In property, the need to progress and attain more resources and as strong a market position as possible is just as important as it is in every other industry. The resource you need to ensure that you’re always in a strong position to get is landlords. Their fees comprise most of your income, so it stands to reason that the more landlords you have, the stronger financial position you will be in. Finding private landlords and convincing them that they should sign up to property management services with your letting agency is much more difficult than it sounds on paper. But there are ways you can do so and, with shrinking margins in lettings, now is the time you need to be trying to win as many new landlords (while retaining the ones you already have) as possible.
But, while you might want to take steps to ramp up your acquisition of new landlords, you need to ensure that you have the right foundations in place first.
We will cover everything you need to know about building and solidifying those foundations to give you the best possible position to grow your business by winning those landlords. You need to assess your business’s achievements to this point, look at what you want to realistically achieve in the future and decide on a sensible time frame - dominating market share in your area might be a realistic idea, but it’s a year-long goal, rather than something that can be achieved in a few months.
In this article we’ll be covering:
- Set a target for winning more landlords
- Attract new landlords with marketing activities
- Have a sales process in place to win more landlords
- Retain and upsell to existing landlords
- Plan for the increased demand from having more landlords
- Overall Key Performance Indicators (KPIs) and Return on Investment (ROI)
By the end of the article, you should have a solid understanding of the kind of position you should be in to start growing your business and the kind of returns you should be looking for.
Set a target for winning more landlords
There’s no point doing anything as a business, property or not, without setting realistic and achievable targets. Having a clear plan will avoid wasting your time and money and, after all, how else are you going to know if you’re moving in the right direction?
When you’re working out what you want to achieve as a business and when you want to achieve it by, one of the easiest ways of articulating your targets and strategies is to employ SMART (Specific, Measurable, Assignable, Realistic, Time-related) objectives. Coined by George T. Doran in 1981, SMART objectives have formed the core of businesses’ long and short-term strategies for over thirty years because they provide a clear structure and a measurable framework for practically anything a company wants to achieve.
A good target to focus on might be covering the shortfall resulting from the Tenant Fees Act eating into your annual revenue. According to the average figures cited in Fixflo’s Letting Fee Ban Impact Calculator, agents stand to lose around 11% (just over £28,000) of their turnover in fees in the first year of the ban. Even if 15 properties are being let per month with £300 applicant fees for each, on an annual basis that will work out at £54,000 lost.
Though actual figures will obviously vary by agency, this gives you a target to work towards and one way of meeting it will be by winning more landlords. Using SMART objectives, you might create a plan as follows:
Specific = your specific target is to make up the shortfall created by the Tenant Fees Ban by other means than charging tenant fees.
Measurable = work out how many landlords you need to win to make up the shortfall and keep track on a weekly basis. You should already be able to come up with an informed estimate based on average rents and other payments made.
Assignable = state who is going to be responsible for winning the landlords - will it be property managers, branch directors, sales teams or someone else? This also helps ensure accountability and increased levels of teamwork because everyone is pulling towards a stated common goal.
Realistic = state how likely it is that the target will be met in the time frame - if not, how close do you expect to get?
Time-related = state when you expect the target to be met - if it won’t be met by the deadline, how soon afterwards will it be met? Track your progress in relation to your deadline throughout the process and adjust expectations and tactics accordingly.
The SMART system works for every objective you come up with, whether you’re looking to hire an area manager or ensure more renewed tenancies across the properties you manage. Applying the SMART system will help keep you on the right track, allow for greater transparency throughout the strategy in terms of what’s working and what isn’t, and enable you to make tweaks more easily if you see opportunities for improvement.
Target landlords with marketing activities
Now that you've set SMART targets, it's time to apply them to your marketing plan and Target landlords to your letting agency. Understanding the basics of marketing is key to success, and to avoid wasting money on fruitless marketing ploys. The single most important metric for every marketing plan is conversion rate. Broadly speaking, it refers to the percentage of prospects who take a desired action. For example, you may place an advertisement on an email newsletter, of all the emails received by people in the database, how many of them were opened? That's one conversion rate. Of all the opened emails, how many of them clicked through to read the blog article about your services? That's another conversion rate.
If you have an agency open day, and invited some prospective landlords for the event, and if the aim is to receive evaluation requests from these landlords, the eventual number of requests you get will help you arrive at your event conversion rate.
This metric is important because it indicates the effectiveness of every pound and penny you spend on marketing activities. It is also key to track key numbers over time, so that you can monitor the effectiveness of each type of marketing tactic and channel.
Have a sales process in place to win more landlords
The systems and processes you employ for winning new instructions are vitally important to get right. There must be a clearly-defined set of tools and tasks that everyone in the team follows when finding, qualifying and signing leads. This will ensure cohesion throughout the business and provide solid foundations for growing the business.
A strong process also helps moves the prospect through the buying funnel - this is a well-worn marketing concept which is applicable to businesses in practically every industry, so it is more than applicable to property management agencies. The following is a commonly-used process, but it should obviously be tailored or tweaked to suit each business and its customers.
- Receive lead and add to the CRM (Customer Relationship Management) system you’re using.
- Call to qualify - do they fit the bill in terms of their profile and the service they require versus what you’re able to offer them?
- Arrange an initial discussion meeting to understand their requirements and explain your services.
- After a day or two, call them to follow up and see what they’re thinking. If they need a little more persuasion, this can be done on the phone or at a second meeting.
- Attend a second meeting where the aim should be to get a decision from them.
- Either win the instruction and sign paperwork or look at revisiting the situation a few months down the line.
It’s important to never write a lead off unless it turns out that they are completely unsuitable for you to deal with. Situations and circumstances change all the time, and there’s no reason why a lead which has been resistant to signing up would not see that resistance disappear later on if they decide they could actually do with your services.
In terms of owning the process, you might have an overall manager, or you might delegate the calling and appointment booking to a salesperson. Make sure you allocate responsibility and hold people to account - Key Performance Indicators (KPIs) are always a great way of doing this.
Retain and upsell to existing landlords
Winning new landlords is certainly a goal worth focusing on, but not if it comes at the expense of retaining the ones you already have. Common sense dictates that it’s much easier (and less expensive) to keep your existing customers - all you have to do is ensure you don’t give them a reason to leave you and go elsewhere.
With that in mind, you should check that you’re doing everything you can to keep providing an exemplary service before switching your focus to trying to win new landlords.
Plan for the increased demand from having more landlords
Insofar as having a strong foundation is concerned, you also need to ensure that you’ll be able to increase your capacity and possess the ability to meet demand when needed. There’s no point in planning for growth and then being unable to deal with it when it arrives.
You might usually think about this in the context of the business’s headcount, but increasing capacity does not necessarily mean adding more people - if you don’t have the demand there, you’re simply expanding the business, which could result in it going backwards and becoming less profitable. If you increase your cost base, you will need to grow by a certain amount to cover the increased cost of that new employee. If you do not grow by that amount, your sales might be higher, but your net profit margin will be lower, which could cause cash flow issues for many agencies.
The vast majority of agencies are going to feel the impact of the Tenant Fees Ban with a decline in sales exacerbated by retaining the same overheads, meaning they’ll lose money. Before they start to think about growing, they need to assess their existing business model and how to understand their capacity. There is little point taking on more properties if you cannot manage them to the same standard and risk losing them.
A good way of thinking about increasing capacity is to consider the difference between platform initiatives and growth initiatives. A platform initiative is an initiative that is intended to increase efficiency without increasing the size of the company - for instance, training staff as opposed to hiring more - while a growth initiative would include tactics like investing in new staff or premises, changing client criteria (i.e. focusing on winning higher-profit clients) or changing product focus. Platform initiatives can only help a company grow so far before becoming ineffective - at that point, you need to start focusing on growth initiatives.
The graphic below is a good way of visualising this. The first cup represents the capacity of a business which has only focused on platform initiatives and is now full - the business is operating at maximum capacity. Once this happens, it must then be swapped for a cup with more volume, representing the capacity offered by growth initiatives. Once that cup has been filled (or reached capacity), it can be swapped again.
Overall Key Performance Indicators (KPIs) and Return on Investment (ROI)
No strategic plan is complete without setting Key Performance Indicators (KPIs) and deciding how your return on investment is going to be calculated. It harks back to our SMART objectives - what constitutes successful growth for you? How many more landlords do you want (or need) to gain, and when do you want to gain them by?
Once you have enough data in your CRM system, you can work out the average value of an instruction, average conversion rates and the average amount of time it takes to turn a lead into a customer. Being able to access this information whenever you need it will help you see whether you’re on track to meet your KPIs and assess whether your current strategy is providing a good ROI.
Overall Key Performance Indicators (KPIs) and Return on Investment (ROI)
There are many ways of calculating your ROI. A very basic calculation you can use to do so is below:
(Sales Growth (£) - Marketing Cost) / Marketing Cost = Return On Investment
So, if sales grew by £1,000 and the marketing campaign cost £100, then the simple ROI is 900%.
If you are meeting your KPIs and achieving the desired ROI, you’ll be able to use the data to prove it. If not, you can use the data to tweak your strategy, ensuring that you are always moving forward and improving performance, rather than staying still.
Some tips to keep in mind throughout the process include:
- Writing down the KPIs and who is responsible for achieving them on a document which can be distributed amongst the team to aid with articulating overall goals for the business, helping with employee engagement and accountability
- Compile a spreadsheet with all of the KPIs on them that you refer to an update every week or month
Don’t set too many KPIs - it may prove difficult to achieve all of them at once, which can paint a negative picture that may be false and give the wrong impression about any progress you might be making.
For many of us, it can be frustrating to have to plan rather than jumping in and getting started. But when it comes to the fortunes of your property management agency, planning for growth is vital. If resources aren’t as plentiful as you’d like them to be, this is the time when you need to be considering how to utilise them for the best possible return. If you can maximise them by upselling your existing customers, that will help.
- Use SMART objectives
- Set realistic KPIs to check that you are meeting them
- Invest in a CRM system so you can see relevant data
- Find ways to increase your capacity
- Ensure you retain the landlords you already have
Obviously, these are guidelines - you will need to tailor them to your specific business - but they provide a solid basis for any property management agency to get started with plans to win more landlords. For more tips on how to win more landlords, why not download this free Strategy Checklist and start working on your business?