I never have understood why we keep focusing on leasing when
one area is so much more important and productive to both occupancy and
cash flow....keeping our residents. My opinion is we have conditioned
some of our people to believe leasing is the primary job they should be doing,
and some of that is in the titles we use. As an example, we have leasing
specialists, leasing associates, leasing consultants, leasing agents,
etc. Maybe there is a new way we should be looking at this position.
I propose we change the title to Resident Care Specialist and here is why. First, as the name implies, the first and most important part of our people is in taking care of our residents. Providing care to them, providing services to them, and making it so they know how important they are to us is critical and being missed. Now don't get me wrong, one of the tasks of an RCS is leasing...when necessary. If we change the mind-set of our people that leasing is secondary and taking care of our residents if first by reflecting this in their title, maybe they will adopt the principles we need for them to in providing service and care. Maybe if we teach them and condition them to take responsibility and accountability for our residents through increased training and education, maybe we will see changes in the retention of our residents. I know many of you are right now saying, "We do this." My response is, "But do they really get it and is it truly working?"
Second, prospects want more than a lease...they want to know they are going to be taken care of after the move-in. The title of leasing "whatever," implies that is their primary job...closing a lease and then moving on to the next person. We condition our prospects/guests with the words what the experience of deciding to live with us is (a leasing event), and through this condition our employees believe this is the most important part of what we do. I believe our prospects will see the title of Resident Care Specialist as not something as an event or a one time experience, but as a process that is more permanent and portrays the potential relationship they are really seeking. I also have an issue with paying leasing personnel a bonus but not paying service personnel for what they have to do...but that's for another blog.
Our industry has experienced many changes, however, the true meaning and value of resident retention has been skimmed over for those not in management roles and remains the same. Interview a leasing person today and get to discussion of salary and one of the questions more frequently asked by them is, "How much is the leasing bonus." I propose a dramatic change within our industry and that is to "stop" paying leasing fees or bonuses and only pay "renewal" fees or bonuses. Some companies have looked at this and talking with regional managers and owners at conferences and workshops they tell me, "It is the only way we can keep good leasing people," and "This is what they expect." My response to this is, "No, this is how we have conditioned them." When asked what other challenges they are facing 9 times out of 10 say either resident retention and/or higher turnover costs as factors most impacting NOI and cash flow. After hearing this I want to say, "Daaah!"
Let's look at it from a financial standpoint for both the team member and the bottom line, and for ease I will use an example of a 300 apartment community. The staff totals an Community Manager, Assistant Manager, one RCS, as well as three in the service department. Let's say we use an easy number of $50 for a lease, and turnover on an annual basis is 40% or 120 apartments. This equates to $6,000 in bonus or leasing potential. On the flip side of this your average turnover costs including vacancy loss, specials, and capital is $3,000 (below the average in many markets, however, an easy number to use). This means your expenses and lost income associated with turnover is $360,000 (yes I said $360,000...you do the math).
Now lets say you offer the bonus not on leasing but on retention only and help them understand and condition them to relate to the primary job of resident retention. A minimal improvement of 5% in retention would mean only an improvement of 15 renewals than before, however, $45,000 in lower expenses and improved income. If I were to say to a team, this is how things have been and the financial aspects of what it means. The current bonus for the team is $6,000 for leasing. How would you like to increase that by $4,000 in the coming year? Here is how we do it. First, resident care is first and foremost and we will start by changing titles from leasing to RCS. Second, take personal accountability for those you move in and build a case based process around them. This means minimal in person communication with your resident every two months, and I don't mean by leaving a voice mail. Truly build the relationship so renewals are not an event...they are a process. Third, increase the retention by just 5% in the next twelve months and tell them what that means....about one additional renewal per month, or JUST 15 renewals over the year. This presents a manageable and totally understandable and reachable goal. Remove the leasing incentive and take the $10,000 ($6,000 original and $4,000 new money). If you are doing the math this equates to $51.28 for each and EVERY renewal the team does at the new renewal rate of 195 apartments. What this also does is make everyone's job easier, marketing costs lower, and expenses reduce or income improves by a net of $41,000 ($45,000 in lower expenses plus the $6,000 you were paying before in leasing fees, less the $10,000 new program). This also increases the property value in just one year at a 5% cap rate by $820,000. (Now I have the owners and upper managers attention).
We have changed with technology and how we market our communities and automated leasing and responses. We have been provided with software that does not require for us to think about rental rates. We have gone to texting versus talking and dependent on the internet for where people find us. What we have forgotten about is the "people" part of this and what that can mean to the bottom line. Maybe going back to the basics of service, resident care, and personal communication can still have meaning and value. I believe it does, however, it is going to take a new way of thinking...or is that an old one?
I propose we change the title to Resident Care Specialist and here is why. First, as the name implies, the first and most important part of our people is in taking care of our residents. Providing care to them, providing services to them, and making it so they know how important they are to us is critical and being missed. Now don't get me wrong, one of the tasks of an RCS is leasing...when necessary. If we change the mind-set of our people that leasing is secondary and taking care of our residents if first by reflecting this in their title, maybe they will adopt the principles we need for them to in providing service and care. Maybe if we teach them and condition them to take responsibility and accountability for our residents through increased training and education, maybe we will see changes in the retention of our residents. I know many of you are right now saying, "We do this." My response is, "But do they really get it and is it truly working?"
Second, prospects want more than a lease...they want to know they are going to be taken care of after the move-in. The title of leasing "whatever," implies that is their primary job...closing a lease and then moving on to the next person. We condition our prospects/guests with the words what the experience of deciding to live with us is (a leasing event), and through this condition our employees believe this is the most important part of what we do. I believe our prospects will see the title of Resident Care Specialist as not something as an event or a one time experience, but as a process that is more permanent and portrays the potential relationship they are really seeking. I also have an issue with paying leasing personnel a bonus but not paying service personnel for what they have to do...but that's for another blog.
Our industry has experienced many changes, however, the true meaning and value of resident retention has been skimmed over for those not in management roles and remains the same. Interview a leasing person today and get to discussion of salary and one of the questions more frequently asked by them is, "How much is the leasing bonus." I propose a dramatic change within our industry and that is to "stop" paying leasing fees or bonuses and only pay "renewal" fees or bonuses. Some companies have looked at this and talking with regional managers and owners at conferences and workshops they tell me, "It is the only way we can keep good leasing people," and "This is what they expect." My response to this is, "No, this is how we have conditioned them." When asked what other challenges they are facing 9 times out of 10 say either resident retention and/or higher turnover costs as factors most impacting NOI and cash flow. After hearing this I want to say, "Daaah!"
Let's look at it from a financial standpoint for both the team member and the bottom line, and for ease I will use an example of a 300 apartment community. The staff totals an Community Manager, Assistant Manager, one RCS, as well as three in the service department. Let's say we use an easy number of $50 for a lease, and turnover on an annual basis is 40% or 120 apartments. This equates to $6,000 in bonus or leasing potential. On the flip side of this your average turnover costs including vacancy loss, specials, and capital is $3,000 (below the average in many markets, however, an easy number to use). This means your expenses and lost income associated with turnover is $360,000 (yes I said $360,000...you do the math).
Now lets say you offer the bonus not on leasing but on retention only and help them understand and condition them to relate to the primary job of resident retention. A minimal improvement of 5% in retention would mean only an improvement of 15 renewals than before, however, $45,000 in lower expenses and improved income. If I were to say to a team, this is how things have been and the financial aspects of what it means. The current bonus for the team is $6,000 for leasing. How would you like to increase that by $4,000 in the coming year? Here is how we do it. First, resident care is first and foremost and we will start by changing titles from leasing to RCS. Second, take personal accountability for those you move in and build a case based process around them. This means minimal in person communication with your resident every two months, and I don't mean by leaving a voice mail. Truly build the relationship so renewals are not an event...they are a process. Third, increase the retention by just 5% in the next twelve months and tell them what that means....about one additional renewal per month, or JUST 15 renewals over the year. This presents a manageable and totally understandable and reachable goal. Remove the leasing incentive and take the $10,000 ($6,000 original and $4,000 new money). If you are doing the math this equates to $51.28 for each and EVERY renewal the team does at the new renewal rate of 195 apartments. What this also does is make everyone's job easier, marketing costs lower, and expenses reduce or income improves by a net of $41,000 ($45,000 in lower expenses plus the $6,000 you were paying before in leasing fees, less the $10,000 new program). This also increases the property value in just one year at a 5% cap rate by $820,000. (Now I have the owners and upper managers attention).
We have changed with technology and how we market our communities and automated leasing and responses. We have been provided with software that does not require for us to think about rental rates. We have gone to texting versus talking and dependent on the internet for where people find us. What we have forgotten about is the "people" part of this and what that can mean to the bottom line. Maybe going back to the basics of service, resident care, and personal communication can still have meaning and value. I believe it does, however, it is going to take a new way of thinking...or is that an old one?
