As the multifamily industry continues to adopt more sophisticated technology solutions, it faces an inevitable problem: too much data and not enough organization. At OPTECH 2018, Tim Bruss of Hamilton Zanze said it best, “…we are swimming in data.”
A practical strategy to data management will prevent your organization from drowning in a sea of meaningless numbers. Brandy Daniel, of BH Management stated that their teams reviewed 20-30 reports a week just for one or two metrics that mattered. Over time, they worked together to identify the most important metrics and were able to reduce reports down to 2 or 3 – with the information shared having a more direct impact on the business. This “less is more” approach is a growing trend in multifamily.
At Knock, we are focused on optimizing sales and marketing performance for multifamily property management companies. In countless conversations with our customers, three metrics come up regularly as managers work to better understand and optimize leasing performance across their portfolio.
1. Understand Exposure Timing and Unit Mix
Identifying exposure of both current and potential units is critical in limiting the impact of vacancy loss. Exposed units can be defined as those which are currently vacant or have tenants which have given no intent to renew. Potential exposure represents that at a given time in the future — let’s say 90 days — X amount of units will be vacant and will not generate revenue.
Exposure risk can be spread across the year by varying lease lengths, but the reality is that leasing teams won’t truly know if a unit will sit vacant until the 90-day renewal notice is sent. Not good. Let’s look at what you can do about that.
2. Timing and Conversions Across Funnel
With an understanding of which units will be vacant and when — managers can focus on building the pipeline needed to fill those specific units. Understanding historical funnel performance will allow managers to proactively ramp up marketing spend to generate the necessary leads.
Leasing an apartment is a high-touch sales cycle and lead-to-lease conversion performance can vary widely across communities. So when should marketing begin? Lead-to-lease conversion timing benchmarks across the portfolio is a good place to start, but you need to drill down into the community and unit-specific performance to uncover any adjustments that need to be made. For instance, if a community’s average lead-to-lease conversion is 30 days, but 1-bedroom units facing South take 60 days, the marketing for those units should begin sooner to accommodate for the longer sales cycle.
Pro Tip: Leasing agents should be taking notes of prospect comments, and opinions of specific units during tours. This will allow your team to develop characteristic profiles for units over time and may shed light on highly marketable features or prospect sentiments. Check out Knock’s solutions for Leasing Teams.
3. Spend Performance
Envision this scenario: Unit X will be vacant starting February 1st and it has a typical conversion time of 30 days — how much do you spend to market this unit? The Answer: More simple than you would think! 🙂
Establishing cost-per-lease and cost-per-lead benchmarks are helpful tools to use when determining what to spend to fill vacant units – and a successful CRM should provide full transparency into this information. Cost-per-lease benchmarks multiplied by total available units establish a good estimate of the marketing budget needed to fill units. This budget can be further optimized by utilizing cost-per-lead benchmarks to evaluate the performance of each marketing channel. Simply increase investment in channels driving leads at a cost lower than your average and decrease investment in channels that are more expensive to lower the overall cost-per-lead.
Modern organizations are able to customize sales and marketing approaches based on funnel performance and unit availability. Portfolio and community benchmarks are great places to start, but understanding the unit mix, typical performance of those units, and which marketing channels can most efficiently supply quality leads to fill vacancies will allow property managers to optimize marketing spend and minimize the impact of vacancy loss across their portfolio.