dare to go a step further… Project developer Fenixco, for example, organises a BBQ for its customers upon delivery of the project.
You can be creative and it doesn’t have to cost much, but make it personal. Just think of a gift voucher for a local interior design store or … IKEA.