Quality Control While managing the flow is important to the Kormans, it’s also important to ensure that the quality of the unit is up to the Korman Residential standard.
Between move-ins, representatives from Korman Residential inspect the apartment. If there is a stain on the sofa, the sofa is removed and replaced that day. If the apartment is dirty, the furniture is worn, the bedspread is faded or anything else is unsatisfactory, you risk turning the customer off, explains John Korman. The person who has a bad stay will probably not return, and Korman Residential relies on repeat business.
“You want to impress customers so they come back again,” he says.
That’s why the company has a quality control person, a maintenance person and housekeeping inspect the units. “We want to make sure [our] furnished apartments are as close to perfect as possible,” says John Korman.
Relocation At the end of the ’90s, when Korman Residential was perfecting and growing its extended-stay units, it still had a problem. Its weekly traffic reports showed it was only fulfilling requests for furnished apartments 30 percent of the time, because clients were looking for furnished apartments in locations where Korman Residential didn’t have any.
“We were turning away 70 percent of the potential business. It was driving us crazy,” says John Korman. “The fear became that one of the national companies would service [our clients’] needs, and we might never get them back,” says James Korman.
One painful example was a deal Korman Residential had with Regal Theaters. When Regal was building its theaters in the Philadelphia area, Korman provided corporate apartments to the construction crew. Two years later, when Regal’s business was concluded in that area, the Regal Theater crew went elsewhere.
“They went somewhere else to build their next theater and we didn’t follow them,” says James Korman. “We knew they were going to more places to build more theaters, we had a fantastic relationship with them … and then we let them go. We kicked ourselves. That was maybe the most crystal clear example of how we should work. We didn’t make that mistake again.”
Instead of turning away more business, Korman Residential looked into subleasing units at other communities to accommodate its clients. “It enabled us to convert [more] of our traffic into leases and it has enabled our company to grow, which might be the most important thing,” says James Korman.But, finding apartment owners who were willing to let Korman Residential sublease units wasn’t always easy. “Some of the properties didn’t want us to do it,” says John Korman. “That was the biggest problem. In some cases, it would take us a long time to find a property to work with.” The company realized it couldn’t just go to the local guidebook for an area, and make calls to a leasing office. Instead, it decided to create alliances with owners and managers. Korman Residential joined local and national associations to help build these relationships.
Before the alliances, properties that had low vacancies would charge the company large premiums for their units. “That doesn’t work out so well because it really shrinks the margin of profit,” says John Korman.
With alliances, Korman Residential found management companies on which it could depend. “And once we got a select group [of companies to work with], it made the whole program work a lot better,” says John Korman.