Leaders within our industry, consistently ask me about Bild & Co’s belief on discounting. If you’re a user of Bild Sales System, you know we don’t advocate negotiating on price. And if you must do so, that means your sales team isn’t building value with their prospects. This frequent question has prompted me to think about “discounting” and when it can be used as a selling tool. In truth, discounting is the easiest method to “negotiate” and commonly takes place when prospects feel your product is a commodity. Again this ties right back to creating strong value in your community.
So what is the difference between discounting and “negotiating” and how can one affect your community over the other?
Consider This Scenario:
What is the real cost of a sales person discounting an apartment? For example, if your monthly rent is $3,500.00 and the average length of stay is 18 months; gross rent from this one move in is $63,000 over the term. Discount the rate by even $250/month and the rent over the term is $58,500.00- a difference of $4,500. This may not seem like a lot but consider the financial impact on an entire portfolio? What if it’s 100 apartments and 20% are discounted, this means you have lost nearly $90,000.00. If your company has a portfolio of 12 communities this is $1,080,000.00!!
Let’s look at “negotiating” as an alternative. Assuming the value is built, when the prospect asks for a discount, stop and consider the financial impact on the community. Instead, consider offering a moving service “on the house,” a design consultant to help with the apartment layout and furniture placement, to paint the apartment or any other type of creative service that presents a small, one-time expense. This greatly decreases the financial impact on the community and keeps the rent rate at the appropriate amount. Rather than a loss of $4,500 over the term, you may incur a few hundred dollars on the front end and land that next new resident! When utilizing simple negotiation tactics versus discounting, it helps build employee morale with the community and new residents feels you are going above and beyond for them. More importantly, existing residents don’t feel they are paying different rates than new ones and at the end of the day it is healthier for the community financially.
Please remember prior to utilizing any of these negotiating tactics to consult with your communities’ leadership!
Written by Seth Garber, CEO at Bild & Company. For more information on how we can help create a strong core value within your sales team, please contact us →