Ellis Shopping Report Multifamily Industry Benchmark 3rd Quarter 2014

Welcome to the Third Quarter 2014 Ellis Shopping Report Multifamily Industry Benchmark. Our team continues to deliver the most current and effective tools to help you monitor and evaluate on-site leasing and marketing effectiveness, as well as to be able to compare your team’s performance against others in the industry. The importance of the customer’s perception of their experience with your team and product cannot be disregarded. Perceived value, as defined by customers, creates loyal customer relationships. Customer loyalty is the best predictor of your future strength and growth potential.

In the 2^nd Quarter we addressed the topic, “Does Leasing Training Need to Change?” While technique has always been the foundation of most sales training programs, it has become more of a challenge to teach the emotional piece—how to connect with customers. Certainly, there are areas that deserve a quick evaluation in all training departments: training practices, training environment, and training content to name a few.

Quite often, these conversations include Generation Y. The property management industry is an ideal industry for Gen Y because it provides a fast-paced day-to-day work environment with endless growth opportunities. But, before they hit the leasing floor they must be trained. They must understand how the workplace works. They must understand how to communicate with all generations. They learn differently—so our training must speak to them.

This quarter we explore the question, “What Gets in the Way of Successful Leasing Training?” Based on the two previous topics, you can safely assume that Generation Y made the list. However, there are a handful of other obstructions such as high turnover, too many initiatives, process focus vs. customer focus, and technology. Each one presents its own set of barriers which might get in the way of successful leasing training. It is not a difficult question to answer. Ask any trainer, and their list is long, deep, and wide. Join us as we approach a few of the topics from a different perspective.

Changing Trends

Trends have always carried a powerful punch. We can learn a lot about a company with shopping result trends, too. Even when employee performance looks good on paper, there is always room for growth. High-performers can even use a little polish on some of their skills and competencies. This often is the difference between good and great leasing consultants!

When it comes to serving the future resident and providing a great experience, where have your employees ranked among your competitors over the last 15 years? This trending graph provides us with a snapshot of benchmark averages since 2000. It tells us that overall leasing performance has been slowly edging up since the inception of the Ellis Benchmark. What does your company trend look like in terms of leasing performance, technique and customer experience?

Since 2000, the Ellis Shopping Report Multifamily Industry Benchmark quarterly ranking and comparison has been our way of identifying and recognizing the leasing performance of participating companies. The basic premise of the Ellis traditional benchmark is evaluating leasing performance and technique on the 10 key benchmark questions. The Ellis customer experience benchmark score is based on the answers to Questions 1-9 in the customer experience section of the Ellis shopping report, which reflects the customer’s perception of the service they received, the value offered, and how well their needs would be met. Participants can qualify for Platinum, Gold, Silver, or Bronze level based on their company average and benchmark performance scores during the quarter.

The overall benchmark score ranges by category reflected in the chart below were calculated based on all of the shops included in the Ellis Benchmark for 2013. The median Ellis Traditional Multifamily Industry Benchmark score in 2013 was 93. The median Ellis Customer Experience Benchmark score for 2013 was 3.7.

The Ellis Traditional Multifamily Industry Benchmark 3rd Quarter 2014 Overall Average score of all participating companies is 90%. The Ellis Customer Experience Benchmark 3rd Quarter 2014 Overall Average score of all participating companies is 3.7.

3rd Quarter, 2014 – Participating Companies Representing 3,497 Total Shops

Advenir Real Estate Management; AMLI Residential; Berkshire Realty Holdings, L.P.; BH Management Services, Inc.; Bozzuto & Associates; CWS Apartment Homes, LLC; Gables Residential Services; GHP Management; Greystar Management Services; Guardian Management, LLC; Holland Residential; IMT Residential; Kettler Management; Monogram Residential Trust; Pacific Living Properties; Palms Associates; Pinnacle (PRMC); Post Properties; RAM Partners, LLC; Riverstone Residential Group; Simpson Property Group; Sunrise Management; The Bainbridge Companies; Timberland Partners; TriBridge Residential; Venterra Realty; Waterton Residential; Windsor Property Management Co / GID; Winn Residential

Congratulations to the 3^rd Quarter 2014 Ellis Traditional Multifamily Industry Benchmark Platinum Level Achievers!

Gables Residential Services

Congratulations to the 3^rd Quarter 2014 Ellis Customer Experience Benchmark Gold Level** Achievers!

AMLI Residential
Bozzuto & Associates
Monogram Residential Trust
Post Properties
Simpson Property Group

* Companies are listed in alphabetical order
** The highest level achieved for the 3^rd Quarter 2014 Ellis Customer Experience Benchmark was Gold.

How did we do?

These graphs show the average score of all participating companies for each benchmark question and the combined overall benchmark score.

What Gets in the Way of Successful Leasing Training?

In an industry where competition is sometimes fierce, entry-level employee turnover is painfully high, and training gets a small slice of the “budget” pie, those responsible for leasing training have a tough challenge on their plate: deliver a high quality consistent training program, improve leasing performance company-wide, and advance company objectives, all while staying within budget.

Are you meeting the leasing training challenges at your company? If not, what is getting in the way of true leasing success? I expect that the list is long and probably unique to your company. Here are three obstacles that could be getting in the way of successful leasing training:

1. High Turnover

Unquestionably, the ongoing churn of employees who are hired, leave shortly thereafter, and then must be replaced is one of the greatest challenges in leasing training today. The more employee turnover you have, the more training holes you have to deal with and the more strain it places on the training department. A 2012 study conducted by the Center for American Progress (CAP) found that it costs, on average, $3,328 to recruit, hire and train a replacement for a $10/hour employee. High turnover is an obstacle to a successful training program because the door is always revolving with new employees entering and the trained ones leaving. How can we overcome this obstacle? Here are some causes of turnover that you may not have considered.

• The best leasing consultants are often promoted to supervisors, which leaves a void in leasing that must be filled.
• Great leasing consultants do not always make great supervisors. If their leadership skills are lacking, your best employees will move on.
• The wrong people are hired because we become tired of interviewing.
• After new hire training the property manager does not take ownership of continued training for the leasing consultant, so they flip, flop, and falter through each day until they either quit or they are fired.
• The new leasing consultant views their position as a way station—they accept the job on their way to something else—with your company or another; their original intention was never to stay.

High turnover does get in the way of a successful training program. Aside from the obvious burden it places on the training department and the financial impact, it can lower employee morale and cause a flood of people leaving because they see their peers doing the same thing. High turnover can also make the remaining employees more stressed out because they have to fill in the gaps until a new employee is hired and trained.

We know that the longer someone is in the leasing consultant role, the better they become. When will the leasing consultant position truly become a desired long term career?

1. Generation Y

In the 2^nd Quarter topic, “Does Leasing Training Need to Change?”, we covered a lot of the popular conversations regarding the methods of delivering new hire training and which ones speak to Generation Y. According to the U.S. Bureau of Labor Statistics, Generation Y employees are increasingly mobile, with a median turnover of 1.8 years. By 2020, this generation will make up 50 percent of the workforce. They cannot be ignored.

Because their parents sent them the message, “You can be anything you want to be,” Gen Y employees push employers for quick advancements. They want out of the leasing job quickly. It is not necessarily that they do not like it—they just need to be “all that they can be” as soon as they can get there! If something more attractive comes across their radar screen, they will leap. All of this can get in the way of a successful leasing program because they have no intention of sticking around. What is the answer? Does the success of leasing training only rest on the training department? It should not.

The property manager plays a key role in the success of the leasing training program. While we have given lip service to this concept for years, it is not optional anymore. Back in the day, a property manager would greet their newly trained employee, introduce them to the team, tour them around the community, and with a few “check-in” moments the new employee would hit the ground running. That does not work today because Gen Y is different. If your manager is stomping their feet and declaring, “They are not trained! They should know all of this stuff!” you might reconsider who is running your community. They need to understand that Generation Y grew up with a lot of guidance from their parents, society, and teachers. Now they expect this type of handholding at work. Today’s manager should understand how to integrate Gen Y employees into the work setting without turning them off, provide them with solid mentoring and experiences that lay the groundwork for their leasing careers, and keep them from self-destructing – yes, from self-destructing.

This does not require a large training budget or time away from work at a formal training program. It demands the right kind of leader because the most effective leasing training for Gen Y will happen on the job—not necessarily in the classroom.

2. Too Many Initiatives, Processes, and Technology Implementations

While many companies have the best intentions when it comes to new leasing training initiatives, some have inadvertently placed more focus on the sales process than the customer—the employee customer and the resident customer. A recent conversation with a friend regarding their vehicle purchase shed much needed light on this point. She told me, “I have just met the greatest salesperson in the world! He didn’t use technology to ‘wow’ me. He didn’t use a unique closing tactic. He didn’t place any timeline demands or offer me any incentives.” She still agreed to purchase the vehicle. This is the result of a successful sales training program—or is it?

•  He was passionate about his product and very knowledgeable, too.
•  His follow-up was consistent, considerate and helpful. He was not pushy.
•  His job did not end at 5:00. He followed up on pressing items on his day off. When she sent him a text, he answered.
•   He did not forget the customer after the sale. Three months have passed and he still emails her asking if she and her family are still happy with their purchase. This was after he received his commission check and his positive customer review.

Maybe he truly is the greatest salesperson in the world. No process, no technology, no grand sales initiative. Did I mention that he is a member of Generation Y? Things that make you go hmmm…

Certainly, technology and process have their place in the leasing training, but are we distancing ourselves too far away from the student? The human interaction, the mentoring, the personal investment—we must model the behavior we want our leasing consultants to pass on to the customer. Are we?

Join us next quarter when we will dig into our final topic for this theme: “What Should Leasing Training Include Today and Trends for the Future?”

We thank you for your ongoing participation and feedback, which help make this report informative, fresh, and a reliable resource. We hope you will find Ellis Partners in Management Solutions, a feedback company and multifamily partner since 1984, to be not only the finest source for mystery shopping but also a training and feedback resource for your organization. Additional support and information can be found under Training and Articles on our website.

Prepared by Joanna Ellis, Chief Executive Officer

October 15, 2014