#AptChat

Yes, it’s the middle of March Madness, but that didn’t keep us from our regularly scheduled Friday chat. Our latest topic for discussion: Shopping the Leasing Team. There are no shortage of passionate opinions on this subject, and this discussion didn’t disappoint. Here are some of the highlights from the chat:

Are “standard” shopping reports fair? Should companies customize their expectations in their shopping reports?

• David Kotowski: Companies should customize their shopping reports based on what/how they train their associates.
• Jennifer Kennedy: I think customized shops are better than standard, but I think standard are fair.
• Patrick Nelson: There should be a minimum standard for our industry however I think each company should customize when possible.
• Heather Kattelman: Def customize! If we are going to hold them resp for leasing polc that’ what we shop for.
• University Pines: Ours shops via phone 1st scoring out of 100 pts, then actual visit scoring out of 200.
• David Kotowski: The old saying “inspect what you expect” comes to mind here. It’s unfair to inspect more than you’ve told someone you expect.
• Janet Rosseth: Custom reports should follow agent job description closely. If u expect your brand sold a certain way, it should be on there.
• Jennifer Kennedy: Customize – because we have special programs that give us comp. adv. and we want our teams to talk them up.
• Richard George: You should only customize to test specific behaviors that you want to encourage.
• Elysa Rice: We think it’s important to have an industry standard to compare against. mgt co can customize in addition to standards.
• Janet Rosseth: Most shopper services allow for companies to customize around the standards.
• Elysa Rice: Questions like response time should most certainly be compared.
• Joanna Ellis: Most companies we work with (hundreds) customize shop reports to their training programs laying out guidelines and expectations.

Should auto-responders get the same ‘rating’ as a Leasing Pro generated response?

• Patrick Nelson: No. Nothing like a response from a live person.
• Matt Adler: I’d say no. The autoresponder should be counted as a PART of the process but doesn’t replace personal interaction.
• Elysa Rice: Industry standard is 40% NO response at all on internet leads – so by all means auto is better than nothing.
• Joanna Ellis: Many companies send auto resp but also require agent to follow up with personal email and/or call.
• Janet Rosseth: Auto responder is nothing more than an out of office tool. It can be written to engage prospect until agent connects though.

Many companies today are ‘training to the shop’. Is this realistic?

• Kim Cory: NO-what are we training robots here?
• Zack Kestenbaum: I’m an idealist, I think we need to hire quality people and trust them, measuring is good but don’t “train to the shop.”
• Janet Rosseth: Shops should measure the effectiveness of training programs, not to point out faults in our agents.
• Tamela Coval: As a former leasing agent, the shop rep was 1st presented to me as a constructive tool-I carry that positive approach with me 2day.

What if all shops simply had the one question: Would you have leased today based upon the leasing pro’s behavior? Yes or No.

• Carmen Krushas: That’s why the big Q are the benchmark Q’s. need to jazz it up a bit?! totally stagnant. (I do like your question tho)
• Lisa Trosien: My former mgmt co always shopped us 2x on our ‘shop day’ as they believed shoppers had bad days. Wanted to be fair to us.
• Jennifer Kennedy: I don’t trust the shopper on that. They might have said “yes” to everyone because they aren’t truly moving.
• Zack Kestenbaum: Too subjective, what happens if shopper is having a bad day?
• Joanna Ellis: One question is good but sales does require technique too. If you don’t ask, you may not receive!
• Kim Cory: Some also like seeing formal evaluations even all-stars. Shops should B explained & used as a tool 2 help.
• University Pines: That 1 question’s important but responder really needs to be specific & descriptive in the answer 2 get anything out of it.
• Heather Kattelman: I would question this b/c I’ve seen many shops that this 1 ans just doesn’t “fit” w/ the overall opinion of the rest of the report.

Should you ever terminate a leasing pro for a bad shop? Why or why not?

• Kim Cory: NEVER!
• Jennifer Kennedy: No. Sets a bad precedent. Only exception is if they did something illegal during the shop.
• Zack Kestenbaum: Don’t fire based on a shop, fire based on results.
• University Pines: Anyone can have a bad day…not a good reason to “punish” & def not to fire…good learning tool tho.
• Carmen Krushas: Get the dead weight off and shop. Nothing wrong with firing for the right reasons. Who cares if they had a bad day? not customer.
• David Kotowski: For one bad shop? NO!! For consistently bad shops? Maybe. Regardless of the #’s, everyone eventually has to show they know.

Other notable comments and questions to get you thinking:

• Patrick Nelson: How frequently should the team be shopped?
• University Pines: frequency: i think no less than once a month…
• Elysa Rice: We have a client that uses their reports as competitive motivatrs for agents – they win vacay time, bonuses, etc based on reports.
• Janet Rosseth: If 55-65% of our first contacts are from Internet, we should be “shopping” there more frequently.
• Joanna Ellis: Shops are used primarily as training tools but also serve as a form of accountability. “Do they not do or do they not know?”
• Lisa Trosien: Is a ‘national benchmark’, such as what Ellis uses, helpful? It shows you how you stack up…I like it.
• Justin Dunckel: Ellis bechmark is great. Even cooler that they customize results for our small Co. so we can compare vs. the big guys.
• Eric Brown: If I were a leasing consultant and my company shopped me I would seek employment elsewhere, Measure me on Results, not a witch hunt.
• Joanna Ellis: Large co shared how shop drives results-100% shop = double lease bonus per lease. Do I hear “commission sales people”? Results!!!
• Lisa Trosien: If shops are used constructively as a training tool, they are *not* witch hunts.
• Joanna Ellis: Companies shopping regularly can spot trends and use information individually and globally to redirect training. Goal: Consistency.
• Tamela Coval: As Trainer on both owner/manager & vendor side, I used Shop Rep as Training Guide. Not 2 teach 2 the test, but 2 set expectations.
• Megan Yasenchack: It (shops) would help me to improve my skills, being new in leasing I want to learn as much as I can 2 get better at what I do.
• Justin Dunckel: We’re kind of all pretending these shops are 100% subjective about the LC. I sure gain more info than that on mine.

Additional Resources:

• Sample shopping report (provided by Matt Adler)
• 2009 last qtr’s Net Mystery Shopper benchmark (Provided by Elysa Rice, representing 536 shopping reports)

What’s your opinion on secret shops? Good? Bad? Helpful? Are you customizing the shops based on your training program, or are you using a “standard” report? And how does your bracket look so far?

(This week’s #AptChat included 307 tweets from 46 different contributors.)

Last week’s #AptChat focused on the use of revenue management (RM) software solutions to efficiently determine rental pricing, while taking the emotion (and potential for overcompensation) out of the process. With representation from both Rainmaker (LRO) and RealPage (YieldStar) throughout the discussion and apartment operators on both sides of the fence, this turned out to be a very interesting, enlightening discussion.

First, it’s important to understand what a revenue management system is and why apartment operators might want to use one. Here’s how you defined revenue management software:

• Gary Katz: For those unfamiliar with RM systems, they price apartments kind of like hotels price their rooms. Prices can change daily.
• Keith Dunkin: RM systems provide the optimal blend of internal fundamentals and external data. Protects from over reacting to comps.
• Keith Dunkin: Improved Revenue Performance, Increased Visibility, Pricing Efficiency, reduced carry costs.
• Steve Matre: Classic yield mgmt, matches price to demand based on lease exp’s and historic traffic, system sets price.
• Gary Katz: The idea is too not price apts too low and leave $ on the table and not price them too high and leave them vacant.

We gave both Rainmaker and RealPage the opportunity to describe how they derive their pricing. Here’s Rainmaker’s response: “LRO optimizes rents based on supply & demand (traffic, leasing, availability, etc). Market response is measured & prices adjust.” Bruce Barfield also added that “LRO uses electronic web scraping technology to get dynamic prices.”
Janine Jovanovic answered for RealPage: “YS gets factual leasing data daily from 15k+ properties across the US + 5m MPF units + any data entered on site.”

On to the recap!

Are you using revenue management software for your business? If yes, why? If no, why not?

• Jennifer Kennedy: No….not sure that there is enough ROI.
• Donald Davidoff: Been using it for 9 years with multiple tests that prove the ROI.
• Heather Blume: I’ve worked with the software before, and talked to many clients who use it. Some love it, some don’t.
• Keith Dunkin: To echo Donald at Archstone, Rev Mgmt has been in place for years with proven revenue premiums to market in 2-5%, compelling ROI.
• Heather Blume: What mgrs have said to me is that they lose the push/pull ability and it’s difficult to stay competitive sometimes.
• Mark Juleen: Nearly 2 years now with Yieldstar.
• Janine Jovanovic: Managers and leasing staff have told us that they love it because it empowers them to sell more.
• Keith Dunkin: On the ROI comment RM systems have been measured consistently in up and down market and both solutions have proven out.
• Trachelle Spencer: We have been actively using LRO for over 6 years and would not go back to a manual process.

How long does an RM system take to ‘pay for itself’?

• Rainmaker Group: LRO typically pays for itself in a matter of months.

How many units before companies feel they need a “pricing guru” to over see the system? (Asked by Steve Matre)

• James Flick: I would suggest 50+ properties for a dedicated individual in YS. Otherwise, use the consulting services w/ RealPage.
• Janine Jovanovic: You can outsource pricing oversight to us. Makes sense to have your own internal resource at 10,000+ units.
• Trachelle Spencer: We have 44 communities currently on LRO; there are two of us managing them. Doesn’t include Lease Ups.
• James Flick: It is probably more cost effective to outsource to an experienced consultant at Realpage vs. a full time person in house.
• Chris Long: We have 150 properties and 3 dedicated resources.
• Trachelle Spencer: It is important to have pricing professionals and not have the system run independently.

How tough is it to renew someone when their rent can, in effect, go down one day after they sign their renewal?

• Donald Davidoff: Rents can go down in one day on manual systems.
• Janine Jovanovic: This is a function of market conditions not RM – happens with or without RM in place.
• Leigh Curry: What about the person who finsw out their airplane fare has decreased by $100 or hotel room by $50…fact of life.
• Mark Juleen: We have struggled the most with making renewals as fair as possible.
• Trachelle Spencer: We have processes in place to review renewals if necessary.

Along the way, there were a lot of great comments about implementation and the use of revenue management systems in general. Here are a few of the highlights:

• Mark Juleen: We played with it for the first year trying to override too much. We just let it run now.
• Mark Juleen: No more “concessions” or “specials” rents, just adjust both renewal and new.
• Mark Juleen: In 2009 our Rev. was up 2% in Indy while most competition has reported they are down 2%.
• Lisa Trosien: You have to know/learn how to ‘sell’ it to the prospect. It really does simplify the process.
• Janine Jovanovic: Prospects can do math. They like the “check writing” price. You can say “concession” is built into the price.
• Trachelle Spencer: Our communities do weekly competitive surveys. We are finding more accurate pricing online.
• Trachelle Spencer: We have classes offered by our Training Dept. Site Visits, 1 on 1′s, conference calls, webinars, etc.
• James Flick: Have we aligned incentives and compensation for managers and leasing associates to get them to embrace rev mgmt?
• Lisa Trosien: RM is great: it’s fair; it increases the bottom line; it creates urgency. It removes the ‘fudge factor’. I’m a big fan.

One advocate for revenue management, Mark Juleen, laid out in detail why he likes using the program over manual pricing. Here’s what he said:

• MPF does market surveys for us & plugs that data into the system (at least with Yieldstar). No need for bs market surveys.
• I can review pricing and approve changes in about 20 min. for our 12 properties.
• You set a sustainable occupancy and if your team performs average you will usually sustain that.
• If your occupancy dips below the sustainable, then you probably have a people problem.
• If you outperform your sustainable then prices go up and you know your team rocks.

Even though Mark is a fan of the system, he still thinks there’s room for improvement (and others seemed to agree). For more comments on this, and for the rest of the discussion, check out the full transcript.

What do you think? Are you using a revenue management system to set pricing? If so, what has been your experience so far? What can RM systems do to improve their models? Are you evaluating your options? Let us know what you think in the comments!

This week’s #AptChat included 354 tweets coming from 53 contributors. Thanks to all those who contributed this week!