Tandi manages the Marketing for 54 properties and over 14,000 units in the Eastern Division at BPA. Her responsibilities at Berkshire include Marketing, Sales, Customer Service, Management, Retention, Development and Motivational Training. Tandi oversees Media/Advertising/Image/Brand positioning and development, Marketing Collateral, Internet Advertising, Marketing, Sales, Operations and Customer Service Promotions and so much more!

We’ve heard several different versions of this question in the last 12 months – an interesting question on our LinkedIn group’s discussion page from  Tandi Tucker Toni, Director of Marketing–Eastern Division at Berkshire Property Advisors:

“Our communities have been using a posting tool–www.gogopin.com to create ads to post on Craigslist. Recently these ads have been flagged/removed as soon as we post. Any ideas why this is happening?”

Tandi is the Marketing, Sales, Training and Motivational Guru at Berkshire with over 17 years of Property Management Experience.

Tandi manages the Marketing for 54 properties and over 14,000 units in the Eastern Division at BPA. Her responsibilities at Berkshire include Marketing, Sales, Customer Service, Management, Retention, Development and Motivational Training. Tandi oversees Media/Advertising/Image/Brand positioning and development, Marketing Collateral, Internet Advertising, Marketing, Sales, Operations and Customer Service Promotions and so much more!

Please respond here, or on our LinkedIn discussion group page.

Is revenue management just a “black box?”  Have the technical challenges been solved in creating a software that can optimize the rent yield in apartment communities?  What’s the math behind revenue management?  A new technical white paper answers these questions and many more.

In a recently published white paper, “The Implementation of an Apartment Dynamic Pricing System,” Dr. Jian Wang, vice president of research and development for The Rainmaker Group, describes in great detail the implementation of an apartment dynamic pricing system with particular emphasis on setting optimal rental rates for new leases. The system he describes “has been helping several leading apartment operators offer prospective tenants a menu of rent options for the last six years. It sets the optimal rents everyday, which are presented in the form of unit type, move-in week and lease term.

Click here for entire white paper

Apartment operators struggle with a myriad of issues, one of the most important is setting rental rates for new and renewal leases. Traditionally, rents are typically set with the goal of achieving market share, maintaining occupancy and remaining profitable. Rents are determined by various factors including market condition, competition, condition of property, and vacancy rates. Management experience also plays a role in determining rental rates.

Revenue Management (RM) has emerged as another way to determine lease rates for apartment operators. This methodology uses data-driven pricing to find the optimal price for individual apartments based on current and forecasted market conditions.  Apartment Revenue Management Systems (RMS) is a rapidly growing trend for setting rental rates in the apartment industry. Once limited to the airline and hotel industries, RMS has seen significant growth in the apartment industry since multifamily-specific software hit the market several years ago.

The article includes a study of the characteristics of apartment rental firms compared to hotels from a revenue management perspective. The characteristics that apartments and hotels share:

• Both are perishable products (they are worthless until they are occupied again)
• Both have constrained supply (there’s only so much to go around)
• Both are effected by advance consumption decisions (customers reserve product before using)
• Both have censored demand observations due to product availability and/or pricing constraints

However, the apartment industry does distinguish itself with the following characteristics:

• Longer lengths of stay
• Fewer transactions
• No repeat customers
• More renewals
• Riskier decisions
• No group booking
• No walk-ins
• Concessions

Dr. Wang outlines his expert view on the design of an optimal multifamily revenue management system with modules including:

• Data Aggregator – links the property management systems and the RMS
• Statistics Operator – estimates a number of business statistics based on the aggregated historical data
• Demand Forecaster – predicts the remaining unconstrained demand for a finite planning horizon, which will be fed into the Rent Optimizer module
• Supply Forecaster – predicts the number of units available for lease for a finite horizon of future weeks
• Reference Rent Calculator – estimates reference rates
• Rent Optimizer – calculates optimized rents from which the optimal rental rates are derived in the Rent Recommender module
• Rent Recommender – module that recommends optimal rents by disaggregating optimized rents

Dr. Wang has more than 16 years of experience in mathematical modeling, system architecture, and implementation in engineering and software vendor industries. He’s a demonstrated leader in operations research and is published in several top journals.

Click here for entire white paper

The multifamily industry spends around $170 per unit yearly on marketing costs – over $50,000 annually for a 300-unit property, or $1.7 million per year for a 10,000-unit portfolio. The bulk of this spending goes to advertising, yet the typical owner/manager still struggles to determine if this money is delivering cost-effective results.

Many advertising decisions are made without clear data on how effective different forms of advertising can be. The multifamily industry can change this by using principles of direct marketing to assess which advertising methods will generate the most leads and leases for the least amount of cash outlay.

John Helm, CEO of MyNewPlace.com stresses the importance of consistently tracking the effectiveness of each advertising source in a white paper Cost Effective Resident Acquisition.  His team worked with the heads of marketing for several owner/managers in implementing the recommended analytical approach.

In every case, the owner/manager was able to identify that 20%-30% of their advertising spend was simply not cost-effective. In many cases, they were able to cut this spend, redeploy half the “saved” dollars and replace, or even increase, the number of leads and leases generated.

There are five basic steps owner/managers can take to evaluate most cost-effective lead sources:

1) Identify Sources

2) Determine Common Metric

3) Benchmark Sources

4) Allocate Spend (and Effort)

5) Repeat

Using these basic steps can help multifamily housing managers identify ineffective cost areas of their advertising spend. That money can then be reallocated to more efficient advertising methods, resulting in better leads and leases for the same or lower costs.

Click here to read the full report.

Peggy Hale is the Director of Sales and Marketing at Morgan Properties in King of Prussia, Pennsylvania. Like a Texas Ranger, she works without backup as the sole corporate marketing staffer.  In 2007, when Morgan doubled in size from 16,000 units to 32,000 units in a single acquisition, the company decided to put a heavy emphasis on operational best practices.  With a doubled workload, Peggy needed scalable help to manage their customer relationships and to collect the necessary data to understand which marketing efforts improved NOI.

WHAT THEY DID:

“Morgan Properties decided to hire Level One’s leasing call center to handle 100% of our sales calls” says Hale.  “All traffic is sent directly to their marketing lead management specialists.”  From early data, Morgan Properties found out:

• That 85% of renter prospect traffic came from Internet sources

• By taking calls at all hours, not just during business hours, captured leads increased by 35%

• Accurate data helped them understand what type of media worked best in each market

• They were able to save $300,000 per year by optimizing and re-allocate their advertising spending in just four markets

WHY IS THIS IMPORTANT?

Right now, times are tough for multifamily and the stakes are high.  As a result, everyone connected to marketing should consider using these two principles to guide their marketing efforts:

• Marketing should be statistically or objectively measured and managed.

• Use marketing data to drive incremental revenue by bringing in more renters on the margins.

LEARN HOW YOU CAN:

Join us at the AIM 2009 Conference where Peggy Hale will be presenting a case study on Morgan Properties’ experience, and discussing how a call sales center helped the marketing efforts of a single person can create significant yield.

Need to know more about generating revenue through marketing (and everything else online)?  The AIM Conference is your event.  April 29 – May 1, 2009 at the Denver Marriott City Center.  Hurry, the early registration is only $525, but it ends on December 31.

REGISTER FOR AIM 2009 NOW