A few weeks ago we discussed the experience of leasing up big projects and the importance of setting up unit type groupings in the pricing & revenue management (PRM) system. In that article I noted that too many operators neglect unit type setup, creating categories that make no more sense to a prospect than a shoe store that grouped all of its shoes by size alone.
To be effective, PRM systems need to "understand" demand streams. To set the system up for success, therefore, we need to understand unit type demand and build our categories from the bottom-up, rather than the top-down.
There's more to this than revenue management
All of that said, there is one more element to successful leasing that a surprising number of operators continue to overlook: how should floor plans be marketed and sold? What’s so hard about determining floor plans, you ask? All you need to do is take the architectural drawings and convert them into marketing friendly images that can be viewed online or printed as handouts, right?
Wrong. Just as PRM requires us to understand the way that our prospects shop for apartments, we must understand the role of floor plans in sales and marketing. Our goal in defining floor plans should be to provide prospects with information and to help them make informed decisions. But what if we are showing them too many floor plans?
I always recommend taking a look at a community’s website, as if you were shopping for an apartment. If you haven't done that before, I'd expect many of you to be overwhelmed with the number of choices being offered. That's a significant risk as choice overload, also known as "overchoice" - which occurs when there are too many options available - can result in decision fatigue, choice deferral and general unhappiness among our prospects.
Take two nearly identical floor plans, that are architecturally different because one has a balcony and the other does not. On most websites, I see that each of these two homes has its own unique floor plan name and separate images. Now imagine a prospect filtering through all of the floor plans on a high-rise. Rather than marketing these as two distinct layouts, let’s look at them from the sales perspective; they are the same floor plan with the choice of a larger living area or the option of outdoor space.
Making it easier for the prospect
The marketing of floor plans should make the decision process easier, not harder. While it is critical to differentiate these floor plans in the property management system, the marketing departments need to group their floor plans in ways that make it easy for prospects to understand and make decisions.
Not all marketing departments are guilty; some companies have at least executed a naming convention such as A, A.1, A.2, etc. While that is better and more intuitive, I am not sure that each variation needs its own drawing and link on a website.
My preferred design is to take the cues from single-family homebuilders. They provide the floor plan, but off to the side they display additional options if they are available. I have started to see the multifamily industry adapt to this method and it not only provides the customer the information they need to know about variations, but it also consolidates the floor plans into fewer options to prevent choice overload.
The time to act is NOW
Unit type setup is a crucial and under-rated discipline in multifamily asset performance. Through these two articles, I have attempted to present two important sets of considerations for unit type setup: PRM and sales & marketing. Few companies handle the needs of both effectively, and most miss the opportunity to find the balance between too many categories and too few.
The downside of poor configuration - be it suboptimal pricing, frustrated prospects or in many cases both - can be a drag on performance, even in a strong market. At some point markets will soften, competition for residents will intensify, and the habits that we have acquired during these plentiful years will hurt operators. Now is the time for organizations to refocus on setting up properties to compete more effectively for residents.
If you found my last two posts useful, you may be interested in an expert panel that I'll be leading at NAA APARTMENTALIZE in June. "Solving the Pricing vs. Lead Generation vs. Sales Problem" will expand on the overlapping areas of PRM and marketing and will take place on Thursday, June 27th at 5 pm.