Closing Marketing Gaps to Compete in the New Normal
Brittany and Marie joined Ethan Lieber on the Latchel podcast to discuss marketing gaps and how property managers can compete in an industry that’s only growing more crowded and more competitive. Ethan wanted to know how a property management company can position itself and build relationships to add the marketing fuel that’s needed to grow.
Here’s what they had to say.
Fourandhalf as Property Management Experts
Fourandhalf is a marketing agency that creates and implements owner lead generating plans for property management companies. The main goal is to help property management companies grow through owner acquisition. They partner with their clients to get found online by property owners, which requires marketing strategies that target their ideal owners. Some of the marketing campaigns Fourandhalf manages include blogs and content creation, websites, SEO ads, and reputation management.
Most Fourandhalf clients already have the foundation of their business set up. A good marketing campaign will work best when the operational side of your property management business is ready to go and ready to grow. Marketing and leads need infrastructure to be effective. Even the best marketing plans won’t work if no one is there to answer the phone and engage with leads.
Over the last five years, a lot of people have wanted to get into the property management space to build a monthly recurring revenue model. Fourandhalf can work with people who are starting from scratch, but it’s a challenge because marketing takes time.
Sometimes, newcomers to the industry believe that property management is just managing homes, but there’s a lot more involved, and that’s why Fourandhalf has also served as a connection hub for people in the industry. If you’re not ready for marketing, this company will put you in touch with the people who can help you build your foundation and prepare for the marketing component.
Acquiring a New Client: Close the Holes in Your Funnel
Most property management companies can think about their marketing and sales process as a funnel. At the end of the funnel is the client. The top part gathers everything that’s needed for marketing. You’re bringing people into the funnel, and you want to make sure there’s not a hole in that funnel. You want to make sure the funnel goes somewhere. That’s how you get marketing to work.
When people come to Fourandhalf, they’re usually doing some sort of marketing already, even if they don’t realize it’s marketing. Most business owners reach out for help when they realize they aren’t sure of what they’re doing, or they don’t have the time to do it right.
The first step of the onboarding process with Fourandhalf is to look for problems in the process that a property management company already has. It might be an unstructured sales process or a simple training issue with their Business Development Manager.
Trends and Mechanics in Property Management
Ethan sees management companies with a demand and appetite for growth. Increasing doors and revenues is a huge topic in the property management industry. Has this led to an investment in property management marketing?
Yes, and for a couple of reasons:
- The real estate market is crazy right now. The higher demand for marketing is partially driven by the fact that house prices are high. With such a hot real estate market, rental property owners are starting to cash out on their investments. While word of mouth and referrals once made up for any natural attrition with a property management company, marketing is necessary now because that attrition is growing. It’s a little bit of panic for some companies.
- Competition is growing. More and more property management companies are arriving in markets every day. Companies have to offer competing prices and services, so that requires a marketing strategy that gets existing and new businesses in front of people.
You cannot control that your clients are selling their home. But, if you’re a property manager who also offers brokerage services, you want to make sure your clients know you can help them sell. That’s part of marketing. The worst case scenario is finding out you’re losing a client after the house is already sold.
It’s easy to forget that providing a service is holistic. It starts with marketing and runs through the entire property management lifecycle. It’s all interconnected. You aren’t going to provide every service for every client by default. You have to let them know what you’re capable of providing, and you have to market yourself all the time.
When property managers think of owner marketing, they often think about marketing as something that happens before the contract is signed.
But, you can’t stop thinking about the owners you already work with.
You continue winning their business throughout the contract period. You can make sure they’re happy with you and you can upsell other services, especially if you have a brokerage. Act as a consultant, not just a property manager. Educate those clients on upgrading properties for better rental values, accessing equity, and other potential wins.
Your marketing should talk to your current clients – not only your prospects.
Find out why they’re in real estate in the first place. Get to know the why and the goals. This makes it easier to communicate with them.
A final reason that marketing is more important than ever is that a lot of property management companies are being more selective about who they work with. They’re choosing to drop clients that aren’t ideal so they can focus on the clients that are going to make them money.
How to Out-Compete the Property Managers in Your Market
Property managers have a lot of local market knowledge.
Ethan discussed this with Brittany and Marie on The Property Management Show.
This advantage can be used to their benefit when they’re competing with venture capital companies and other competitors. There are other ways to position yourself to win more business.
Know who you are and what makes you special.
Often, you’ll have a list of things that sound great to you but if you do a bit of research, you’ll see that those same things are listed as benefits for a lot of your competitors. You have to make yourself and your services really unique. It requires a deeper dig into who you are and what you do, and it’s hard.
A lot of property management websites will talk about providing peace of mind, handling tenant relationships, and increasing ROI. You do those things and you should advertise it, but what benefit do you add that’s different than everybody else? Recognize what’s unique to you.
- Example: Realty Solutions
Fourandhalf worked with Dave, from Realty Solutions, on the company’s new website. He’s a smart guy with a marketing background and when he gets a lead, he trains his team to ask that lead about their exit strategy. He wants to know the end goal. That’s pretty unique, so we advertise it on his website. Dave wants his customers to feel like Realty Solutions is on a journey with them. They talk through the end goal, providing a more consultative role than simple property management. That brings in new business.
- Connect branding to a feeling
How do your prospects feel when they leave a meeting with you? Show them how you provide your management services, but make sure you’re letting them know what it feels like to have a property managed by your team.
Explaining all this in your marketing materials is the hard part. It’s a creative process and you have to test and monitor it constantly. It’s important to be flexible, too, and to be willing to test different messages. Fourandhalf uses Unbounce, which is an interesting algorithm that puts one version of a page in front of a test group and allows you to choose the best version based on different test phrases and explanations.
Reviews Can Show You How You’re Different
It’s hard to find hacks that help a property manager come up with their unique competitive advantages. It usually takes time. However, you can always put your reviews to good use. If you don’t have a lot of reviews, conduct a survey of your current clients and find out what they like best about you.
It’s easy to feel bad about the negative reviews. But, you should use those, too.
Prospective renters and current tenants can be ruthless, so it’s hard for property managers to look at negative reviews without a bias. But, if you look at them objectively and identify the holes or opportunities in your process to make experiences better, you’re closing a big marketing gap.
Fourandhalf works with someone who invites people to have a conversation with her when they leave a bad review. If an applicant leaves a bad review because they paid an application fee but didn’t get approved for the unit, she calls them in and explains exactly what their application was missing or where it was deficient. This helps them. She’s had people go in and completely change their review. It’s not always reasonable to sit down with everyone who is unhappy, but making time to use those negative reviews can change the experience people are having.
Latchel and other platforms can often protect you from bad reviews. Those reviews are collected before they’re published. But, in some places anything can be written and companies have little control.
This is why it’s important to set expectations early. Let applicants know, in writing, what your criteria are and that application fees are nonrefundable.
How to Evaluate What You Should Spend on Property Management Marketing
What you should be spending on marketing is relative. It depends on your business and it largely depends on your area. Marketing a property management business in a state like California is different from some of the markets in the Midwest.
Before labeling your marketing spend as too high or too low, know your business numbers. You need to understand:
- Your annual contract value – how much is a property management contract worth to you?
- Your lifetime customer value – how long do owners stay with you and how much money do you earn from owners over the time period?
These two numbers in particular will give you an idea of what you need to spend. If each owner brings you X dollars over the course of five years, how much should you spend to acquire them?
Go as deep as your data will allow.
If Property Owner A costs $500 to acquire and stays with your company for one year but Property Owner B costs $1,500 and stays with your company for 10 years, you’re working with different marketing spends.
What do you care about more – growing by doors or growing your profit margin?
Most property management companies will care about profits. But, you might be thinking about selling that business in five years, and you want as many doors as possible so you’re acquired at a higher price. Otherwise, the number of doors you have is really a vanity metric. You’d likely rather have higher profits. A lot of management company owners are shifting priorities and seeing this as the ultimate goal.
Here’s some math to help you see how the numbers are so important in establishing what you should spend:
- You close a contract and, based on the rent you’ll bring in, you can expect to make $10,000 a year on the portfolio.
- Your operating margin leaves room for a 20 percent profit, which means you earn $2,000 every year on this one contract.
- You put that money towards marketing.
- You paid $2,000 to acquire the new client, so you’re not making any money in Year 1. But, in Years 2, 3, 4, and 5, you earn $2,000 every year. That’s a profit of $8,000 on this one client who stays with you for five years.
Property management clients who don’t have this data available to them can request a workbook from Fourandhalf. It’s easy to gather the information and you’ll see what kind of calculations to use.
You may be wondering if there’s a rule of thumb for what your ratio should be.
Here’s what Fourandhalf recommends:
A healthy ratio, in general is 3:1. So, your lifetime customer value would ideally be three times the amount you spend to acquire that customer. You’ll have to adjust for your unique goals. Maybe you want something more aggressive. If your lifetime customer value is five or 10 times what you’re spending to acquire new business, it’s a clue that you could be growing more, and a larger spend might be a good idea. (for more on Lifetime Customer Value and other property management KPI’s, check out our KPI blog series!)
Remember that lifetime value needs to be inclusive of your operating costs. A better operating margin gives you room to increase the acquisition costs and you can spend more on marketing. Ethan stresses this because it explains why and how venture backed companies spend so much on marketing. They’ve invested so much in automation, and they have a higher operating margin.
When Should Property Managers Begin Marketing?
It’s never too soon to launch some marketing initiatives because you can start small.
Marketing doesn’t have to be all or nothing. Building your reputation is something you can start right away, and you don’t have to have 5,000 doors to do that. The biggest mistake management companies make is starting too late. They’ve already lost money in client attrition and they’re climbing the wall to dig out of a hole.
Start wherever you are. It’s going to be hard to grow if you’re a property management company without a website or a GoogleMyBusiness page.
Automation isn’t always necessary in the beginning. Foundational pieces can bring in new business as well. Once a company knows who they are and the audience they’re speaking to, they can begin thinking about automating this to do as much as possible with the dollars they have.
Marketing isn’t something you do once and then forget. It’s also not cookie-cutter. Your branding and positioning strategies depend on who you are and your market. Something that works for a business in Florida won’t work for a business that’s in Nebraska.
Property management marketing is a time and financial commitment. Make sure you have the budget to invest long-term instead of starting something and then ending it after a few months. More established businesses understand that better than companies that are brand new and want to hit the ground running.
There is a marketing mindset. If you think you can do marketing for three or six months and that’s all, Fourandhalf will often recommend waiting until you can afford a real commitment. It takes some time for you to reap the benefits of your marketing plans. You can have the best message in the world but if it hits your perfect client at the wrong time, they won’t buy. You cannot think short-term when it comes to marketing because your expectations won’t meet reality.
Sales Cycles and Property Management Marketing
The length of a sales cycle really does vary. Lead Simple runs some great reports and one of the metrics is the sales cycle. It’s hard to track when an owner first saw the direct mail you sent out, but understanding your sales cycle has a big impact on marketing results. If your sales cycle is 90 days, you won’t know for 3 months if your marketing is working. It’s a grind and it takes time.
This is even harder in property owner marketing. There isn’t a large pool of data to pull from, so a 90-day cycle is the earliest you’ll see any results. It could be six months or a year, and that’s hard to wait for. It’s why Fourandhalf tracks what’s working in different areas and for different clients.
Outsourcing your marketing is often more effective because experts can go through the analytics with a comb. If your website is getting high traffic numbers, that’s great. But, if owners looking for property managers only make up five percent of that traffic, you need to make an adjustment. You don’t want to attract tenant leads when you’re looking for owners.
Marketing Success Stories: Real Estate Gladiators
Real Estate Gladiators is a Fourandhalf client with the correct mindset in terms of thinking about marketing as a holistic thing that’s sustaining and not temporary.
They doubled their portfolio after a one-year marketing strategy. Tracy and Katherine took the advice they received and they were engaged throughout the process. But they didn’t stop at marketing. They also understood the value of a solid sales process.
Fourandhalf was helping with the marketing, and Real Estate Gladiators understood the importance of finding clients that fit. They also put processes into place so that when the leads came in, it was clear who on the team was accountable and who should follow up, and when. There was a smooth transition from the sales team to the operations team.
That seamless onboarding process helped to boost reviews because owners were impressed from start to finish. It fed back into the marketing organically. New business was created based on their great systems and processes as well as the marketing.
It’s hard to trust a company for over a year, but when the business doubles, you can’t really question the results. The lesson of Real Estate Gladiators is to trust the process.
Recently, they’ve been acquiring books of business for less because they know their numbers. If they want to buy a certain number of doors from another property management company, they can show the seller exactly how long it will take them to acquire an equal number of doors, and how much it will cost. That has inspired sellers to drop their prices dramatically.
They have a stellar reputation and Fourandhalf loves using them as an example because it demonstrates that marketing results reflect what you’re willing to put into it. This is a collaborative effort. You can’t throw money at a marketing plan and expect it to work.
If you’d like to talk about property management marketing, contact Fourandhalf. Your journey starts with an initial consultation that’s all about where your business is now, and where you want it to go.