COMMENT In 2003, Warren Buffet led the £1.45bn purchase of McLane Distribution Company from Wal-Mart, after a single two-hour meeting. There was no further due diligence. Berkshire Hathaway’s esteemed leader simply said: “I trusted Wal-Mart, I trusted the people I was working with.”
In 2020, after the obligatory checking of everyone’s mute status, do you think a two-hour Zoom call would have delivered the same swift transaction?
Property transactions are made up of multiple touch points, from early mentions of a brand or individual’s name, to first-time calls and meetings, right through to in-depth due diligence and research. Last month, TrustedLand hosted a virtual roundtable to review how the businesses had adjusted getting to know prospective partners in 2020. Joined by senior experts from the British Property Federation, Cushman & Wakefield, Build Zone and Blend Network, we explored what matters to them when building relationships, what they expect and look for in their virtual interactions, and what can’t be replaced online.
The response, combined with my own quick Twitter poll, was that more online interaction was needed to achieve what is developed in person. Participants in the roundtable unanimously agreed that meeting in person accelerated trust way beyond the equivalent time on video could ever do. As guest Yann Murciano of Blend Network put it: “Eyes tell more than balance sheets.”
Establishing trust virtually
We all need to feel comfortable in a transaction. But lockdown guidelines and personal preferences around social distancing need to be respected. Doing deals doesn’t just stop, so how do we establish the required trust virtually?
In the marketing profession, the number of “touch points” needed before making a purchase is often referenced as being between seven and 15. But the roundtable revealed that figures of anywhere from 10 to 100 is much more realistic before a deal is likely to be done.
Indirect references such as websites, media portals, Companies House, listings sites, social media, video platforms and industry forums were put forward as research resources. On top of this, application forms, e-mails, video calls, phone calls, text messages and social messaging were all considered part of the relationship-building process for stakeholders, whether formally identified as one of their required phases, or the natural fillers in between.
What is needed to “do the deal”?
What interests me, is how many of these are needed to “do the deal”? Has this number gone up when not meeting in person? For fun, I broke it all down into terabytes.
Let’s assume each transactional relationship consists of three 30-minute Zoom calls, a series of 20-minute phone calls, 20 minutes of website research, Companies House and media searching, 20 minutes spent on owned and social media channels, 20 individual e-mails and, finally, downloading a 10-page company brochure and scanned application form.
As a best estimate, this works out at 8.8 gigabytes, which doesn’t sound like a lot to create a transaction. UK pay-as-you-go pricing would value that at around £10 of data. That’s £10 of hard cost to get, say, a £1m piece of land, £2m of development finance or £6m of warranties.
So while we cannot easily jump into a boardroom right now, the value of how we handle our digital communications, our online presence and our video interactions as potential partners, team colleagues and applicants will have accelerated significantly.
With many of our TrustedLand members openly leaning towards online meetings to replace first-time coffees in the future, I can confidently predict that the hour back-and-forth travel time might simply be swapped out for online searches and checks. Lockdown is a good time to think about what they may, or may not, reveal about your business.
Alex Harrington-Griffin is chief executive at TrustedLand
