Social Powered Price Premiums: Revenue Management Likes Friends
Been wondering lately if social media platforms are ever going to factor into the effectiveness of your revenue management system? Quit wringing your brain cells, as the answer is a definitive yes, pundits on the casino gaming side of revenue management offer any clairvoyance into system advancements in the apartment sector (they do). We were intrigued by a recent podcast featuring an interview with The Rainmaker Group’s principal and co -founder Tammy Farley, not so much because of the possibility that social media might be used to create incremental demand (still a longshot in multifamily), but because of the promise of social media in determining overall resident satisfaction and gaining a better understanding as to the propensity of residents to renew, both of which can ostensibly be used to support pushing price premiums relative to market.
Rich Hughes
In short, it’s easier to ask for more rent when you know your residents like where they live and when the alternatives in the market don’t match your demonstrated customer service levels. “I already have an algorithm that uses social media as one of the inputs to generate renewal price,” said Chicago-based AMLI Residential’s revenue manager Rich Hughes. “It’s a logistic regression and looks at transactional behavior and psychographic and behavioral demographics, and social certainly falls within that. You find that on the front side the pricing is somewhat homogenized because you are exposing pricing to the market and saying OK, who wants the product at this price? On the renewal side you have a one-on-one relationship with these people that allows for bespoke pricing, and there area lot of strategic levers based on who they are and what they like that affect how much of a price increase you can push.”
Even if you’re not quite up to programming logistic regression algorithms, gauging resident sentiment via social media (including compiling and aggregating ratings on the sites that have them) offers any operator the ability to better determine renewal rates. “I certainly think that resident sentiment can be measured via social to help determine propensity to renew,” says Stacy Westbay, president of Dallas, Tex.-based multifamily revenue management consultancy Revenue Edge. “Obviously a key area to gain uptick in revenue via revenue management is on the renewal side. If you’ve got really strong apartment ratings or scores or if your company participates in regular resident satisfaction type surveys I think you can certainly gauge what your perception is from your residents and know that you can push rents a little bit here or there.”
Stacy Westbay
Still iffy for the apartment set is whether or not social media can be used effectively as a direct marketing channel, or for targeted marketing to create incremental and variable demand to improve revenue management pricing outputs. “On the gaming side with both Facebook and Twitter you can target very specific demographics for push marketing messages as compared to blast marketing to the general population,” Westbay says. “That is a little bit harder to do with multifamily, where fans of apartment companies on Facebook and Twitter are typically going to be existing residents, not prospects.”
Hughes says that even if social media is going to pull prospects in the door, it can still be tied to guest cards as a way to better to gain inferential data for qualifying and selling applicants. Is Jane Doe checking in at the local BBQ joint? Make sure to point out the fire-pits and poolside grills during the community tour. “That and the final element of social of course is the extent that you can get highly relevant long tail tie-ins for SEO lift. You’re not going to rocket up the rankings and knock off Rent.com because you’ve got Facebook at Happy Acres, but in the domain of long tail marketing, which is probably where the smart operators are looking right now, I think there is a lot of value there in social media.”
Have a killer idea about integrating social media with revenue management? Email me at steve@jtimedia.com
