One of our current customers manages of multi-family properties in the Dallas area.
They came to us looking for ways to improve their margins. What we realized upon a cursory analysis was that their business was getting bogged down by two things.
1. They were trying to track to may variables in identifying their ideal customer and
2. They weren’t automating anything.
The lack of automation might seem forgivable, but to analyze the variables that will help you target your ideal customer automation will be necessary.
To begin, we did something no one else had. We applied our experience in retail optimization to the multi-family industry.
Let’s look in depth at one example:
Our multi-family client tracked 34 variables. That yields a staggering number of possible outcomes and is impossible to track without automation. It’s also unnecessary. Most of what they needed to know could be determined by narrowing down the variables to 7 key elements.
Next we did some competitive analysis to determine how successful properties market. We then compared that with what our client was currently doing.
We also met with key stakeholders to assess their current plans.
Data Driven Decisions
Our client had recently ruled out opening a new apartment complex in Frisco, Tx. Despite the fact that Frisco is one of the fastest growing cities in the country. Based on their initial analysis, Frisco didn’t fit the model. But when we narrowed down the variables and looked at what their more successful properties were doing, it turned out Frisco was the perfect opportunity. Unfortunately, they missed the window, however we could now be sure that wouldn’t happen again.
This was a case study in making decisions based on data rather than opinion.
The Process of Automating
Now that we had a good idea of where the optimal positioning was for this client we could present them with several options for approaching the situation.
In each case, automation played a key role. The ability to look at several variables, including those beyond standard demographics, require it.
Once you know what the metrics you’re measuring against, and the external variables that effect the outcome, you can determine what’s best by creating a formula that takes them all into account.
So we built a formula upon which we could perform further analysis and began discussing the results. Much of which was well outside what is assumed by the opinions of the management company.
One of the initial finds was the need to stop cannibalizing their own business. Keep in mind, the goal was to increase margins, not necessarily gain market share.
The FLAME strategic performance assessment is our secret weapon, by encompassing marketing, delivery, services, finance, operations, proactive management, and CRM to help you develop and keep the right audience.
What About Cannibalizing vs. Competition?
One of the key concerns was tenant cannibalization. So far they had been building or acquiring apartment complexes too close together, and in doing so, cannibalizing their own market. The question arose as to whether it was better to cannibalize themselves or allow competition to come in to play. It was an easy question to answer once we’d analyzed things.
The short answer in their case was don’t cannibalize, but….
Cannibalization was affecting profit margins negatively and causing investor ROI to decline.
However, this only became clear once the analysis was performed and wasn’t a blanket recommendation. Rather, it was advisable to grow market share but without as much overlap in physical geography as in the past.
Bringing It All Together
Once you understand your buyer and target… what do you then do to market to that buyer and how do you improve margins?
To begin with, we eliminated or re-engineered low margin products. Depending on your cash flow needs this may need to take place over time.
Second, don’t cannibalize your own market. It might seem preferable to allowing in competition but it will often hurt margins and may come as a huge opportunity cost.
Thrid, focus your marketing efforts straight at the identified audience. There is a natural tendency to want to go broad, but often, focused efforts will outperform, particularly when margins are the KPI.
Finally create feedback loops. Client satisfaction surveys and other means of collecting data will help you be proactive in managing the needs of your customers. That feedback is also instrumental in evaluating the day-to-day management of your business.
And only automation has the power to allow you to track, measure, and manage those things effectively.