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Four Common Misunderstandings about Centralized Revenue Management

iStock-944574186There’s an interesting debate we’ve seen start to percolate in pricing and revenue management (PRM) these days—whether to have pricing authority centralized or whether to decentralize it. From the examples we’ve seen with clients and prospects, there seem to be three approaches:  With centralized pricing, there is a team of PRM experts in the headquarters (or home office) generally regarded as having pricing authority. They may (should) collaborate heavily with the field, but in the end, they control the process and the data flow.  With decentralized pricing, pricing authority is delegated to the field. This can reside solely with operators/sales teams or it can be structured such that a divisional or regional VP has her own pricing person collaborating with her team.  A third option we’ve seen involved establishing a centralized PRM team but leaving pricing authority clearly in the hands of field operations/sales. In this scenario, the central PRM team acts more like a set of advisors or internal consultants as opposed to controlling the process the way a “pure” centralized approach would.   The case for decentralization   Often, the preference for either of the latter two comes from a desire to “empower” the field to control their own fate. They get bonused on business results, so the logic goes, “Why not give them full authority where they have responsibility and get rewarded (or punished) accordingly?”  There are some compelling elements to that thought process. It makes sense, for example for pricing to “live” closer to where the customer is. Pricing can have a more intuitive understanding of local market conditions and make decisions more quickly when pricing associates ar......
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My New Year’s Resolution: Get Systematic About Team Development

iStock-871106192For my New Year’s resolution, I want to focus on how to better develop associates and create environments in which they will be successful. In short, for my own company, “make it less about me,” which I can’t help but notice is also critical for our clients. The more success is based on a single leader’s energy and knowledge, the less stable that success will be—whether just for one department or for an entire company.  So how can we make success something permanent and less dependent on us individually? It’s definitely not easy, but I think it’s clear. It rests on 3 inter-related tasks:  Find the best players  Train and develop them  “Build the genius into the system”  Find the best players  This may sound a bit trite, but that doesn’t make it any less true. You can’t rely on people unless you recruit the best. Throughout my career, I’ve found the following to work the best:  The best hires are people I already know. So, the more people you know, the better your ability to hire. It’s why I have always believed in going to industry conferences and events. It’s why I’ve done things like form local user groups. And it’s why “networking” is more than an excuse for getting out and meeting colleagues in and outside of our company.  The next best option is to hire people who someone on our team knows…not because we asked for referrals but because they came organically. Create an environment where people want to be on your team, and they will attract the best of their friends a......
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Spotlight Interview: Chad Greiwe of Gene B. Glick Company

ChadGrieweTwitter (1)Chad Greiwe is what you could call a jack of all trades. He’s the executive vice president of operations at the Gene B. Glick Company, one of the largest privately held real estate ownership, development and management firms in the country, with more than 20,000 units in 13 states. At Glick, Greiwe is responsible for strategic planning and oversight of the company’s operations vision. The Indiana native’s responsibilities in this role include the oversight of property management, maintenance, information technology, purchasing, training, financial and regulatory compliance, and marketing outreach. Before his time at Glick, Greiwe served as an advisor to the company while working with Katz, Sapper & Miller, where he specialized in serving clients in the real estate industry. Greiwe is a licensed real estate broker, a CPA and a member of both the Indiana Society of Certified Public Accountants and the American Institute of Certified Public Accountants. He is also an active board member at the Indiana Apartment Association and Connect2Help 211.  Like we said, he’s a jack of all trades.   Outside of work, Greiwe enjoys spending time with his family of five and is an avid fan of Hoosier basketball and Irish football.  Your background is in accounting. How do you think your accounting experience helped prepare you for the multifamily industry?  The fact that I started my career at the second largest firm in Indianapolis – based on the number of team members – has really helped me. During my years at Katz, Sapper & Miller, I was exposed to different business owners and their interests on a daily basis. I was fortunate ......
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Spotlight Interview: Linda Early on Landing Her First Job And The Future Of The Multifamily Industry

Linda Early Head shotSuccess equals talent plus luck. No one knows this more than Linda Early. Linda got her first gig in the multifamily industry by chance (otherwise known as sisterly persuasion) after graduating with a Biology degree from James Madison University. Years later, she established herself as a vice president for Archstone. Then, came AvalonBay Communities. Today, Linda is a vice president with Brookfield Properties Corporation - and she has a lot to say on not just where she’s been, but where she - and the industry - are going.    How long have you been working in the multifamily industry?  I’ve worked in the multifamily industry since 1994. After I graduated from college, I stayed with my sister before figuring out whether or not I wanted to go to grad school. But at one point, my sister had enough of me sitting on the couch and told me, “Hey, they need somebody in the office of this complex. You should check this out and get a job.”   What happened next?  I started as a leasing consultant at a 1000-unit property with Charles E. Smith Residential. It was something I really didn’t even know you could have a career in. Even though data and research was something that I was interested in, I’m more of a people person and I liked working with teams. So, I just kind of started and never really looked back.    You worked at Archstone for nearly two decades. Why did you stay so long?  The customers were the focus of the decision-making. The company truly focused on making things better for them. But also, you were able to try things at Archstone - and you were able to f......
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What Would You Do? Tips to Reduce Staff Turnover

iStock-545982614In our new series, we’ll be tackling common and frequently asked questions from operators and operator executives in the multi-family housing industry.   Ask a multifamily operations-focused executive what their biggest concerns are, and it likely won’t take long for the topic of staffing—and by extension, turnover—to  come up. High turnover rates have a number of negative implications for operators, including hiring costs, lost productivity, lower sales results and more.  While turnover is a fact-of-life in multifamily, there are things you can do to manage and mitigate the problem. In today’s installment of the new What Would You Do? series, we’re tackling employee turnover.   Here is a common scenario we encounter:  “I’m the head of operations for a Midwest regional operator. We own 2/3rds of our portfolio and 1/3rd is owned by others. We’ve got 21,000 units with 65 properties. Turnover for our onsite personnel is running at 37-46% and has been increasing over the last several years. What’s more, with lower unemployment, we’re finding it harder to fill positions and the expectations from applicants is increasing. This is impacting our ability to fully cover properties and while our performance is still strong, we’re worried about how this is going to impact us into the future. What would you do?”  This question deals with two important considerations for every employer: how do you get quality employees on your team, and (even more importantly) how do you keep them?  High employee turnover can be a stressful situation, but it’s a solvable problem. Let’s look at ways to address it step by step.  Why Are Em......
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Apartment Leasing: Are You Looking in the Right Places to Differentiate your Property?

City neighborhoodA headline about consumer preferences caught my eye recently. It was from the recent annual meeting of the Urban Land Institute (ULI) in Boston, and it read: "Walkability Now May Outweigh Transit Access in Valuing Location."   The idea is interesting for several reasons: proximity to transit has, after all, been one of the most critical attributes of apartment locations in the urban core for decades. What can be happening in our ever more densely populated cities to push it down the list of priorities? The short answer - according to the panel of industry luminaries including Green Street Advisors and AvalonBay Communities - lies in changing workplace demographics and travel habits. Ride-sharing services like Uber and Lyft have changed people's travel habits in major metropolitan areas, and it means that prospective residents want to be able to walk to other things besides the metro. This insight reminded me of one of the perennial issues with the multifamily sales process: agents habitually under-emphasize the importance of the neighborhood as a deciding factor for prospective residents. How To Differentiate Communities There are broadly three ways to differentiate an apartment to a prospect: the unit, the community, and the neighborhood. Agents and sales training programs tend to focus heavily on the attributes of the unit and the community. The neighborhood, meanwhile, remains curiously neglected as a source of differentiation, and this represents a significant opportunity for multifamily operators. In fairness to operators, getting ready to sell the neighborhood is trickier and more nuanced ......
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What Do These Millennial Insights Mean For Your Business?

iStock-862717438A couple of weeks ago we posted the latest in a series of blogs about the tastes of the millennial generation and how to appeal to them. It's always interesting to lift the lid on this much-discussed generation, especially when it gives us insight into the kinds of experiences that they like - and more to the point, don't. But it isn't always clear what multifamily operators should do to cater to these tastes. Below we relate some of the findings of the previous post to some actionable recommendations. First, let's remind ourselves of the main points that we addressed in our last post, which focused on three main themes that resonated with our researcher: Transparency - where we saw examples of companies going to impressive lengths to disclose everything that a consumer could want to know about the production, ingredients and profits associated with their products. Experience Over Things - where examples like Airbnb are effectively reducing the price of room accommodation and building experience-orientated packages.   Flexibility - in choices, including, for example, communication options which appeal to the desire among millennials to avoid having to use the phone (at least for speaking to people). Transparency and the Renewals Conversation   Since apartment sales and marketing migrated to the web, the flow of information between the buyer and the seller has become transparent in most regards. Look at any well-run property website or ILS and you should expect to see exhaustive detail on the attributes of a community and the unit ......
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Is Your Sales Process Creating a "Buyer-Beware" Environment?

iStock-499094444Fall is upon us. As usual for multifamily operators, Halloween preparations and pumpkin spice treats provide the backdrop to the main event - next year’s budget. As we grind through the seemingly endless iterations of revenue and cost numbers and reconciliation between properties and central teams, at some point the light will appear at the end of the tunnel. At that point, we will get to turn our attention not merely to the goals, but how we will achieve them. We will bring 2018 to a close with a decade of growth behind us. We will enter 2019 facing what is now an annual question "is this going to be the year when things slow down?"  Of course, nobody knows the answer to that question, but there are good reasons to take our preparations for next year as an opportunity to revisit sales. A decade when demand has outstripped supply more often than not has delivered spectacular returns but in many cases, less-than-spectacular sales performance. Why Multifamily Sales is Different The challenges with multifamily sales are manifold and well-documented: it's the only industry that I know of where sales reports to operations. The cutting edge of sales - the leasing associate - attracts a transient workforce, creating a need for high-volume training of associates to deliver consistent sales processes. However, in delivering a consistent process, we overlook one of the most critical considerations in sales performance: prospects are unique. While it's no surprise that prospects aren't all created equal, our industry has ......
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More on that Strange Creature, Homo Millennius

Millennials I’m an avid reader of The Economist, and I recently read an interesting article on how marketers are trying to address the Millennial generation. As readers of past blogs may recall, I’m a confirmed cynic that the generation represents a fundamentally different species (metaphorically); so, I was immediately drawn in by the observation in the article that the reason so many companies struggle to understand the differences between Millennials and other generations “may be because such differences are overblown.”   Ipsos-MORI is quoted as saying that Millennials are “the most carelessly described group we have ever looked at.” The article quotes a MillerCoors failure to sell to Millennials by creating TwoHats, a light-flavored fruity brew they said would appeal to Millennials taste and budget with the tagline, “Good, cheap beer. Wait, what?”  The article does say that Millennials do respond to three big themes: transparency, experience over possessions and flexibility. They cite examples such as:  Everlane, an online clothing manufacturer offering “radical transparency” by disclosing both the conditions under which each garment is made and the profit being earned  A large company, ConAgra, has succeeded in growing sales by eliminating all artificial ingredients from its snack and ready meals  Airbnb is the classic example of enabling more experiences through both reducing the price of stays and selling experience-oriented programs  AllyBank has offered flexibility with checking accounts that have no minimum balances and no fees  Carmakers are experimenting with subscription services, rather than ownership—another example of increasing flexibility even in a durable goods category To test the validity of these thoughts, I turned once again to......
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Allowing Short-term Rentals in Multi-family Buildings: The Benefits and the Risks Based on Real-world Data.

Pillow Case Study - Allowing Short Term Rentals in Multifamily Buildings-1Just yesterday, Pillow Homes released a white paper I authored, “Allowing Short-term Rentals in Multi-family Buildings: The Benefits and the Risks Based on Real-world Data.” Though in full disclosure I was compensated for my work, I am particularly proud of this piece of analysis as it’s the first time I’m aware of any comprehensive case study of what really happens when buildings actively allow residents to sublet their homes out for short-term rentals (STRs). The paper was made possible by data collected on the Pillow Homes platform and the courtesy of two management teams of Denver multi-family communities allowing me to interview them to bring their experiences into the analysis along with the “hard” numbers. The study was made all the more interesting as one of the communities was a stabilized property and the other is going through lease-up, thus giving different perspectives from different operating imperatives.   The findings were fascinating, and I hope will contribute positively to the ongoing debate over the pros and cons of allowing STR rentals. Key highlights of the study include: The communities experienced participation rates from 19% to 32% of their residents Those residents participating saw net average income of $835 and $1,075 per month which helped them offset the growing cost of rent in an urban environment The communities received a monthly revenue share of $112 and $144 per participating resident which went right to the bottom line Through Craigslist advertising promoting the communities’ STR-friendly policies, they received a combined 16 incremental leases (the stab......
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