Insight #6: Shift Operational Levers Together—Not Independently
By: Jay Parsons, Andrew Bowen and David Polewchak
Many of today’s apartment community managers and regional managers were not in the business during the last recession back in 2008-2009. That means they experienced nothing but good times until the pandemic hit. In the best of times, “good enough” is usually good enough to meet targets.
Now, most property managers are looking for opportunities to re-accelerate revenue growth in 2021. What’s the best route to do that? This is the type of environment where the best managers will stand out.
Top property managers and asset managers will likely share one common trait: They will have learned from a big mistake in the last downturn and recovery. In that time period, too many operators lacked a cohesive strategy across marketing, leasing, screening and pricing. Goals of one group could be undercut by the goals of another – often putting department heads at odds and holding back performance.
How can operators best move these levers together in a cohesive, connected way to drive the bottom line?
Here are 5 tips to help you achieve success in 2021.
- Be Interconnected, Not Just Integrated. A decade ago, apartment operators were thrilled just to have integrated solutions – meaning the same data moved between different software tools. That was only Step 1. But a cohesive strategy between different toolsets requires more than just integration. It’s about being interconnected. Interconnection weighs the impact and learnings of one technology to improve the performance of another. Holistic decision making is key to driving results and it’s much more possible now.
- Align to Common Goals – and Distinct Parts. We often say we want “everyone singing from the same sheet of music.” Today’s top operators and investors have come to realize what they really want is everyone reading from the same musical score. Each team member playing different parts – bringing their own skills and tactics, not as completely distinct solo acts but in ways that enhance the overall performance. Analytics tools are empowering the operators of today to accomplish this alignment in ways that simply didn’t exist in the last downturn and recovery.
- Get Even More Precise. One huge mistake of past downturns was to react at the asset level rather than the floorplan level. If your two-bedrooms are full but you have exposure issues on one-bedrooms, a decision was previously made across all unit types versus what should have been a more targeted approach.
A better decision may have been to invest in targeted marketing for those one-bedroom renters that you really needed. Then the next step is focusing your leasing team on prioritizing those leads you targeted and considering reducing the price only on those impacted units. Leaving those two-bedroom units (largely) alone, in that example.
- Measure the Domino Effect of Each Lever. Leveraging BI and transactional benchmarking tools allows us to weigh the impact of multiple TACTICS simultaneously against each other. Did the increase in renewal percentage allow us to actually pull back on turn expenses? Did the focused marketing campaign drive more realized leases or just additional leads? Once the leads were in the funnel, did my teams effectively execute in the leasing process? What lead sources translate to the highest-value leases?
- Don’t Operate Screening in a Silo. While you’re focusing on more direct marketing and leasing processes, don’t forget to keep your eye on prospect screening. The risk is too high right now to be reducing any screening thresholds, but intelligent and comprehensive screening can reduce long-term risk and minimize skips/evictions.
To learn how AI Revenue Management brings interconnectivity between marketing, leasing, screening and pricing, read more in this new eBook.