Filling vacancies has largely been regarded for decades as a matter of “playing the odds.” You never know who is going to be a solid applicant and which prospects are secretly looking for the place to open their next underground brothel/meth lab, so you get as many people on your list as possible, and you filter out the ones that seem a little weak. But as a side effect of the “shotgun” approach, the actual sales effort mostly happens at the advertising part of the chain–the part that got people to come in and look around. Once they made the appointment to see the rental, there might be some ingratiation on the part of the person doing the showing, but there isn’t a whole lot of selling going on, because you aren’t going to do your tenant screening until after they sign off on being officially interested anyway.
We want to question that wisdom. Success happens most often when someone decides to do something different from the mainstream, accepted wisdom–and we suspect that this might be one of those moments. So over the next few posts, we’re going to be looking at the logic of a few different kinds of salespeople and how they view the sales process, and how it might apply to the process of filling vacancies in a rental property.
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Internet Marketing 101
We’re starting with internet marketing because it’s the most process-like way of finding your next tenant. The world of internet marketing is dominated by concepts like the “sales funnel” (a series of steps that drive a person further and further toward the decision to purchase) and the “conversion rate” (the percentage of people who decide, at each step of the sales funnel, to take the next step). These two concepts map nicely to the process of filling vacancies.
The Tenant Funnel Part I: Advertising
The first step of your “tenant funnel” is your advertising. Maximizing the number of (relevant) people who see your advertising is thus the first step toward maximizing your number of prospects. Whichever form of advertising you use–nation or even world-wide online ads, local print ads, or flyers–you should spend a fair amount of time considering how you will spread it out to as many eyes as possible, and then creating a process for doing so. In other words, establish a time and cost-efficient process for maximizing your advertising exposure without driving your costs too high.
When someone “converts” on that first step, they do so by calling you and asking to schedule a viewing. The conversion rate on your first step is always the smallest (the same is true on the internet as well), but in a way it’s also the most critical precisely because your exposure is so great. An ad that convinces 1% of people to call means a lot more when it reaches 1,000 relevant people vs. 100. So creating ads that inspire people to convert more readily is a pretty high priority. And it only gets more important as you maximize your exposure.
The Tenant Funnel Part II: Showing
The “input” for this step was the “output” from the last step, so the “maximizing exposure” process for this step is identical to the “maximizing conversions” process of the last step. We can then skip straight to the “maximizing conversions” part of showing rental properties.
So now you have 1,000 people who have seen your ad, and 10 of them have signed up for a showing. It’s time for Part II of your tenant funnel: making sure that the property is awesome enough that those who do see it in person want to live there. This is, of course, going to vary a lot depending on your neighborhood, target market, and so on, but in general, if your property offers your target market a decent value per dollar, it looks good, and it doesn’t give the impression of being unsafe (or in an unsafe area), you should be able to get a conversion rate around 25%-33% of all people who have seen a property. If you’re not achieving that kind of success, you should probably consider amping up your curb appeal, value-per-dollar, or face-to-face sales skills.
The Tenant Funnel, Part III: The Signature
So now of 1,000 people who saw your initial ad, you’re down to three who are still interested enough to become your new tenant. This is where we leave the world of Internet Marketing behind a bit, because there’s no such thing as a bad customer on the internet, but there totally are God-awful tenants in the real world. The key to the final part of the tenant funnel isn’t maximizing the number of tenants–because each dwelling will naturally restrict the number of available people moving in.
But as much as you can only have one tenant, so conversion rates aren’t an issue, there is still the process of selecting the best possible tenant out of the ones you do have available–the tenant screening process. On the one hand, performing this task poorly means you have to start all over again, often at significant expense. On the other hand, taking too long when screening a tenant can mean they choose another place to live due to some other life circumstance of which you are unaware. So be thorough, but again, have a process that is efficient and repeatable.
So, in short, the lessons we can learn from internet marketing are as follows:
- Have a process in place for maximizing your advertising exposure.
- The more people your ads convert, the easier it will be to fill your property.
- Before you show a property, make sure it is set up to maximize its appeal to the viewer.
- Have a process for tenant screening that is thorough, but efficient.
By establishing workflow protocols for each of these steps, you can make filling your empty properties significantly easier. Next time, we’ll look at the paradigm of the door-to-door salesman and see what we can learn from that arena!
What does the sales funnel that you use to get tenants in the door look like?
Let’s talk in the comments section!