LRO

Is anyone using the LRO? We are a test property for our company. I don't think it's a good system. For example, I had a prospect who wanted to move in January. There was a $40 difference in the price (in the exact same tupe apartment)between moving in now and January. How do I sell a $40 difference and expect the prospect not to feel penalized for wanting to move in January? My AM said we should just give them the current price no matter their move in date. If we're going to ignore LRO's pricing, why use that system instead of the GRIP - which works just fine in creating urgency? I'm just afraid that the company has already invested too much time and money into the LRO to now listen to any negative feedback about it.

Having transitioned to and worked on LRO, I will tell you that I prefer it! Give the system time to work and I think you will feel the same way. It can be quirky at first, but the prices will adjust - if you get a few people who want future dates that tour but don't rent, LRO will adjust. Just give it time.

So how many lost sales are acceptable while the LRO works out the kinks?

I don't know Whitney. It depends on how your management company has LRO configured. If I remember correctly, it took a month or two to stabilize and learn your patterns. Entering all traffic and phone calls is critical so the system can learn and adjust. It's fusterating at first, but it gets better. And...the good news is that if people aren't looking for a few months out and you sold them on your property, let them know that prices change and that you will keep in touch with them so when prices drop, they will be ready.

Right now, I'm just keeping track of all the sales I've lost because of the LRO pricing. Prior to our property being a guinea pig for the system, I was averaging 2.4 apartments a day since I started 6 months ago. Our traffic hasn't changed even though it's supposed to a "slow" time of year (I have 4 move ins this week). But I have lost some people because of the LRO pricing. People don't want to be penalized for wanting their home when they want it. And they can go somewhere that doesn't do that. I think it should be okay to say a system doesn't work for your specific property. After all, that's why they're testing us on it. So I'm hoping my input will be valued.

Hey Whitney - you have a reply on the MFI Fan Page: www.facebook.com/MultifamilyInsiders

Whitney,

I am very surprised by your comment! Since I started your property on LRO the occupancy has increased 4% and your trend has increased 3% so it looks like the product is working for someone in your office. I know it is difficult to be a test property but your asset was chosen because of the great attitudes of the staff and the ability to dig in and help us work out our growing pains.

Happy Leasing!
Carey Nelms
RVP for BH Management

Whitney,

The change to LRO seems to be frustrating in the beginning because it is not what we are used to. It is an effective tool for increasing leasing and will be great once we embrace it. We have been very productive with this new pricing guide so far and are confident that we will continue to be productive in the future. Embrace the change and you will see change. Hang in there!

Jonathan Schipper
Property Manager
BH Management

Not to butt in, but I am a PM in Tampa FL and my property went on it back in May. We have seen a 7% increase in occupancy and an 11% increase in economic occupancy. It's weird to see the GRP steadily go down, but you will make more money. It's also good for companies that don't let you lease far into the future with concessions, even if you have the availability (with my last company we had to lease anything over 30 days out at market rate - we could only offer concessions for current move ins). It can take some getting used to in the beginning, but it takes concession responsibility completely out of your hands, and is a great closing technique as the rate changes daily. We use Yieldstar and it saves their quote for 48 hours, so they have to make a quick decision or take the chance of the price going up. You just have to learn how to sell it. If it is telling you that the future price is $40 higher, that is because it knows something you don't. It is based off of market and availability. You may have several units available now, but maybe only 2 of that type on notice for January. It also assumes that in the time between then and now it will have your other units leased and the rate will have increased. Simple supply and demand. The fewer there are, the higher the rate. Learn how to take a different approach with people. If you are losing people because you are telling them what the rate is now, and what it is when they want it, then don't tell them what the rate is now. Find out their info first and only give them the options that apply to them. If it is brought up, or they call back and find out the current pricing, let them know that it's higher for that time because of the availability, and if they don't act quickly the price will increase more because you are leasing so much right now. You will see that $40 increase jump to current units once enough are leased. If you have the same availibility now as you do then, the pricing should work out to be the same. Also, make sure you are getting them moved as close the the vacate and make ready date as possible. Our system increases the rate for the longer the unit is held. Hope that helps a bit

Corey Norman
Carter Haston Real Estate

I'm curious - how do all of the companies out there using the revenue-enhancing software feel about it in light of all the "don't decrease value" and "never run concessions" arguments? I'm pro strategy so I analyze markets then develop a strategy from there.

Hello everyone. Whitney, you bring up a good argument for challenges with a revenue management model. Where the frustration comes from may not be in the pricing, but in your presentation. I guess what I would ask you is how the prospect even knows what the price is to move in today vs. January? If you discuss today's price with a prospect, and then ask them their actual move-in date you're setting yourself up for potential failure. It's really critical that you do not discuss price specifics until you've found out an actual move-in date first. Our strategy is to discuss a range of pricing at first (if absolutely necessary), and only after finding out a specific move-in date and the actual apartment the prospect is interested in do we quote a specific price. Quoting prices in this way can actually help you in that the Jan. move-in price could be $40 more, but you can also follow up that quote by asking the person if they can move in any sooner as you can offer them a better price if they can. These are tips and tricks you'll figure out to have the system work better for you over time. At first it is definitely a different way to operate, but the pricing model looks well out into the future to determine the pricing and knows when it can push rates.

I say all this assuming the prospect somehow found out about the today rate when they should not have, but I'd like to help you out. Let me know if I'm missing anything and I'm happy to contribute some additional ideas. We use Yieldstar, but the systems are very similar.