Should You Outsource?

By Keat Foong, Executive Editor

While the use of call centers is pervasive across many industries, the apartment sector appears to be at least one industry that is resistant to this current-day corporate trend. The fact is, the majority of apartment companies still do not use call centers—in place of on-site property management staff—to take phone calls or e-mail from prospects.

Call centers could indeed be seen as anathema to the personal service that many apartment companies are traditionally proud of providing. At the annual Brainstorming session, speaker and consultant Anne Sadovsky asked some attendees for their thoughts regarding the use of call centers to take calls from prospects. “The general consensus is that many people are pretty unimpressed with call centers, because the representatives who answer the phones have never been to, and know only so much about, the properties,” says Sadovsky. “Many of the callers’ questions go unanswered.”

Yet the benefits of call centers can arguably be stunning, according to others. AvalonBay employs call centers to take all its phone and e-mail sales inquiries, both during office hours and off-hours. Representatives set appointments with the prospects and forward leads to on-site staff, who follow up with the prospects.

According to Kevin Thompson, AvalonBay’s vice president of marketing, the employment of call centers resulted in no less than 100 percent of all AvalonBay’s phone and e-mail calls being responded to within 24 hours (75 percent of the e-mail are replied to within one hour). “Call centers work well for us,” says Thompson. “They provide enhanced customer service.”

The services furnished by call center vendors today include not just answering sales calls or replying to e-mail from prospects who have seen an apartment ad on the web or in print, but also handling other duties such as resident relation calls, maintenance requests, online chat or offering outbound resident services, says Mark Sadosky, president of Multifamily LLC at CallSource. The benefit to outsourcing the function, says Sadosky, is that the apartment company has the opportunity to use a dedicated team of people whose sole focus is to attend to the sales leads for the community. “Those employees have the advantage of being able to focus on one task: follow up timely and accurately to the sales leads of the communities.”

By comparison to the 100 percent response rate to phone and e-mail inquiries using call centers, the best e-mail response rate AvalonBay could achieve previously when the function was performed in-house was 40 percent, says Thompson. And anecdotally, the response rate when phone calls are taken by on-site staff may be about 60 percent for the industry as a whole. Even if apartment companies are able to take 75 percent of all the phone calls or e-mail they receive, that translates to many missed calls, says Thompson.

All those missed calls mean many lost leases. “Run the math on the missed calls times closing rates, times an average year’s rent, and you’ll understand the need for a call center,” argues Sadosky.

In addition to 100 percent of calls being taken, Thompson maintains that the actual performance of the call centers are better, too. The lead-to-appointment conversion rate, he says, is much higher when representatives at call centers take the calls or e-mail. “We consistently obtain a 41 percent to 45 percent lead-to-appointment conversion rate. In-house, it is difficult to obtain those conversion rates.”

Thompson ascribes the better performance by the call centers to the lengthier amount of time call center representatives spend on the phone with prospects—on average 4 to 5 minutes, versus 2 to 3 minutes for calls taken by
on-site staff. Thompson says AvalonBay’s service representatives do not
pretend that they are based on the properties. And their compensations are not based on the number of calls or commissions, so they are willing to spend “quality time” with the prospects.

Thompson adds the representatives are trained specifically for the apartment industry, and there is “amazing customer service and talent” at the centers. “These services are not India-based. You do not have representatives taking one call for apartments and the next call for satellite TV,” he says.

Still, the overall apartment industry remains unconvinced. Call centers and outsourcing may have negative connotations for consumers, and outsourcing a customer service to call center representatives who are not connected to the community may appear unpalatable to much of an industry that may still be Mom-and-Pop.

“At Village Green we believe we are in the hospitality business, where personal relations and personal service are paramount to excellent customer service,” says Jonathan Holtzman, Village Green’s CEO. “Call centers will be treating an apartment community as a commodity. The person who is hired at a call center has never visited the apartment community nor the competitors.” Village Green employs professionally trained representatives whose compensation is tied to the performance of the apartment community, says Holtzman.

The consultant Sadovsky says apartment owners may be willing to accept the need to use call centers during after-hours or to handle overflow calls, but many would not want to have the centers take all calls and e-mail communications. “Call centers may be pretty convincing that they can do a better job than we can. I disagree,” says Sadovsky.

Sadovsky says using on-site apartment staff to answer calls can yield better results for the apartment owner—if the sales staff is trained correctly, and if the property management office is adequately staffed. “You need to hire enough people so the property is properly covered, and there is always someone to answer the phone during business hours,” says Sadovsky, adding that leasing agents also need to be paid more. “You don’t want to hire mediocre people to act as the front for what is really a multi-million dollar business.”

Other than distaste on the part of apartment companies with the notion of resorting to outsourced representatives who are unconnected to apartment communities, another impediment to making use of call centers may simply be the greater cost. Many apartment companies prefer to treat the call-taking function as an incremental duty performed by their existing staff rather than pay extra for going through a call center, says Thompson. Most fee-managed properties have to justify every expense to their owners, says CallSource’s Sadosky. And the service can get costly, whether users pay a flat rate or by the call or lead.

Also, for third-party apartment managers to outsource to call centers may possibly not sit so well with their clients. “The [fee] management companies are deferring their responsibilities to the client,” says Holtzman. “Why would an owner hire a professional management company when they are subcontracting to call centers [when] the most important aspect of the fee manager is to achieve occupancies and rental rates that exceed their competitors’?” he asks.

In response to the charge that call center representatives are unconnected to the apartment community, Thompson says the onus is on the apartment owners to supply all information on the property to the phone and e-mail service subcontractor. The information folders that the representative pulls up on the screen should have as much information as possible, Thompson says, such as pictures, maps, pricing, features, local schools, retailers’ distance to the malls, pet policies and even competing communities. He adds that if there are questions the representatives do not know, they can make a phone call to check with the community site office itself.

Sadosky of CallSource says that detailed information sheets can work so smoothly that the callers may not even be aware that they are not speaking to property staff. “I have personally witnessed a call center agent based in Phoenix converse with a prospect calling in regard to a community in Florida. The agent was able to provide a complete description of the community, along with directions on how to get to the community without the prospect ever knowing that they were talking to someone 2,000 miles away.”

With regard to the added cost of subcontracting out to vendors, Thompson advises apartment companies to examine how many incremental leases the call center will yield before the service pays for itself. He says the service will most likely be very worthwhile when that calculation is made. Moreover, he notes that for AvalonBay, the call center merely makes an appointment—and the in-house sales staff takes over from there in making and closing the sale over the phone or in person.