If - like me - you're in the business of demand optimization, you'll know that it's been getting harder and harder to talk about any trend in multifamily without first referencing the ten years of unprecedented growth that the industry has been experiencing. For as long as anyone can remember, residents have been relatively plentiful. That's great news for operators and investors, but a growth environment can paper over cracks in sales and marketing performance.
This inescapable trend was on our minds when we embarked on a new study of lead conversion tactics. A couple of weeks ago at the AIM Conference, we published a new white paper "Converting Leads to Leases." It is an update to a study that we had run previously in 2014 and 2017.
The results of the first study were instructive, presenting a call-to-action for marketers and operators. They highlighted the extent to which operators were failing to implement some of the most effective and least expensive tactics for increasing lead conversion. We updated the data nearly three years later with an identical study, which yielded mostly similar results. The 2019 paper reproduces the methodology from those studies to report back on how the multifamily marketing has progressed in the last five years.
Replicating our 2014 and 2017 research, we generated leads online for 33 different communities through the individual company websites (not through apartment marketing sites). The 33 properties represented mostly the same group of operators from the 2014 and 2017 studies. The set represented a wide range of players—public and private, national and regional, owner, operator and fee manager (and mixed) and with an equal distribution of geographic locations.
As in 2014 and 2017, we contacted one community per operator. We analyzed the same prospect experience touchpoints we did in our previous studies:
We contacted each property, requesting information about a one bedroom, one bathroom apartment. If the website required a move-in date, we set it a month from our inquiry date and specified a 12-month lease.
The details of the research and analysis are available for download in our new white paper, but here, I will share a couple of observations that stood out from our review.
The first - and most shocking - observation was that 18% of the requests did not receive any response at all. Given the cost of generating leads for all properties, nothing lower than a 100% response rate should be acceptable to operators. While this year’s 82% is higher than the truly awful 70% rate from 2017, it should be clear that many operators are wasting expensively-procured demand. That needs to change.
In both of our past studies, we were surprised at how few operators were conducting high-quality email re-marketing drip campaigns. We define these campaigns as a series of automated, contextually relevant emails about the property, designed to engage a prospect who has provided their email address to the operator. Drip campaigns represent a fundamental basic tactic in related industries like hospitality and travel, so multifamily marketers ought to be reaping the benefits of this tried and tested approach.
Based on those insights from 2014 and 2017, we started this year’s research with the hypothesis that we would see improvement from the numbers of properties employing this tactic, given the overall growth in marketing automation technologies. The good news this year is that we did see some improvement - with 27% of properties initiating campaigns, up from 17% two years earlier. However, this is a modest increase at best and almost 75% of properties are missing a big opportunity.
It takes time, effort and cost to generate a lead; but other than the upfront time and cost of developing a good drip campaign, the incremental costs are insignificant. More broadly, our new study tells us that the vast majority of marketers in this space are still not spending adequate time experiencing their lead-nurturing activities from the prospect’s perspective or, worse, aren’t even thinking systematically about how their lead nurturing activities look and feel from a prospect’s perspective.
We hope that you download and benefit from “Converting Leads to Leases”. If inspires you to do nothing else, you should generate leads from your own sources (their website, ILSs, etc.) and then experience what happens exactly the way their prospects do. Remember, the 10-year bull run will come to an end at some point, and when it does, the state of all leasing capabilities will be tested in a way that they haven’t been for a decade.