February 2, 2018

How to Charge Higher Rent (Hint: Own Your Web Presence.)

Posted by Jake Meador

 

Let's talk about two different buying experiences.

In situation number one, I'm at a typical supermarket trying to find some cinnamon to help me make an apple pie.

All I have to go on in assessing the different options I have are the labels on the bottles. All the bottles are sealed and there are no samples. I'm looking at three or four different brands, but I have no way of telling which one is better or how they are different. So what do I end up doing?

I look at the price.

In most cases, I'm almost certainly buying the cheapest one available to me. I only have one way to distinguish these brands and that's price. So I'm buying based on price.

The net effect of this for the companies is that they make less money because their business basically devolves into a battle to charge the lowest price while still making enough revenue to have a business. This is how internet listing services work.

Now let's talk about a different situation.

This time I'm at a specialty store that only sells spices. They have four or five different varieties of cinnamon available in several different sized containers. They also have helpful marketing comments written on little cards next to each type of cinnamon explaining what it is, how it's unique, what it's used in, and so on. This isn't just generic marketing copy that doesn't actually tell me anything substantive about the product; it's an actual description of what makes each type of cinnamon unique, things like its flavor profile, texture, common uses, and so on.

Most importantly, they have a small jar that you can open up and smell in order to actually experience for yourself how these different types of cinnamon are unique from each other. This is how apartment websites should work.

Why People Pay More

There are two key differences about the experience at the specialty store:

First, the seller is offering me relevant, useful information that I can use to guide my purchase. Maybe the first cinnamon I look at is better for desserts than the second—so that's going to push me toward that one, even if it is slightly more expensive. If I know that I'll get a better apple pie from it, I will probably not think much about spending an extra dollar.

Second, the seller is giving me a chance to "try" the product for myself so I can actually experience it on my own and make my own judgment. So maybe I smell all the cinnamons and decide that I really like a specific one the most, even if it isn't the one they recommend for baking.

The net result of this difference is that there are many different ways for me to distinguish between different types of cinnamon. And so, while I will look at the price tag, I'm not basing my entire purchasing decision on the price. I'll pay a little more if it's the cinnamon I like best or if it's specifically described as being ideal for baking. Here's the big idea: There is a relationship between how easy it is to differentiate between products and what a person will pay for the product.

Why ILS's Reduce Rent Rates

Now apply this idea to our industry.

How does a community differentiate itself from competitors? Going the other direction, what marketing methods flatten distinction between competitors, leaving them to compete only on price?

Look at this first image, which is a screen capture taken from one prominent internet listing service:

Screen_Shot_2014-10-15_at_1.40.17_PM

When you look at that image, what stands out? It's almost certainly the consistent design—one listing to the next looks exactly the same. The only difference is the name, contact information, and the photo. But the core template doesn't change. This is how it works across the entire ILS. All the listings are standardized.

Sure, you can pay a bit more to get some extra features added on—but so can your competitors. There is no way you can guarantee that your community will have a totally unique listing on an ILS. All that will make your community stand out are the photos and the details shared in the marketing copy. And while that will help differentiate your community on a limited level, there will still be a handful of communities in your neighborhood that share most of the same amenities and are a similar price.

So what's left to help you stand out and win the prospect's business?

  • Offering rent specials or move-in discounts.
  • Waving the security deposit.
  • Charging lower rent rates.

What all those situations have in common: You make less money. And less money can translate into any number of bad business outcomes—lower wages for employees, less money to put into the community to keep it up-to-date and comfortable, less visibility in the community, and so on.

In other words, this is the customer at the supermarket, staring at labels and then staring at price tags. There's no useful differentiation, no guidance in making a decision, no ability to try it before you buy it. So all that's left is to grab the cheapest thing and go.

How to Make Your Community Stand Out

What you want for your marketing is to create an experience like the specialty store rather than the generic supermarket. Here's how:

You begin by providing prospects with plenty of "self-serve" information, which means prospects can access it on their own on your website without needing to talk to a leasing staff. This information should include:

  • rent rates for every floorplan
  • photos of every floorplan
  • walkthrough video tours of floorplans
  • thorough amenities information
  • pet policy and pet fees (deposit, rent, etc.)

What this allows you to do is give your prospects a variety of ways to distinguish your community from a competitor. They can see exactly what the apartment looks like via a video tour. They can easily find out what it will cost them to have a pet if they live at your property. They can find out what amenities you offer. All of these things make it easier for a person to identify the unique value you offer and to justify to themselves why your community is worth the price, even if it is slightly higher than a competitor.

What all of this ought to add up to is higher rent rates for your community. This is the result of people perceiving a clear, unique value in your community that only your community can offer to them in that way. If prospects can see that you're offering a unique value, then they will be more willing to pay higher rent rates.

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