Pricing and Revenue Management (PRM) has been in mass-adoption in multifamily for more than a decade. During that time, an industry talent pool has developed around the core technologies that companies use to manage pricing. The systems are sophisticated, enabling better decision-making and returns at companies that have been successful in incorporating them into their business processes.
Yet our experience tells us that some companies integrate PRM systems and processes into their businesses more effectively than others. While companies may use the same PRM software, many don't get the same returns as other companies that use it. Much depends on the human skills that companies deploy to ensure that the system is configured and operating in the way that it should be.
Given our depth of talent and experience in PRM, clients frequently ask us what they should look for in a good pricing and revenue manager. Our industry often places a heavy emphasis on multifamily experience when recruiting new associates, often for reasons. However, there are compelling reasons to apply different rules to PRM recruits (the discipline of PRM came from different industries, like hospitality and airlines, after all). While awareness of multifamily operations can undoubtedly be helpful, it honestly is not the most important qualification for a successful revenue manager.
Below we have listed the top five attributes that we look for in a revenue manager:
1. First and foremost, we look for a keen analytical mind. Pricing has a profound mathematical dimension to it, so pricing managers should have strong mathematical skills and be very comfortable with statistics and time series math. However, it goes beyond merely math skills; having a keen analytical mind means being able to "see the business in the numbers" and "the numbers in the business." It's about the ability to look over a broad range of information to diagnose the root cause of a challenge and then prescribe an appropriate solution. That, in turn, requires and the ability to merge intuition with real analysis to solve complex problems.
2. Next, we look for a solid business mind. One of the things we love about pricing is how it's at the nexus of so many things. While math skills are critical, so is the ability to understand how the business runs, realize the psycho-social elements of success and to quickly recognize the drivers of success. It takes a solid business mind to avoid getting overwhelmed with the many elements of minutiae that don't make a big difference in results.
3. Then we look for an ability to bridge the analytical and the business worlds. The best pricing managers not only understand analytics and the business, but they can also bridge that divide. They can communicate complex issues to operators (particularly site-level associates) in terms they can understand. They can also take "English input" from operators at all levels and translate that into parameter changes within the PRM software that will drive towards desired results. That ability to translate back and forth is perhaps the rarest skill on our wish-list.
4. The ability to interact with senior leaders despite being at a (sometimes much) lower title is also critical. Because pricing is so critical to business success, pricing managers often interact with senior leadership. It is quite common, however, for a pricing manager to have at best a Director (and sometimes a Manager) title. It's easy to be intimidated by such a difference in titles, yet those senior executives depend on honest feedback. That's why it's not enough for a pricing manager to be able to communicate well with site and regional level associates. They need to be equally effective communicators, sometimes respectfully challenging, senior executives.
5. To have long term success, we also look for someone who is intellectually curious. While good pricing managers have a keen understanding of their pricing world, great ones ask questions that go outside the pure pricing lines. They typically understand how different areas of the demand management platform can overlap and affect performance. This curiosity prevents pricing calls from getting stale. It also serves as a safety net for management who knows there is someone else on the front lines that can and will identify issues early on.
To summarize, we recommend finding people with a unique blend of IQ and EQ (emotional intelligence). Candidates with a great bedside manner have a natural advantage: Think of the example of a pricing manager, who - to be effective - must sometimes push the upper bound of pricing. This can result in some discomfort on the side of operations, who may not believe it is possible to achieve these rates.
The best pricing managers have the soft skills to "sell the dream" and manage the constructive tension that can sometimes exist between pricing and operations without the relationship going sideways. (Tip: if your pricing manager hasn't visited a property in over three months, the chances are their bedside manner isn't great).
You'll notice I didn't say anything about rental housing experience. It's not that such experience isn't valuable; it's just that individuals with the five characteristics above can usually learn what they need to about multifamily housing. Someone with multifamily housing experience who lacks any of the five attributes, however, is unlikely to gain them. In my own career, I've hired several people from outside the industry with deep pricing experience and have never been disappointed. I doubt you will be either.