Experts on the 2013 NAA revenue management panel, held in San Diego on June 20 provided an illuminative discussion on the strategy and best practices for implementing a revenue management system that your staff can utilize to help your business thrive.
Dhar Sawh, the panel’s moderator from Yardi, allowed up front that implementing revenue management systems can be disruptive. When you implement such a system, it will change staff roles and how internal data is analyzed and put to use. To be prepared for operational change and minimize disruption, it’s important to have a solid implementation strategy in place pre-launch.
Key takeaways from the session focused on training and, more specifically, the importance of organization-wide training on a new revenue management system. The panel emphasized the importance of training as a means of empowering your staff to better connect with residents and colleagues.
One key reason for having a training strategy in place has to do with the typical turnover experienced in the real estate industry. If the property is running smoothly because the current staff knows the system but then new hires arrive, you must be nimble enough to train new employees quickly and ensure their understanding of the software is thorough. As Jennifer van Arcken, director of information systems for BSR Trust LLC, pointed out, “There are a lot of parameters to set up on each property and if something gets changed then it might not be giving you the right response.” In short, the onsite team needs to know it is okay to pick up the phone and call their manager with concerns.
Not only do managers and staff need to appreciate the system, but they also must know how to sell the pricing to prospects. Prior to the establishment of revenue management systems, renters were sold on the bottom line. Now the question that matters is “When do you want to move in?” Prospects may be surprised at first when presented with lower longer-term rates based on an earlier move-in time frame. And they’ll hopefully be incentivized to sign a lease to start almost immediately, even if they still need to vacate a former unit.
Your prospects are savvier now, they understand how airlines and hotels operate and that prices will fluctuate. Managers should see this as a time saving device. Without time spent compiling information on how they created their pricing, they, along with their leasing agents, can focus attention on customer service and resident satisfaction. McCarley Davis summed it up: “Our product is worth the price you’re paying. The amenity packages, the unit interior finishes, it’s worth every penny. The system is telling you that so let’s move on to what makes you want to live in this place.”
It's not just front office staff who will need revenue management training. Accountants and controllers also need to understand how prices are being set.
And don’t exclude regional managers and regional VPs; you must train from the top down. It’s important that everyone knows what’s going on, especially if the system calls for a reduction in some rents. Implement monthly pricing calls to set expectations and gain the maximum benefit.
Revenue management is a science, eliminating subjectivity from the pricing process. It’s also not autonomous — you can’t just set it up and forget it or think that you’ll understand how everything works right from the beginning. Train your entire team and set expectations early so you can measure your success. Evaluate the data and develop strategies that allow you to circle back around as needed to adjust, retrain, and regroup.
Thanks again to Kenneth Hodges of Western National Group, McCarley Davis of Epoch Management, Jennifer van Arcken of BSR Trust, LLC, and Dhar Sawh of Yardi Systems for providing such an insightful session.
Elizabeth Giles is the Web Marketing Specialist for Yardi.