Multifamily operators live in a world where demand is determined by factors completely out of their control. Sure, through levers like marketing and pricing, they can affect how much of the demand they capture, but they really can’t affect the overall demand itself. That’s determined by factors that drive household creation, e.g. job growth, divorce rates, and other macro demographic statistics like the number of students graduating college programs each year.
If you still doubt this, just ask yourself whether an apartment company could advertise in a way that suddenly made someone go, “You know what? I think I’ll move next week.” This “structural demand” contrasts with most consumer-driven businesses that can and do create demand (“I will …” “take an extra vacation,” “buy a car a year earlier than I planned,” “go out for dinner tonight,” …) and has dramatic implications for how we approach all aspects of lead management and leasing.
Since we can’t control the total number of potential residents and it’s very expensive to increase lead generation directly, lead capture and conversion is the single most important set of activities impacting how many people lease at your community and/or how much pricing power you have for your leases. And the sad truth is that most communities are mediocre at best, and at worst quite poor at lead capture and conversion.
Consider the following:
- 12-15% of calls come after hours and either don’t get answered or are sent to voice mail where a) the prospect doesn’t leave a
message or b) follow up is at best many hours after this initial lead is generated
- Even during normal hours, 40-60% of calls typically go unanswered with the same (maybe worse) result. The most diligent leasing agent can’t answer a phone while touring another prospect, and almost no one staffs offices for peak demand.
- Typical leasing agent follow up is weak. For example, an August 2014 study of how 31 “name brand” operators responded to online leads showed:
- 16% of leads never got responded to
- 23% of leads don’t got responded to on the same day
- 32% of leads only got an “automated” response (i.e. a generic response that clearly is computer generated and contains little to no customization)
- Only 13% had any regular form of follow up
On top of this, the plain and simple truth is that prospects do not shop and lease the way they did years ago, yet many operators have not materially changed their platform for converting initial leads into leases. Daniel Pink, in his book To Sell Is Human, points out how much more control and information buyers have today. If our lead management process and platform doesn’t meet their expectations, then our ability to routinely capture the business is compromised. And we all know that expectations today are substantially inflated compared to expectations a decade or more ago.
You may be reading this and asking yourself “Why do we need to change? We’re making money.” And that may be true but how much money are you leaving on the table by not addressing lead capture and conversion issues?
Times are good for multifamily operators but as I’ve written before…winter is coming. Assess your situation now. After all, the first step to solving a problem is admitting there is one in the first place.