Mission: Create a Stellar Sales Force
Advantage:
Just think of the power of money as a motivator. The thought of $200 to $300 per lease could spur your employees to aggressively follow a lead and respond promptly to e-mails and phone calls. “We went from nothing to offering commission to then increasing commission because we realized if you properly incentivize people, they will do a better job,” says Steve Heimler, CEO of Woodland Hills, Calif.-based Stratus Real Estate.
Plus, the extra income can motivate the sales team to work on the weekends–the busiest selling time. “We tend to put the new people on weekends because the people who have been around don’t want weekend shifts,” says Woodward of Laramar Communities. “That is totally ridiculous, because most of the traffic comes in on weekends. Imagine Banana Republic saying, ‘My most experienced salespeople can work Monday through Friday, and I am going to put all the brand-new people on the sales floor on a Saturday.'”
To stay competitive, the multifamily industry needs team members focused solely on sales, adds Heimler. As more companies rely on revenue management systems and other technologies to push rents, only true salespeople will be able to capture these higher rents.
Challenge:
Many industry leaders simply don’t want to create a stellar sales force and instead are looking for well-rounded employees who can do everything from lease to walk the grounds and field residents’ complaints. “I just don’t believe in the ‘eat what you kill’ mentality for the multifamily industry because we ask our people to do too much,” says Lynd of the Lynd Co. “Way back when the industry started, a leasing agent was well-rounded, knew the community, and knew the people. And then it turned into this sell, sell, I only want you selling, and I just think that is the wrong approach.”
Instead of using money as the only motivator, the Lynd Co. focuses on creating a career path for its employees. The company is testing a program where leasing agents get a $1 raise on their hourly wage each time they reach a new level in the leasing program. To move up in the ranks, the employee must demonstrate strong interpersonal skills and leasing know-how. “This way, you create more of a well-rounded team player versus someone who is just truly incentivized by making money,” explains Lynd.
Mission: Maintain a Satisfied Resisdent Base
Advantage:
It’s all too easy for commission-based salespeople to have a one-track mind: Get the next lease and dodge everything and anyone in your way. To make sure employees don’t ignore current residents, Stratus Real Estate is testing a setup where leasing agents’ compensation comes from a combination of their sales results and property-based NOI performance. “This way, the ‘star’ also is motivated to assist with customer service and general operations,” says CEO Heimler.
To encourage employees to maintain strong relationships with residents, companies also are paying commissions for renewals–sometimes at a higher rate than bonuses for new leases. That’s the case at Stratus, where the company values the financial impact of renewals. “We realized that renewals are worth more to us because they avoid vacancy and turnover costs,” says Heimler.
Challenge:
Paying commission for renewals makes a lot of sense, but the logistics can be complicated. Just ask Woodward of Laramar Communities. His company is trying to figure out how renewals will work under the new pay structure. “Do you assign renewals to specific people, or do you do it in a pool [with other employees]?” asks Woodward. A leasing agent usually isn’t the sole reason why customers decide to renew their lease; the decision is typically based on their interaction with the entire property management staff, including the maintenance and cleaning crew.
Despite such renewal incentives, the temptation for the leasing staff to focus solely on sales is still powerful. On-site agents might easily target their energies on prospects instead of helping current residents. “You are going to have dissension in the ranks when you have a manager say, ‘Hey, leasing agent No. 1, go over and do x, y, and z,’ and they say, ‘I am not going to go do that. I will lose four leases because of that,'” says Lynd of the Lynd Co. And if residents are ignored, don’t count on getting too many renewals.