In the TV, cable, and Internet industries, there’s a common problem referred to as “the last mile,” the portion of the telecommunications network chain that physically reaches the end user’s premises. The term is, of course, metaphorical, as the actual distance varies substantially by home. But it’s a useful colloquialism for characterizing a speed disruption, or bottleneck, in communication networks.
In these networks, high-capacity “trunks” branch out and eventually feed many last-mile “leaves.” Bandwidth is relatively easy to enhance on the trunks but very difficult and costly to replace and upgrade for that last mile. Hence, the quality experienced in the home often lags that felt in the core network.
The revenue-generation process in apartment operations suffers from an equally problematic “last mile.” In this case, however, it’s not bandwidth delivery on a telecommunications network but, rather, lease delivery resulting from our lead-generation activities.
Many lead-generation activities are analogous to high-capacity telecom-network trunks. A few centralized activities (such as websites and ILS buys) can generate large numbers of leads. The challenge, as in telecommunications, occurs in the “last mile” of the revenue-generation process: those leads are delivered to individual sites that can vary widely in “speed” (or, in our case, success in translating these leads into leases). Proper focus on this “revenue last mile” can substantially improve your leasing throughput.
Here are a few areas of lead-to-lease improvement I’ve seen successful operators implement:
The first step in maximizing lead-to-lease results is to make sure that as many leads are converted to tours as possible. That’s hard to do when phones are answered only 40% to 60% of the time during office hours and are forwarded to voice mail off hours (when typically 10% to 15% of all calls come in). Large companies may debate whether to outsource or in-source a call center, and small and midsize companies can’t really build a professional call center economically, but to me, there’s no doubt call centers more than pay for themselves.
Back in 2009, I personally conducted a 40-community test. In the experiment, I supplied 20 test properties with a commercially available call center. Each property had a pre-selected control property for comparison. The results showed the test properties captured 32% more guest cards than did the control properties, drove a similarly larger number of tours, and had 150 bps better revenue.
I also favor outsourcing, based primarily on my experience that property management companies do best when they focus on their core competencies and hire vendors with core competencies (like running a call center) that support operations.
E-mail remarketing is one of the least-expensive marketing tools in our arsenal, yet very few operators take advantage of this great way to leverage their existing lead base.
Less than two years ago, my company ran a test of 31 national and regional operators and found that 66% of them never e-mailed their leads more than once, and only 3% had what we judged to be an organized, consistent e-mail drip campaign.
As an example, at Arcstone we sent 3 million e-mails a year in a remarketing drip campaign. We spent less than $100,000 total with our vendor, ExactTarget. Many other vendors are available as well, including Constant Contact and MailChimp.
We spend so many dollars to get a lead; it’s a shame not to invest a few more pennies per lead for organized remarketing.
Operators spend a lot of time and money on lead generation, but do we spend enough of either on lead treatment? Given the prevalence of online and mobile activity, managing review sites is an important piece of the sales and service puzzle.
In the past few years, several new and existing vendors have created solutions that make it incredibly easy to manage reputation from a single dashboard, push out responses, and analyze both feedback from our residents and how we stack up against competitors.
In 2016, there’s simply no excuse for compromising your “last-mile” performance by losing leads to poorly managed reputation.
CRM and Lead Analytics
There’s truly a revolution going on in the client relationship management (CRM) and lead-analytics space. Gone are the days of clunky (or nonexistent) CRMs and little direct access to revenue value-chain analytics. Several new CRM products have been released in the past year, with more on the way.
Analytics tools from the major platform players continue to improve, along with new entrants that focus on the revenue-generation platform and overall business intelligence needs. If you’re not familiar with any of these, get out to conferences like the Joshua Tree Conference Group’s Apartment Internet Marketing Conference, the National Apartment Association’s Education Conference & Exposition, and the National Multifamily Housing Council’s OPTECH Conference & Exposition.
Pricing is a key link between leads and leases. Charge more and the lease-to-lead ratio goes down; vice versa if you charge less. Since we can’t just “build more apartments” immediately in response to higher demand and then take them away when demand drops, it’s critical to get the highest “revenue per unit” (RPU) we can. RPU is a never-ending balancing act between occupancy and rate, an act that humans are not well equipped to calculate on their own. That’s where pricing and revenue-management (PRM) systems come into play.
Almost all of the NMHC 50 companies have adopted some form of automated pricing … and for good reason. If you aren’t on the PRM bandwagon by now, you’re slowing down your revenue last mile.
Along with pricing, an operator’s sales model and training program are the most critical determinant in whether the firm’s last mile encourages or inhibits leasing success.
Sadly, I find there’s very little conversation about this topic in the C-suite, and when there is, it’s often in simplistic, “We just need to train our leasing associates to close better” terms. The reality is much more complex. Sales-performance improvement comes from a coordinated effort, in which training is just one, albeit critical, part of the entire sales ecosystem. The full ecosystem includes many components:
• An approach to sales that takes into account the Zero Moment of Truth (ZMOT). The ZMOT is everything prospects do online before they ever talk to a sales associate.
• The recognition that multifamily housing involves “structural demand.” Unlike with many other verticals, apartment leasing associates are rarely competing with the status quo. Prospects are almost surely going to rent somewhere, so the key isn’t to have some killer salesperson but, rather, to serve prospects well enough to earn their business.
• Associates who are genuinely interested in other people and capable of adapting their tone and style to match what resonates best with each individual prospect.
• A training program that leverages the latest in adult learning theory to ensure that behavioral change sticks.
• Feedback systems that match the desired behaviors. Secret shops that use a scoring rubric based on how well the salesperson teaches the prospect something, tailors the messages, and takes control in an assertive but nonaggressive way are far better than those that measure mechanical, script-based behaviors.
• Compensation programs that reward success.
• Leadership development programs for community and regional managers that help develop their skills in coaching behaviors, not just supervising compliance.
Lastly, it’s always important to close the loop on business processes and use data rather than opinions and anecdotes to drive change. This is where prospect (and resident) surveys come into play.
Surveys are inexpensive when done by e-mail, though that mode of delivery can lead to a bias in the response rate. If avoiding bias is critical, telephone surveys are much more appropriate but generally cost a lot more to implement.
Try out the above tips and see if the last mile of your own revenue-generation process can benefit.