When it comes to value, we know that everyone has their own idea of good value, and poor value for money is. You can ask 3 different people about a product, and get 3 different answers (Sometimes more which is confusing!).
How then, do we as Property Managers create value for our clients if the starting point is so different for each investor.
First, we need to understand what “Customer Value” is. There are many definitions, but I like this one.
CV = B - C
Customer Value is the result of Benefits - Cost
We know that as a business, value is not just about cost, it has a direct relationship with the benefits one receives. The above formula will help when moving through this blog, and also working on a Value Creation Plan within your business.
It is not important to compete with your opposition on price, it is, however, important to compete (And ultimately outperform) on value. This means that the variable you can control is the Benefits. I often coach that first, we should start with what Benefits the customer is looking for in a Property Manager in the first instance.
- Peace of mind / (hands-off)
- Increase in income, decrease in expenses (through scale and effective lease and rent control)
- Assistance in growing portfolio/wealth creation.
We could go on, but with your own marketplace, it is worth doing this exercise as each will be slightly unique. How then we maximize these benefits over our competitors, and what additional things can we create of offer which will keep clients happy enough to stay, and also refer new clients while growing their own portfolios.
Well, therein lies the million-dollar question.
In many businesses, we see that value & benefits are created or understood as “USP’s” or Unique Selling Points. One office will boast, “We run a smaller portfolio”, while the next will market, “We offer a Rent Guarantee”, “We have a communication guarantee” one will add each showcasing a benefit geared towards potential clients needs or values.
While all of these are good and important parts of a successful new business team, often what is overlooked is the reason the investors own property in the first place. To Make Money!
How then can we focus on this when we are literally taking a cut. Well, this is where the fun happens in my mind. In my days as a new business person, my promise was “It’s my job to have your investment make you more money than if you were doing it by yourself, otherwise why would you pay for my service.”
At the time (Yes I am old, and this was a while ago now) this was a very novel approach as often with fees we see new business people shying away from this question, and getting into a situation where they are “Justifying the fee”. While this may have still been needed for some personality types, it is something that the above approach side steps.
This example does come with a warning, this is a promise you have to live up to. So, how is it done? Simple, great Property Management.
The first is downtime, you need to minimize downtime at all costs, this is a killer of profitability and return for any investor, but also in a PM business.
In our office, our most robust and active people are in our letting team, this is not a training role as getting it wrong at this cost will hurt not only the investor but the property managers moving forward. We also have a very proactive maintenance team who actively negotiate discounts with suppliers, and show this to the clients on invoices (they are invoiced published rates, and then a VIP or office discount is applied). We also make sure that lease control and regular rent increases are in place, so the machine ticks over like clockwork for the duration of the time.
All of these are things that your property management team is already doing I am sure. But we do not often focus the client on these as benefits or value.
There is a rule in advertising, for every dollar spent you should expect 2. Wouldn’t it be great if we could look to expect the same from our property managers?
We would love to hear how in your business you have tackled these challenges, and if you are looking to change or implement any of the above we would love to know how it goes! Please reach out to us in the forums or via email (firstname.lastname@example.org) we are invested in this industry going from strength to strength and would like to be part of your journey within that.