Pricing and Sales: An Interesting Interplay in Multi-family

Selling more is always a good thing, right? Salespeople love it when product is flying off the shelf. They make more money, their confidence leads to even more sales and their companies’ owners see profits rise. Everybody is happy, so what could be wrong with that?

In most industries, that’s totally true. However in capacity constrained industries like multi-family housing, there’s actually such thing as too many sales. If we’re at low exposure and still leasing easily, then the cold, hard fact is that we’re not charging high enough rents. With somewhere in the range of 3.5 million units now on automated pricing and revenue management systems, it’s very common to see good sales volume lead to higher rents which ends up making it more difficult for the leasing agents to rent.

That’s an “elephant in the room” that we need to talk about. Most salespeople only benefit from sales going up; but our leasing associates can sometimes feel like they’re being penalized for their own success. They lease well, so the pricing system raises rents which makes it harder to lease. This is not “normal” in most of the sales world, so we should be purposeful and address this very real situation with our leasing associates. Here are a few things to think about:

• Be authentic and honest with your leasing associates. They’re smart, so don’t try to hide this fact. Be open and honest about it and discuss what it means. Nobody wants something more than when it’s in short supply, so we can authentically point out that the lack of supply can be used to excite prospects about their chance to lease with us.
• Appeal to their sense of competition. Everyone likes playing for the winning team. Instead of feeling down about having to sell a higher rent, appeal to your leasing associates sense of competition by playing up the fact that these increased rents are the result of prospects and customers valuing us. We’re worth it; they’re worth it; our product is worth it
• Rely on your sales system. A good sales system connects with prospects and establishes credibility and trust. Price becomes an easier (not necessarily easy, but easier) conversation when that trust is established. Most sales approaches in this industry say they’re “customer centered” but they’re really not—they’re really about our processes and our products. Make your sales approach truly customer-centered and the value proposition will be received much better by the prospect.

As a supply-constrained product, we should be raising prices when inventory is low. While that doesn’t make the leasing associate’s job any easier, it doesn’t have to be a barrier to their success.