WHEN YOU GET IT RIGHT, data can help you make better decisions and can act as the true north for your agency. It can help you define culture and positively impact how you communicate within your team. And, it can also help your clients and other stakeholders, as Ben White explains.
THE PROBLEM IS THAT so many agencies have up to a dozen different software programs and apps that each perform some function or task. Some of them are large, central pieces of the puzzle, like trust accounting; others might do nothing more than help you take photos at a routine inspection. Regardless, they all contribute to the business and the challenge is to find ways to pull them all together to bring insights. I used to believe the only solution to this problem was to seek the one perfect application that did it all. It turns out that’s a fool’s errand.
The better goal is to find ways to bring together what is important and find the insights buried in all that data. Accessing and using your data effectively can provide your agency with a critical advantage, and I believe that it should be an agency’s highest priority.
So what might that mean in practice? Here are a few areas that we have been working on for some of our clients.
FIND THE GOOD NEWS IN ARREARS
How much time do we spend as an industry talking about, and doing something about, arrears? Of course it is important, but what about spending a bit of time recognising and celebrating the tenants who are never in arrears? Why don’t we find those tenants and thank them? Fostering a respectful and workable relationship with your tenants is critical to finding productivity gains in your agency that cascade throughout the life of every tenancy.
LEVERAGE YOUR WINS FOR GROWTH
Did you know that one in four landlords owns more than one investment property? Well, you do now. Once you find those quality tenants in your rent roll, pick up the phone and let the landlord know that it has now been x number of years since the tenant has missed a rent payment and, accordingly, she is just that much closer to paying off the mortgage. All thanks to a great property manager!
‘Hey there, lovely landlord, the tenant that we placed in your property has paid rent on time, every time, for one and a half years. Do you own any other properties? Do you know if rent is being paid on time, every time?…Sure thing, of course we could manage your other property for you.’
We know this works because we’ve seen it with our own eyes.
FIND THE REAL PROBLEMS
We often use a lot of simple statistics in our agencies. Vacancy rates and arrears rates are often quoted as simple percentages. Those numbers can be very misleading. For example, take two agencies that each have 100 managements and each have an arrears rate of 10 per cent. If agency A has a 10 per cent arrears rate but the arrears are generally spread out across different tenancies from month to month, then few landlords will suffer undue harm. If the other agency has the same 10 tenancies in arrears each month, then those 10 landlords are going to be suffering financially.
You can only really get to this level of understanding by digging below the high level numbers and looking for the underlying truth. In our experience, 80 per cent of total days in arrears each year are caused by less than 15 per cent of tenancies, and we know how to find them and deal with them. You can’t escape the old 80/20 rule!
KNOW WHAT YOU’RE LEAVING ON THE TABLE
One of the most incredible things about this industry is how many agencies do not charge the fees that they are entitled to. We have now got the proof to show it. By comparing the fees that have been agreed with the landlord to what has been entered into the trust accounting system and then to what has actually been charged through journal entries, we have found shocking results. Our data shows that the typical agency is failing to charge between 8 per cent and 12 per cent of its revenue. For most businesses there is the opportunity to double the cash flow if the correct fees were charged.
This is a complex problem to solve, but the algorithms exist today to help you understand your agency’s fee leakage.
BUILD YOUR ASSET
We all know that the property management business is the most valuable asset in an agency. It follows therefore that the data in the property management business is at the heart of wealth creation for a principal.
It is a concern then that our research shows that less than half of all management and tenancy combinations have complete, accurate and actionable data stored in the agency’s main software. This means that an agency is fundamentally limited in its ability to build and foster better and more profitable relationships with its stakeholders, and is also setting itself up for a lower sale price when the time comes.
In short, running a data audit program is critical to the value creation process.
BUILD YOUR CULTURE
No amount of morning teas together or weekend retreats can beat a team culture based on success. When a team works hard together, overcomes obstacles and, importantly, sees their shared successes, you will develop a culture that supports your shared ambitions. Sharing results with the team in an easy to read, always up-to-date format is a great way to unify and focus your team; it also takes the emotion out of things as everyone knows where you stand.
This is just the tip of the iceberg when it comes to using data in practical ways. It can seem intimidating at first, but the good news is that this analysis is becoming easier each day. I believe that developing a data competency and building a culture based on data is fast becoming a necessary precondition to success in our evolving industry.