We've probably all done this at some point in our life, either in business or in our personal life: We've seen something that a rival or competitor is doing in their field that seems to be working for them and decided to copy it and see how it works for us.
In the multifamily space, this can take all sorts of different shapes.
You see your competitor down the street has a new fitness center, so you make a note to look into the costs of getting a new fitness center of your own.
Perhaps a rival company decides to start focusing on a new target demographic or type of property and your company follows suit.
You're trying to set rent rates at a new property and to make it easy you just base yours off the rates at the property down the street.
It's a normal, totally understandable thing to do. If you are unsure what will work and your competitor seems to be have found something that does, it's totally reasonable to think you should imitate them.
Unfortunately, there are some significant problems with this approach.
Imitation limits your community in ways that are not helpful.
Here are some of the problems with imitation as a business strategy and especially as a marketing strategy:
Does their idea actually work?
First, you don't actually know (in most cases) how well an idea has worked for a competitor. You can probably get a general idea, but you aren't going to know internal numbers. Maybe they tried this idea and it has actually mostly failed. Are you sure you want to follow their lead?
If it works for them does that mean it will automatically work for you?
Second, even if an idea did work for a competitor, that's no guarantee it will work for you. Maybe their student housing property is successful because there is enough demand to sustain one new student housing property in the area. If you open up a second, you may not have nearly as much success. Or maybe their fitness center improved retention because their resident profile is actually more different from yours than you realized. You simply don't know if the idea that worked for your competitor will work for you.
Wouldn't you rather come up with new ideas that could make you stand out?
But there's an even bigger problem with the imitation strategy: Imitation guarantees that you will never hit on a new idea, that you will never emerge as your own unique community, and that you'll miss out on any original ideas that could actually transform your business if you tried them.
This post from Moz does a good job of explaining what exactly is at stake when you think about this specific issue. When you mimic your competition, you never discover the opportunities waiting for someone to claim them.
What are your options, if not mimicking competitors?
We're going to focus on two primary ways to chart your own path instead of simply copying your competitors:
- Revenue Management
Original Marketing Strategies
The problem that many communities run into is that there is a pre-defined template for doing apartment marketing online.
It goes like this:
- Built a website that has these pages:
- This page includes general photos of the community as well as a few generic, unlabeled floorplan photos.
- This page includes copy that tells prospects about the floorplan and likely also includes a 2d image of the floorplan's blueprint.
- This page introduces prospects to the community and includes the property's contact information and, possibly, links to social media profiles.
- This page is simply a list of the community amenities and typically also stats the pet policy.
- Advertise on 3-5 listing services or more (as your budget allows).
- Posting semi-regularly on Craigslist.
Beyond that, there's a revolving door of supplementary ideas that range from gimmicky local partnerships to long-shot social media strategies.
This strategy works on a very limited basis for most communities and, in some cases, "a very limited basis" is enough to convince a community to stick with it simply because they don't have any idea what the alternative might be.
This, of course, is precisely the problem. The question they ought to be asking is "What kind of buying experience can we build for our prospects?" but instead they are asking "How are competitors doing their marketing?"
How can we make apartment shopping easier?
If you start with this question, then you're on the right track. All the individual tactics we often associate with apartment marketing may still have a place, but they are radically redefined when you begin y asking this question.
Think about the most frustrating things about shopping for an apartment:
- Time spent driving from community to community to take tours
- A lot of people will blow through an entire Saturday or multiple weeknights just touring different properties.
- Lack of information on community websites
- "What's the pet policy? Do they have washer and dryer on site?" In some cases, even the rent rate is not listed on the community website.
- Difficulty keeping track of the apartments you have toured
- "Which one had the kitchen we liked so much?"
There are no shortage of apartment residents—many of whom are probably living in your community right now who could tell you about how annoying the apartment shopping experience can be.
Speaking only for myself, the last time I had to shop for an apartment, this is what I looked like after a day of shopping around:
If you create a buying experience for people that deals with these problems, then you're a step ahead of your competitors even if your marketing strategy ends up looking quite different.
What does that buying experience look like?
Well, it's an experience that deals with those particular problems.
- Walkthrough video tours can cut down on travel time for shoppers by helping them make a decision about an apartment from their living room instead of needing to drive 45 minutes round trip just to decide after 15 seconds that they don't like the apartment.
- Clear, easily accessed property information can help prospects find the information they care about right away.
- High-quality floorplan-specific photography and walkthrough video tours help prospects remember what units they saw during the day when trying to make a final decision.
The big idea is that your website needs to provide as much self-serve information about your community as possible. By doing that, you make it much easier for prospects to find the information they care about and make informed leasing decisions. This, in turn, makes for much happier apartment shoppers.
Original Revenue Management Ideas
Now let's talk about a more sensitive issue: rent rates. It's sensitive, of course, because rent is your primary or even exclusive revenue source in your business. So getting rent rates right is a big deal.
Unfortunately, what often happens on a community level is different communities look at each other and basically base their rent rates off the rates at similar properties in the area.
This has all the same problems that we discussed above. You don't know anything about how those rent rates are working out for your competitor save what you can speculate based on the appearance of the community and word-of-mouth. It is possible the community's rent is artificially low because they are desperate to increase their occupancy.
It's also possible that all the communities in your area are just not charging enough even though they think they are. And, of course, it is possible that the right rent rate for a community across the street may actually not be the right rates for you to charge.
Instead of basing rent rates primarily off the rates charged across the street, we advise looking at your own internal web data to set baseline rent rates. You can see how many visits are coming to a specific floorplan page on your community site. You can see how engaged the visitors are on the page. This data will give you a larger data set than lead or lease data can and should give you an accurate sense of demand for the unit. Using that data, you can make better informed decisions about rent rates that may allow you to charge rates that might look too high, but are actually what your market is willing to pay.
A cleaner, more user-friendly apartment shopping experience doesn't just help your prospects.
It helps your leasing staff by disqualifying bad leads online before they call your leasing office and take up your staff's time.
It also further qualifies good leads by allowing them to see their apartment online, which makes them a more interested, engaged lead when they come in for a tour.
So stop following your competitors. Insead, forge your own path by creating a marketing process that meets prospects where they are and gives them the information they want.