Created Equal? Leads Aren’t Lottery Tickets
Marketing effectiveness in multifamily housing is often judged by the number of leads generated for a property or portfolio. Strength in numbers, as the saying goes.
Apartment marketers are adept at positioning properties via the internet, social media and more traditional means to generate leads. Technology has made it much easier than in the days when curb appeal and a four-color brochure drove rentals.
However, property managers shouldn’t judge the worth of today’s marketing efforts by the quantity of leads arriving via web hits, emails, texts, calls and other communique. Instead, it’s all about the quality, multifamily professionals say.
“We’re receiving more and more leads,” says Stephanie Versin, Vice President of Marketing at Prometheus. “Quantity is not the issue; quality is the issue. It’s about which leads I should be choosing first over the others. It’s more and more crucial to organize those leads for your team.”
“All leads are not created equal.”
Lead scoring is becoming the holy grail of multifamily
Versin says about a quarter of the leads properties typically receive today are sales-ready. The other 75 percent need additional layers of communication from the marketing team that can be time-consuming and lead to dead ends. Properties that can quickly sift through and identify and close the sales-ready leads have a better chance of building and maintaining occupancy levels, she says.
Lead scoring, a systematic approach to rating a lead and its probability of turning into a new lease, is becoming the holy grail of multifamily. Establishing a score or the likelihood that an inquiry will turn into a transaction is not uncommon in other business verticals.
Ratings are compiled based on numerical or qualitative measures using either user-determined scoring or data driven model. User-determined scoring is created rules based on human observations and subjective experiences; data-driving scoring is derived from statistical modeling.
Either method is being applied in multifamily with intent that leasing teams can better identify and target prospects that are most likely to sign a lease.
“The beauty of lead scoring is it allows you to focus on what really matters,” said Versin, who is among multifamily executives studying potential benefits of lead scoring. “It improves closing ratio because sales team will focus on leads they need to focus on. It’s a time management process.”
Versin says a 10 percent increase in lead quality can translate into a 40 percent increase in sales productivity.
“Lead scoring is a dynamic bridge between sales and marketing.”
Resident information can determine likelihood of signing a lease
RealPage Head of Data Science Rich Hughes, who has been studying lead scoring for the past two years, says certain criteria play greater or lesser roles in establishing a data-driven scoring system.
The model should be calibrated on the volume, variety and velocity of leads and the many sub-steps along the leasing journey to get the most reliable results.
Lead source, phone and email information, guest card content, rent amount, need-by-date, work and apartment geo-mapping and call duration are a few predictive factors that such a system will determine how likely a prospect will sign a lease.
For example, a prospect who calls and emails a property about a unit is more likely to sign a lease than someone who either just calls or emails. The same goes for a prospect who has a new job and needs to quickly relocate to the area rather than someone who is “just looking” or basing a search on rent prices.
“Information is defined as reduction in uncertainty; facts versus opinions,” Hughes says. “We have to go with what it is, not what we want it to be. We use the scientific construct of consilience to bring together buckets of facts and observations about a prospect to see to what degree they agree about the likelihood of a lease being signed. ”
Lead scoring can translate into increased sales productivity
Hughes says revenue management is ripe for activity-based forecasting powered by lead scoring.
“We have an applicant score, and when we roll all the scores together, we get activity based forecast,” Hughes said. “We pass that over to the revenue management system. By giving RMS better information and a deeper understanding of the qualitative nature of demand, it can react faster and capture a price. We’re able to look further into future with more clarity.”
Versin says lead scoring helps property managers minimize the cost per lead and lease. New rents are maximized, as are revenue and lifetime value. Ultimately, rating leads increase operation efficiency, maximize marketing spend and add a dynamic into the multifamily vocabulary.
“It’s going to score and rescore on a daily basis,” she said. “The customer journey is not linear.”
In the big picture, lead scoring will put leasing teams on a fast track to converting the real winners from the losers.
“My team will be smarter, prioritizing their workload,” Versin said. “Knowing that an increase in lead quality can translate into a big increase in sales productivity, you gain insight into whether a deal is likely to close.”
That’s time well spent.