Leased Magazine Welcomes Special Guest Simon Cox from Real Estate Dynamices into the “Expert’s” Chair.
All of our owners seem very attached to ONE particular property manager within our business, and he/she brings in a lot of referral business. I’m scared that if he/she ever leaves to go to a competing agency, these clients may follow him/her. How can I get our clients to be more loyal to our brand, and not just one person?
This is a problem common to lots of property management businesses and relates to a phenomenon I call “The Hairdresser Syndrome”.
What is the Hairdresser Syndrome?
I love hairdressers – and I am a little biased, as I am married to one who has been in the industry for over 25 years.
As we know all too well, trust and loyalty cannot be bought; it is earned, and for a Property Manager, much like a hairdresser, it will take time. As the relationship grows and trust is established, the hairdresser develops a ‘following’ with the client. The customer will only want that hairdresser and no one else; in many cases the client will wait for the stylist they want, even if waiting does not suit them. Now my wife is a hairdressing trainer and ‘loyalty is a privilege, not an expectation’, as she puts it, and there is no truer test of this than when a customer walks away from the business to follow ‘their’ preferred hairdresser as they move to another salon.
Can ‘Hairdresser Syndrome’ Affect your Rent Roll?
Too often I hear of property managers who leave a business after many years and then start poaching the managements for their new employer’s business. Let’s face it; if the Property Manager has a strong reputation, it seems only logical that people will follow that reputation. But how would you manage the situation of a Property Manager leaving your business after three years’ service, and then 50 rental properties follow them across the road to your competition? Not only are you losing an experienced employee, but cash flow and asset value walk out the door. If it happens it can hit you like a ton of bricks.
Let’s Look at some Simple Considerations to keep in Mind in your Business to Reduce this Risk.
Transparency As a Principal you are fully aware of all rent roll decisions and actions taken by your Property Managers. Now I am not saying you have to do all the work, but at least ensure that your clients (landlords) see you as the business, not the Property Manager. Make contact with your landlords regularly, let them know you are the person behind the service and always
encourage the landlord to speak with you freely about the Property Management service they are experiencing.
Without a clear reporting system in place your business is at risk. Ask questions about service, ask about practices applied to your client database, and ensure that you are fully informed of all developing issues within your rent roll.
For most new managements your client has a relationship with the brand, not the Property Manager, and it is the responsibility of the business owners to keep this under control. As a Principal you should build relationships through newsletters, interaction with your rent roll properties and client events, and offer yourself as a problem solver for all clients. Pick up the phone, call your clients and get in front of them regularly to strengthen your relationship.
Protection from Within
Most modern Employment Agreements allow for the business owners to restrict and control certain issues such as intellectual data, client contacts and personal information, and the flow of this in and out of the office. Always ensure that employees are fully aware of the data that can be extracted from your system for the purpose of your business, but also ensure that data does not leave the premises without your express permission. Your Trust Account systems have the ability to control the release of sensitive data and restrict people taking this away from your office, so keep your finger on the pulse. It is wise to review and update your Employment Agreements, Confidentiality Agreements and Intellectual Property and Data Use Policies.
It will always be a balancing act between how close a Property Manager’s relationship is with each client and at what point the relationship between the client and the agency is at risk.
What Principals can learn from this is that there are steps that can be taken to manage and reduce the impact it has on their business.