by Donald Davidoff | Mar 30, 2015 12:00:00 AM
Assessing real performance in multifamily sales is an incredibly hard pursuit. In my post last week, I shared how selling in the apartment world is different from just about any other sales process.
One of the chief differences is the inability to use typical sales effectiveness metrics when assessing performance. Over the last year, as I’ve been sharing our findings and experience about the sales process with hundreds of operators, one of the most common questions/concerns I get is about assessing their leasing team.
While there are certainly some key metrics you can use to assess performance, the nature of multifamily sales requires more holistic metrics. As the saying goes, “What gets measured gets done.”
Therefore, it’s important that you select metrics that cause success. Given the structural demand of our industry, short-term (and even mid-term) performance is driven more by external factors than by anything happening with your organization.
When selecting your metrics, you want to be able to assess the combination of the system and process you provide, as well as the contribution of the individual. Here are the five we recommend everyone track:
1. Time to full production
Turnover is a fact of life in the multifamily industry, and especially as it relates to the sales side. Sales in general has higher turnover rates than other jobs, and the very nature of a job on site means there will be turnover.
While there are certainly things you can do to reduce turnover, you’re not going to eliminate it. Therefore your sales system and training should be designed to get new associates up to speed as fast as possible.
The first trouble we see here is that most organizations aren’t measuring this formally, so they typically have no idea what “full production” really means. For those that are, we are often seeing ramp up times of 6 – 9 months and longer. Your goal should be to have an associate fully producing within 90 days.
2. NPS
Net Promoter Score (NPS) is a valuable, insightful metric that is increasing in popularity. While many operators utilize NPS on an ongoing basis, we find very few who are using it directly to monitor sales performance. There are two NPS measurements that can highlight sales performance:
- NPS by leasing associate.
- NPS of non-residents by associate. There are a lot of reasons that a resident will choose to live somewhere else, several of which have nothing to do with the leasing associate they worked with. That associate should leave a positive impression with all prospects, and this is a great way to measure that.
3. Time from ask to decision
If you ask any highly successful salesperson, they’ll tell you that they don’t worry about “no’s.” What drives them crazy (and destroys operational efficiencies) are the “I don’t knows.” I’m a big fan of the philosophy, tell me “yes,” tell me “no,” just don’t tell me “I don’t know.”
As I shared last week, measurements like closing ratios are not effective multifamily metrics. That said, an effective sales process well executed by associates, will enable prospects to make decisions faster.
4. Predictability
An effective sales operation makes everyone a stronger forecaster. This is helpful, not only from a pricing and management perspective, but also from a learning perspective. Far too often sales happen (or don’t) where the salesperson is less than clear as to why.
Salespeople and leasing associates should be good predictors of what will happen. They should be able to identify the barriers to a sale (and then determine whether that barrier is an objection or a condition and act on that appropriately) and the likelihood of a positive outcome.
When an associate thinks one thing will happen (positive or negative) and another thing actually happens (again, positive or negative) it’s a sign that the associate misread the situation. As they become better at reading signs, they become better predictors and salespeople.
5. RPU Contribution
Revenue-per-unit is not (yet) a common metric in multifamily. Our friends over at MDX are doing a great job of introducing it. RPU is a measurement taking into account both average rents and occupancy simultaneously.
As I shared in more depth previously, an effective sales process should have the effect of increasing demand for your property, thus giving you more pricing power and increasing NOI measurably and meaningfully.
By tracking these metrics you create the dual benefits of increasing operating performance while also becoming a learning organization that continually drives improved performance.