Embracing Change: How to Adopt a Revenue Management System
Residents are paying more for new leases and renewals at the highest clip since its peak four years ago, according to recent data by MPF Research. Plenty factors into what has become a faster start to 2015 than what many predicted for this year. Simply, it’s a great time to be leasing apartments and getting rates that many once thought were not achievable. Revenue management systems are helping property management companies and apartment owners get more bang for their buck.
Revenue management helps stretch your dollar further
While market conditions are creating high demand and inventory levels are newly replenished, getting maximum rent and profit isn’t always a slam-dunk with manual pricing processes. At a recent industry conference, pricing analysts believe the technology has helped users reduce the pitfalls of leaving money on the table, even in the good times.
For some companies, shedding older processes and taking the plunge to a revenue management system is a big learning curve. Getting familiar – and accepting – a new process can take time, as is the case with any change. But analysts say adopting new technology to drive rents and increase occupancy is well worth the effort.
Revenue management is designed to help avoid ‘emotional trappings’
The roots of the Gene B. Glick Co. run deep, and the idea of adopting a revenue management system three years ago was difficult for some on-site managers and others, says Revenue Manager Brooke Dunn. The company was founded in 1947 in Indianapolis by a World War II veteran who desired to help his fellow GIs build homes for their families. Prior to implementing a revenue management system, Gene B. Glick Co. had primarily relied on basing rates on on things like market conditions, exposure, and sometimes emotions.
Learning a new process, especially one that is relatively new to the industry, wasn’t easy for many, especially in a company that manages 20,000 units in 10 states. There were skeptics, even at the corporate level. Dunn arrived at the company just as the system was about to launch. She said training and collaboration with other departments was critical to achieve a level of understanding of how revenue management systems work.
She spent a great deal of time working with community managers to show how the system determines rates and why the company should use the recommended rental pricing instead of making manual changes. Eventually, the company had some a-ha moments after the system recommended – and the company achieved – rates that were previously thought unattainable. Gene B. Glick Co. doesn’t let those go unnoticed.
“It’s been very critical for us to show how the system has been successful, and to celebrate those successes within our team,” Dunn said. This has helped to build confidence in our ability to show value and lease apartment homes at Glick communities.”
Such is the aim of revenue management systems.
“Revenue management is designed to help operators avoid emotional trappings and overreaction to factors that aren’t impeding actual performance,” said Janine Steiner Jovanovic, Executive Vice President, Asset Optimization Solutions at RealPage, which developed YieldStar, a leading revenue management system. “Revenue management continues pushing the envelope on rents, so you can rest assured you are not leaving money on the table.”