This article was provided by Bob Pifke, CMO, Property Management Business Solutions, LLC, franchisor of Real Property Management.
Prior to the mid-1990s, before the age of the internet, the property management business was built on personal relationships. But with the dominance of online research, networking, and robust accounting technology, property management has evolved into a multifaceted engine characterized by smart business and profitability.
Most property managers entered the business almost by accident. They often owned a rental property or two and had fellow investors ask them to manage their properties. Soon, they had enough properties to form a legitimate business. Or, in other scenarios, a real estate agent managed a property as a favor to a client whose property would not sell. Soon other agents asked the person to do the same for their clients.
Personal word-of-mouth referrals was the way property management offices grew. Accounting was done on Excel spreadsheets and tasks and communications with residents were managed in Microsoft Outlook. Property management firms were – and many still are – “Ma and Pa” organizations with five or fewer employees driving the business.
Ushering in Change
However, in place of referrals, the internet has become the go-to place for investors and tenants to find a property manager or rental property. Google and Bing are now top sources for information about “who should I call?” Paid search and SEO for organic rankings are critical to getting a property management business visible to prospective customers. Online testimonials and online reputation ratings have supplanted much of the traditional person-to-person referral approach. Online directories, social media, and review sites, such as Google Reviews, Facebook Reviews, and Yelp are more important than ever.
This change in how business is generated means that property managers should expand their knowledge of the internet and the latest in technology, such as website development, pay-per-click advertising, search engine optimization, task management software, or other new technologies being used by larger and more sophisticated competitors.
How We Compete in Today’s Market
For example, the Real Property Management franchise invests hundreds of thousands of dollars each year on technology and online marketing. We have created a website infrastructure to support our 300+ offices with custom websites, state-of-the-art capabilities, and national oversight. We have negotiated partnerships with top online marketing companies, take care of directory listings for local offices, and are now starting reputation monitoring and automated online testimonial requests. We spend large sums on Google display and Facebook advertising to build brand awareness and generate leads for local offices. Even very large independent property management firms cannot match these investments.
The Emergence of Business Intelligence
A related trend that will radically impact property management is Business Intelligence. Making decisions based on hard facts, and not opinion, makes success infinitely more likely. To do this takes data, and the right software, with ideal financial and operational management, can be a great start.
But numbers in a vacuum have limitations. The numbers might be improving for an individual office but how are your numbers comparing to your competitors’ or peers’? You need to analyze the data to walk away with a competitive advantage.
Also consider the next evolution in data management for property managers. What happens when you combine operational data, Google Analytics data, media buying information, CRM (customer relationship management) data, and market and customer demographics into a single relational database? A company could connect the dots from marketing tactics (e.g., an online ad) to lead volume to sales success to revenue/expenses per property to profitability by account. A complete closed loop intelligence system would be in place.
Imagine the competitive power that would bring to a company! An office could:
- Know exactly the return on investment for specific marketing tactics.
- Be able test changes in processes or procedures, and accurately measure the short and long-term impact.
- Become drastically more efficient in how money is spent and invested.
- Model how to react to competitive pricing or service changes.
- How could a less sophisticated competitor compete effectively?
Growth by Acquisition
With these technological and business intelligence advances, a big future trend in the property management industry will be the acquisition of small property managers by more sizable firms that choose to invest in these new technologies and tactics.
Independently-owned Real Property Management offices are demonstrating this now by buying competing offices in their markets. Sometimes buying property management companies with more properties under management than they presently have. This can be done because of the nationally available processes, systems, and support.
Just as real estate brokers evolved from small independents to regional brands to national brands, the same is starting to happen in property management. Small, independent property management companies need to consider their technological abilities, and consider whether they may join a national brand now, or watch as a local competitor joins a national brand and rises to a new level.
Bob Pifke is CMO, Property Management Business Solutions, LLC, franchisor of Real Property Management. He continues to strengthen the Real Property Management brand and guide franchise owners using his wealth of experience in every aspect of marketing. Bob held executive positions with prominent companies such as CCA Global Partners, VISA and Ogilvy.