July 10

Service Driven Sales

Service Driven Sales

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You see, it’s not just me.  Other industry professionals, journalists and experts involved in the multifamily industry share in my distaste for LRO and other such revenue management programs.  Included below is an excerpt of an email I sent to Multifamily Executive (MFE) Editor Jerry Ascierto in response to his column summarizing his own frustrations with leasing from an apartment community where the rates were set using LRO and he received a HUGE increase in rent after being a loyal customer for many years.  Circled above is the portion of my email that was published alongside other intelligent professionals who also shy away from the revenue management approach.

I wanted to commend you on the thoughts you shared in this month’s editorial column regarding the yield star or revenue management software programs that plague, change and ruin (not our industry, but our site level personnel).  I’ve spoken in opposition to these revenue management programs for several years in various industry forums.  Aside from the fact they turned the airline industry into a cutthroat environment where the quality of product and service continues to decline to new lows, the model has caused many airlines to go under.  Those still in business continue to compete not by providing a superior product or experience (though some do), but by battling to under or out price one another.  With that in mind, let’s look at what it’s done to our industry.  I think it’s telling that when the economy tanked in 08-09, most of the big guys once touting the revenue management programs shut them off.   

 As indicated in your column, the most frustrating thing about revenue management software is that we as an industry are creating and promoting a program that enables our frontline employees to know nothing about their local marketplace, their property or their competitors.  The small talk that once created a bond between a leasing agent and prospect is now centered around a bizarre, odd numbered figure that will be difficult to remember on a monthly basis because it ends in a 3 or 5 or 7 and changes many times per day depending on the level of interest and occupancy at that particular time.  The individual salesmanship and conversation that came with knowing the subtle nuances of your neighborhood is now an afterthought.  It’s now more of a “Here’s your price.  Take it or leave it.” approach.  And when I recruit leasing and salespeople from those who rely on revenue management, I am having to teach experienced salespeople some of the most basic, pedestrian tasks such as market research and compiling a rent survey.  Not to mention, many leasing agents struggle with explaining pricing.  Just last week I was on-site at a potential acquisition for a due diligence walk and the perplexed resident who was renewing his lease asked why his rent had jumped to the tune of $137 per month.  The leasing agent offered “oh, I don’t know, its ‘cause our software tells us.” 

 The key traits of a successful salesperson in any industry have always been good intuition and good service.  Being able to help, but also being able to understand how you can or maybe cannot. Let’s just hope revenue management doesn’t do to our industry what it has done to others.  Check out a blog post of mine from back in 2013 talking about this same issue

Call me old school, but I am stuck on service-driven sales. 

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