Getting residents to swallow a rent increase has never been easy; but it's more difficult now than ever thanks to today's economic market conditions. In order to successfully increase rents, your team must be ready for battle. They must understand why the increase is necessary and be confident in explaining it, over and over again. They must be prepared to resolve objections and show residents why living in your community is worth a little extra. In short, your team must be well trained!
Start from Day One
One of the most important things to realize is that the selling process starts from the first day of a new resident's lease. If you wait until 60 or 90 days prior to lease expiration to start selling an increase, you will have very limited success. Instead, you must build value throughout the lease term by delivering superior service. "Show value to people every single day, not just a month before their lease is up," says Joel Kaye, "Show them that what they're getting now is worth more than what they're paying-so they'll be willing to accept the increase."
That means that your staff must be well trained in the basics of good customer service from the time they begin interacting with residents. "You can't pass on a rent increase unless you've given good customer service," says Eve Bradford, President of Excel Training and Consulting. "So you have to train them from the beginning of their tenure that it's all about service. You do that through daily training, through interactions with the team throughout the whole training program."
Sue Garcia, says that her company's training is premised on the fact that people will pay a little more for superior service. Therefore, onsite team members know that if they offer that superior service, they can confidently ask for an increase.
Get Their Buy-In
You have undoubtedly had experiences with leasing professionals (to use the term loosely) who weren't really "behind" what they were selling. Perhaps you could tell by the tentative way they asked for the lease...or the way their voice sounded listless and bored when they recited their apartment and community features...or the way they gave up at the first hint of an objection. Hopefully, you've also had the opposite of that experience-the leasing person who believed so strongly in his product, who was so contagiously enthusiastic about its miraculous benefits that he was practically irresistible.
In order for your leasing team to perform like the second type of leasing person, they must "get behind" the rental increase and want to sell it. The best way to get this kind of buy-in is to explain the increase to them. If you fail to do so, onsite people may view it as just another obstacle to their ability to lease and re-lease apartments-or as a misfortune for their residents. "Associates who are not educated in the financial matters of the property tend to 'give away the farm' on specials," says Amy Abdallah, "They extend apologetic empathy to residents and make the manager look like the bad guy-so the manager then has to blame it on the corporate office."
Show them why it's necessary to raise rent in real, numeric terms, not just in vague generalities. Share the budget with them to help them understand the economics behind the decision. "Give them a chart so they can see where the money goes...what percentage goes to services, what percentage to maintenance, to payroll, and so forth," says Eve Bradford. "If they understand how the money is spent, they'll understand why we need an increase." Eve also uses a demonstration to show team members what a difference a $10 dollar increase can make: "Show them a formula for the increase, by unit, by month or by year. Explain that that's the cost of their newsletters, their moving programs, and so forth, so they can see the big picture."
It may also be necessary to remind teams that you are in business to make a profit-that your owners expect to see a return on their investment, and it is the responsibility of every employee to make that happen. Amy Abdallah suggests using a training class that asks associates to meet ROI/NOI by forecasting income. "They soon see that sometimes the only avenue to increased revenue is in rental income," she says. "Making them do that really drives the point home."
The team also needs to view the community's rental rate in terms of value, not price. "They need to understand the value of the product they offer," says Carrie Morelan, . "That it's not just four walls, a floor and a ceiling...it's the service they provide and what sets them apart." Sandra Barfield, agrees: "Train them to sell value. They have to know why you're increasing rent and why you think you're able to do that, what you're giving the resident in return." Sandra suggests challenging the onsite teams to go back to their properties and discover for themselves what warrants the increase. This can be an effective way of building support for an increase on a community-by-community basis.
Another way of gaining support is to have property managers ask their onsite teams: "How much of an increase do you think we can absorb?" According to Sue Garcia, it is not uncommon for onsite staff to suggest an even higher increase than you ultimately decide upon. "When this happens, it can be very motivational for them," Sue says "Because they think 'If I said I could get $25 more, and I only have to get $15 more...that's not so hard.'"
Give Them the Tools They Need
Anticipate the objections your team will receive, and arm them with the information they need to overcome those objections. Some tools that can be useful include:
* A "cost of moving" worksheet that calculates all the expenses involved in a move: phone and cable hookup fees, moving truck rental, a day or two off work, security deposit, etc. Total all the expenses and divide by 12, to show that it will be more expensive to move than to stay.
* A "value by value" comparison showing how your community stacks up to your competitors. This is useful for deflecting the "They're charging less down the street" objection.
* A worksheet showing how expenses have increased. Collect data on your operating costs-vendor charges, taxes, insurance and utility bills, if applicable-and let leasing professionals use that information to explain to residents why the increase is necessary.
* A breakdown of the increase amount by day. Showing that a $25 dollar bump comes out to just under 85¢ a day is a great way to minimize it.
* A bargaining chip. Leasing professionals should have something to offer residents who are facing an increase. It might be simply offering to repaint and clean carpets, or to replace their vinyl flooring or their kitchen sink. Or it might be refunding part of their security deposit for each year of residency. It doesn't matter so much what it is-the idea is to show residents that you value their residency and want to make them happy.
* Encouragement. Fielding resident objections about a rent increase can be frustrating, and lead to employee burnout. Be sure to have your onsite managers build in opportunities for "venting" and for morale building. Also, be sure your onsite managers know the importance of listening and responding to associate feedback. "Listen to your associates," Sandra Barfield says. "If they're getting stressed out because they're getting all these objections, the property manager must be able to act on that. Otherwise, you will get the burnout."
Make Sure They Feel
"I think the number one thing they have to have is confidence to overcome the objections," says Sandra Barfield. "You have to get them comfortable with what they're selling. They have to have that level of assurance to be able to justify an increase." Sandra says that level of confidence comes from being well trained in the basics. Her company accomplishes this through classroom training; supplemental, position-based workshops, weekly meetings of onsite teams, and a two-hour "leasing blitz."
Sue Garcia agrees with the importance of a firm foundation in the basics. "Being able to handle the telephone, e-leasing, onsite presentations comfortably...all those kinds of things add up to a leasing consultant's confidence," says Sue. "Which will help them know how to handle themselves whether it's a big increase or a small one."
Sue also notes that one great way to build confidence is to let team members practice. "One of the things we do in the training environment is to let staff 'try things on' in a safe or protected environment," she says. "We put them in role-playing situations, and let them practice handling resident objections. That gives them the chance to work out any kinks in their presentation and feel comfortable with it, because if they're not comfortable doing it in real life, they won't be able to."
Your community's continued success depends on receiving the maximum return on your investment. Selling a rent increase is a tough job; but a solid strategy, that brings your team on board from the start, will make it much easier. Start from day one, get your team's buy-in, give them the tools they need, and make sure they feel prepared. The best sales tool you can possibly have is a team that's totally sold on the idea they're tasked with selling!
By Tami Siewruk
Tami L. Siewruk began leasing apartments more than 20 years ago, and has since held positions up to and including Vice President of Marketing. Now founder and Chief Imagination Officer of Multifamilypro, Inc., Tami specializes in solutions that increase occupancy, rents and traffic while reducing resident turnover. Multifamilypro.com