As the multifamily industry moves out of the bull market it has enjoyed for much of this decade, more operators have begun fostering closer collaboration between their pricing and marketing functions. But the way that multifamily companies are organized does not always make collaboration as easy as it might be.
Last week we shared some thoughts on acquiring and managing marketing and pricing talent, gathered at an executive Round Table hosted by Rainmaker earlier this year. During that discussion participants examined the way that multifamily companies are organized – in particular the interplay between revenue management, marketing and operations. Here is an overview of some key elements of the discussion:
What’s With the Silos?
Apartment marketing and revenue management are both activities whose entire purpose is to drive property performance. Revenue management that does not lead to enhanced revenue is a waste of time. Marketing exists to solve any problem relating to the demand funnel.
For the most part the objectives of the departments are clear. However, in some ways, the multifamily industry is typically less-than-ideally organized to support these the collaboration of these divisions. Companies are traditionally structured with marketing, operations and revenue management all working in separate silos, interacting only when leasing takes a negative turn. Marketing focuses on getting enough demand coming in; conversions are the target for sales, while revenue management wants to optimize revenue.
Unsurprisingly these silos often lead to inefficiencies and potentially underperformance. With market conditions changing and rental rates beginning to slow, there is a growing appetite for a holistic organizational ecosystem that facilitates operational efficiencies, advances the overall leasing process and grows the top line. In practice, that means that pricing and marketing departments share data, communicate frequently and work closely together to identify any issues negatively impacting top-line revenue growth.
"Until we can get that wrapped around and say, 'Look, we’ve got one goal in this ecosystem, and this is how we’re going to solve it,' apartment companies will continue to be riddled with competing interests," said an executive at the Round Table.
Why Operations is an Indispensable Stakeholder
Much of the benefit of bringing revenue management and marketing closer together lies in identifying inefficiencies and fixing them. However, the industry cannot understand, or act upon, the nature of opportunities without first understanding the operational context.
Even though revenue management and marketing may be able to identify – for example – when performance of a team member is negatively affecting leasing, they don’t have the credibility to correct it. Together, the two functions may have the data and supporting evidence they need to say that a particular leasing consultant is performing poorly and needs to be let go, but operations is the only department that can handle that situation.
Operations can sometimes serve as a roadblock in these instances. "Normally I find that revenue management and marketing, we’re on the same page. We know what the problem is. It's that sometimes the operator is slower to act on it," said one Round Table participant. The potential cost in performance is obvious.
It Takes an Ecosystem
Still, even though there are instances where operations are the hurdle to bringing departments together, the growing consensus in the industry is that operations should serve as the central hub of the modern multifamily ecosystem. Only in such an environment can the revenue management-marketing partnership truly thrive and operators efficiently identify the right lever to pull to stimulate top-line revenue growth.
According to the Round Table participants, there are several ways to structure revenue management and marketing within an organization. Arguments can be made for different structures, but irrespective of the organizational chart, the key objectives should be fostering collaboration, eliminating overlap of activities and maximizing the speed to market of decisions.
This blog is an excerpt from our 2017 eBook, “Revenue Management & Marketing, The New Power Couple – An executive discussion on the state of revenue management and marketing in the multifamily industry.”
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