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Centralization of Multifamily Leasing: Preferences and Playbooks

Centralization of Multifamily Leasing: Preferences and Playbooks



As we think about the different ways of centralizing leasing activities, we should keep in mind the objectives of the leasing process. That is, of course, to sign leases. But to reach that stage, leasing teams must process many inquiries, relatively few of which will ever convert.

The turnover rate on leases is nearly 50% in U.S. multifamily communities, so filling those units entails substantial work. Conversion rates for a multifamily property typically range from about 5%  to 9%. So, for every hundred leads coming in, perhaps nine of them will result in a lease. For this reason, much of the effort in leasing is spent identifying the most valuable leads. 

Effective leasing has to balance lead prioritization with service delivery. Leasing teams must treat each inquiry the same way to provide consistent service. Information on the lead source, the channel they came through, and the date when they're looking to move provide an excellent basis for lead prioritization. When leasing teams fail to triangulate those three things, they miss the opportunity to identify which leads have the highest value. Yet, companies relatively seldom have a structured way of analyzing incoming leads, which means that their leasing strategies do not elevate the highest priority calls. And that represents an opportunity for most operators. 

The Importance of Playbooks

The key to organizing centralized leasing is the establishment of a leasing playbook, which is simply a set of strategies and processes used to ensure that associates take the right action with the right customer at the right time. The strategy here is to target the lead with the highest probability of converting, and the process is the path that teams should follow to get the conversion.

For example, two prospects come in on a Saturday; one tells the associate that they need to move from their current residence within 48 hours, and the other tells the associate that they can't move in for a month. A playbook guides the associate to prioritize the prospect with the 48-hour move-in window, as they are more likely to convert than the other lead.

In the multifamily industry, the systems and processes that we develop typically do not separate different lead types in this way. Instead, companies take a one-size-fits-all approach when trying to convert a lead into a lease. A playbook based on lead-prioritization enables a different set of interactions, significantly increasing the chances of reaching your goal. 

What You Need in Your Playbook

We've already discussed the strategy of identifying high-probability leads and their role in nurturing a lead into a lease. Still, a couple more elements are essential to your playbook. 

First of all, the playbook must address the life cycle of the leasing process and the prospect's level of engagement throughout each phase. These directions need to be detailed enough to ensure consistent execution during each step from lead to lease and ensure that each step is assigned to the right team members. This dynamic becomes particularly important as we share more activities between the property and centralized resources. With a central team supporting leasing, we can begin to focus on the prospects, their rental history and find out which of our properties they have already visited.

The playbook also has to focus on how we cross-sell properties. If a prospect chooses not to lease in one property that they have viewed, perhaps they will accept a tour in a different one. Handling these cross-selling activities is now a critical function of the leasing playbook. 

Cross selling requires that the leasing team work on a platform (CRM and related technologies) that places the prospect at the center of the process rather than the community. Prospect-centric technology and data structures are also essential for enabling leasing associates to work from anywhere through any communication channel. The structure and organization of the data that supports the centralized process are vital, as they can either constrain or enable your leasing playbook.

Finally, once all of these elements are in the playbook, we'll need to implement a systematic digital means of collecting data from these elements and ensure the completion of the actions defined in the playbook. One of the advantages of centralizing data in a digital environment is that we have better visibility over the whole sales process than we currently do. That trackability enables us to identify specific weaknesses, risks and opportunities in the leasing pipeline, so it must be central to how the technology works. 

Philosophical Question: How Much Automation?

The final aspect of the playbook rests on how much automation we're prepared to tolerate in our centralized leasing function and, in particular, the extent to which the property embraces self-guided tours. When it comes to automation or automated services, we assume that companies will have varying acceptance levels based on how they interpret risk and reward.  

Some companies will be willing to go all-in on automation, stepping to the cliff's edge and risk falling off to find out where the edge is! The operator may push as many tools as possible toward self-guided tours and will likely embrace the highest degree of automation.

On the other hand, many operators will be uncomfortable with a high degree of automation; this could be due to various factors. They may worry that the customer's experience will suffer or be skeptical of the return on investment. In this case, having the ability to ramp up the degree of automation and ease into centralization is key to designing the playbook.

It seems reasonable to expect that most companies will fall somewhere in the middle of this automation spectrum. These companies will focus on increasing both net operating income and improving customer experience. The key is to be willing to change the status quo of how you interact with customers, but not to sacrifice their ability to engage with a live person whenever they choose to do so.

The primary takeaway from this post is that one size does not fit all. There are different approaches to centralization, and each one has its merits and disadvantages. Irrespective of whether companies take it one step at a time or go all-in, the technologies these companies use are the same. 

Even for companies taking incremental steps into this area, it's critical to understand how the total technology package will ultimately work and to devote the time to the thoughtful design of operating playbooks. That is the right way for people to make the right decisions for the long term success of their companies and their customer experience.


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