Weekly or bi-weekly pricing review calls are a great forum to learn more information on why a property is or isn’t leasing. But sometimes when helping teams the answer isn’t as simple as just “the price”. You may be surprised what may arise as part of these regular communications. Here are three lessons learned from leading these pricing review calls:
1. Managing the Fear is Very Important:
One of the main reasons for having a pricing call is to help the operations team understand your revenue management system’s pricing recommendations. Additionally, these calls assist in soliciting important feedback from the sites.
However, it’s not quite that simple. The natural side effect of these conversations is that the emotions of the operations team come through, and it’s up to the revenue manager to help manage these responses and not overreact. When a revenue management system sees opportunity, the price can rise to a level that feels uncomfortable for the field. Managing the fear by explaining the data behind the system can help, but oftentimes it’s not just relaying the numbers- a good pricing manager needs to be part motivational speaker to achieve that support.
Of course, as time goes on and teams learn to trust the pricing recommendations, the opposite problem may arise. Be careful that your teams don’t get too overconfident, as overriding a revenue management system upwards can be just as detrimental as overriding the price downward.
Amenities are often initially established with a piecemeal approach. On the pricing calls, we look at pricing holistically. While all of those amenities may have made sense when determining the values one by one, stacking them together may out-price most of your demand. Take the time to explore not only why price may be too high but also what is driving this. Ask questions such as: Is the base rent or is the price also impacted by additional add-ons? Do most units have a long list of amenities attached, with the average amenity package adding up to over $150? Which units are leasing?
Remember that the purpose of amenities is to level the playing field so all units lease at a similar pace. If you are mostly leasing units with $0 amenity packages, or only one certain floorplan, this may indicate an amenity issue rather then an overall pricing issue.
3. Listen for Subtle Cues
Let’s add psychologist to the list of revenue manager qualities, because the phrase, “tell me more about that”, should be a common request as one sleuths out the implications of seemingly innocuous comments heard on pricing calls.
Watch for subtle indicators in language to figure out which managers you need to spend more time with to create buy-in, or what comments heard by an outsider could affect leasing. For example, the “haunted” unit may become more of a self-fulfilling prophecy as more of the team refers to it that way.
Sometimes the language isn’t all that subtle. This story comes from a property that I worked with long, long ago. On a pricing call, I asked about a particular longstanding vacant unit and the manager matter-of-factly responded, “Well, that’s the bullet unit.”
“The bullet unit?”
“Yep. A few weeks ago, a gun was accidentally fired in the unit next door. The bullet went through the wall, into this unit, and lodged into the countertop. So this is the ‘Bullet’ unit, and the unit next door is the ‘Gunshot’ unit.”
After a few speechless seconds, I gently suggested we change the nicknames of these units.
I will not contest that community managers have some of the most bizarre and interesting stories, but these are best shared after work over drinks with their revenue manager, not in earshot of residents or potential prospects.
As we always say, anytime you visit a property you learn something new, and pricing calls should be no different!