LRO Can Provide a 3-5% Revenue Lift
- Feb 19, 2009
Annie Laurie McCulloh (pictured) is the new vice president of business consulting at the Rainmaker Group. She is responsible for managing LRO (Lease Rent Options) project implementations and ensuring that solutions exceed client expectations. McCulloh has helped design, deliver and support pricing solutions and has also served as the pricing manager tasked with making pricing decisions for tens of thousands of units using revolution LRO.Prior to Rainmaker, McCulloh worked for Archstone, where she served as assistant vice president, pricing and revenue management. She talks to MHN Online News Editor Anuradha Kher about the importance of revenue management in a tough economy and leveraging automated revenue management to boost a company’s revenues. MHN: What do you plan to achieve at the Rainmaker Group in 2009? McCulloh: LRO has a proven track record in the multifamily industry. With that said, automated revenue management is not a widespread practice. At Rainmaker, I plan to continue to increase the LRO footprint in the multifamily industry in 2009.How do you think your experience with Archstone will help you in your new role?McCulloh: At Archstone, I served as the pricing analyst responsible for implementing pricing strategy for approximately 40,000 units in key markets across the US. My operational/tactical/hands-on experience along with familiarity with the change management required for implementing automated revenue management will facilitate smoother LRO project implementations for both new and existing clients.What is the importance of revenue management for multifamily properties during the current difficult period? McCulloh: In a volatile economy, there is a prevailing temptation to discount on a widespread basis typically in “one-month free” increments. Automated revenue management is a disciplined, statistically driven approach based on community-specific market segmentation. Gut-level intuition, experience and emotion take a back seat; consistent, predictive analytics drive pricing decisions.What advice would you give multifamily properties about managing revenue?McCulloh: I would say, focus on what you can control and make sure the actions you take address the problems at hand.How is the multifamily industry leveraging automated revenue management to boost revenues?McCulloh: Automated revenue management replicates consistent pricing methodology across all communities and ensures pricing decisions are made the same way seven days a week, 52 weeks a year. LRO provides a single source of rents at the most granular level – unit type, move-in date and lease term. It produces options for the customer on both the new lease as well as the renewal front. It manages lease expirations and times them to coincide with demand seasonality. This systematic, disciplined approach based on market response to pricing and availability ensures that communities increase and decrease rents in an optimal fashion to stay ahead of the curve. Over time, the discipline surrounding pricing oozes into other aspects of the business creating more and more organizational efficiencies.How much increase can a property expect in its revenues?McCulloh: LRO has consistently provided clients with a 3 to 5 percent revenue lift.