As the multifamily industry continues to adopt new(ish) technologies and platforms for marketing and leasing purposes, the question often comes up: How well are these tools really working? Unfortunately there’s not always a good “short” answer to this question, but we’ve observed that companies who make it a practice to establish benchmarks and track performance are seeing real benefits.
Mary Herrold, Marketing Systems Developer at The Marquette Companies, explained that benchmarks are not just a random number. “We base them on our performance history, industry averages, and other real-world experience,” she said. “We also research information available in industry publications and through research firms like Satisfacts and Ellis Property Services. We do our homework. Our research tends to confirm what we know from our own experience.”
Michael Pickens, Manager of Online Media at Colonial Properties, agrees. “We’re fortunate because the multifamily industry is really open to sharing information with others. We talk to our industry peers to get a feel for industry standards on statistics, conversion rates, leads and traffic. Our benchmarks often take into account an average of the metrics achieved by our peers,” he said. “In addition to informing company benchmarks, when we see what others are achieving we’re motivated to push new initiatives within our own organization.”
Benchmarking works best when you know what you need to measure, and have an accurate means of rating performance on a daily basis. Without it, you run the risk of making changes to your strategies based on false assumptions. “For example,” explained Herrold, “if a property isn’t hitting revenue goals, the first thing people conclude is that they don’t have enough leads. Is that the true problem? You need the right data or you really don’t know what to fix.”
Herrold suggests reverse engineering your benchmarks: For example, if you need to hit a certain income number in the next quarter, first determine how many move-ins you need at what rental rates over the next three months. Then examine the layers. Use historical and industry information to determine how many web hits, leads, qualified leads, tours, applications, leases and move-ins it will take to get you there within the required time frame. Each benchmark must be carefully monitored and adjustments made in order to meet that final goal.
Which raises another challenge: How do you monitor performance benchmarks in a way that will be significant and helpful to your team members? “The data is out there,” said Pickens. “We work with a number of systems to decide whether to divert dollars from underperforming strategies to more productive lead sources or new ideas.” He points out that it can save a lot of time and effort to work with providers that are willing to provide meaningful metrics for their services. “It makes a huge difference when our technology partners are willing to listen to our feedback and be adaptive.”
Technology is key to benchmarking effectiveness. “We can’t rely on a human being to go ‘find out’ every day if performance benchmarks are being met. Ideally, we’d have the technology in place that could identify and inform us when we’re meeting our performance goals, or not,” said Herrold. This can create extra work when technology providers don’t offer robust integrations or meaningful reporting. Using systems that are inclusive, cooperative, and transparent is vital to benchmarking success.
Now that you have your data, what do you do with it? You publish it, of course. Marquette recommends that managers and team members receive daily updates that show precisely what they need to accomplish to achieve their goals. Colonial ranks properties based on performance and posts results for all team members to see. “Our rankings help identify properties that need help as well as top performers,” said Pickens. “This gives weaker properties a chance to learn from what others are doing right.”
Performance benchmarking gives your properties a chance to identify what works, make timely adjustments to strategy, and build success based on real information instead of trial-and-error. “Ultimately it’s a numbers game,” said Herrold. “The more opportunities you have to lease, the more you will lease.”
