Futurescaping and tracking where the property management industry is going has been interesting over the last few years. A lot of things are coming to a head, and on The Property Management Show podcast, we think it’s important to invite guests who are running big businesses. When our small business partners engage with our big business partners, we can all learn a lot and figure out where our industry is going. It helps us to plan strategically for the future.
Today’s guest is one of those big business guys. He’s Chris Lister, who is currently the CEO of Buildium, and previously worked with Constant Contact. That company recently sold for a mere billion dollars.
Chris knows how to grow a company, and he’s joining us to talk about the future of the property management industry, and how personal relationships and technology are learning to play nice with one another.
What We Know About Chris Lister
For 10 years, Chris helped grow Constant Contact from $25 million in revenue to about $450 million in revenue as the Chief Revenue Officer. After those 10 years, he took some time off to be with his family, and then joined Buildium as their Chief Customer Officer. In case you don’t know, Buildium is a property management platform for small businesses who are managing between 10 and 5,000 units. The platform helps with property management accounting and provides other tools to help with leases, tenants, and units. The company has 16,000 customers and they’ve been around for 14 years. After managing the sales, marketing, and customer success departments, Chris transitioned into the CEO role about six months ago.
To successfully run a big business, it’s critical to understand your market. At Buildium, Chris and his team know they have a market to reach, and they know they have a product that’s moving from good to great. They’re helping their customers get closer to their goals.
Self-Management and Industry Disruptions
Why are more than half of the landlords and property owners still self-managing?
Chris believes it’s because property management is often something that happens to people accidentally. They might inherit a property or move out of the home they’ve lived in for years. Or, perhaps they’re in the military and always moving. Whatever the reason, they’re called accidental landlords. That constituency is a third of the market. They fell into the management of a rental property, and they’re still trying to understand what’s happening.
Sometimes, these accidental landlords will realize that they like the rental income that’s coming in, and they’ll start investing in additional properties. Usually, though, they’re not thinking of professional management as a necessity until they get to 10 or 20 properties. That’s when they need to think about efficiencies and systems.
Lately, a lot of property management companies have been arriving in competitive markets with a lot of venture capital and private equity money. These are shops financed by tier-one Silicon Valley venture capitalists. There are probably more than a dozen of these companies around the country, and more are coming.
Property technology is hot right now.
According to Chris, this should not surprise anyone. More money is coming into this space because it’s an industry that has not been quick to adopt technology. So, they see an opportunity. What has not been established is whether they can create a repeatable model that brings value to the customers. If they understand the face that relationships are essential in this business space, they might have a shot at succeeding.
The companies who win, however, aren’t necessarily the ones with all the money behind them. The companies that win understand that the property management business is relationship-driven. It requires empathy and customer engagement.
If you have a fat check but you aren’t genuine in how you’re delivering services, you’re not going to do well.
Relationships can be the way you differentiate yourself from other companies. If you’re looking for a competitive advantage, it’s not going to be that you do all the things that other property managers do. But, it could be that you treat your customers brilliantly and you know how to effectively manage relationships with your clients.
Customer Service: More than a Department
The customer experience is critical to successful growth in property management. Customer support, customer service, and customer success needs to be the responsibility of every single team member. That’s the theory at Buildium, and you can adopt the same commitment to customer experience at your management company.
You need to meet the expectations your customers have.
Customers can walk at any minute. Each day, it’s important to renew your commitment to them. Make sure every single one of your customers understand how they can be successful by working with you.
Customer service isn’t simply a department, and it’s not corporate-speak. It needs to be part of your culture.
One recommendation Chris has on how to build the customer experience buy-in for a smaller staff is to have every person go out and sit with your customers. This doesn’t mean texting or sending an email.
Go into their lives and see what they’re dealing with on a daily basis.
A few months into his start at Buildium, Chris went to meet with a client in Philadelphia. As soon as he walked into the client’s office, he could sense that something was up. It turned out that his client got a call at 4:00 am that a sewer pipe blew at one of the buildings he managed, and all of the units on the first floor were flooded with sewage. This gave Chris a first-person look at what sorts of things happen to his clients every day. Living it and seeing it and witnessing how everyone was reacting to this gave him an insight that he couldn’t access with a phone call or through an email.
Get into your customer’s mindset. Be there.
Business to Business to Customer
Buildium has their 16,000 customers, and then those 16,000 customers also have their own customers. Part of what they try to do is to build and strengthen the relationship that their clients have with their own customers.
An example of this is resident portals. Bringing technology directly into a tenant’s unit and onto a tenant’s mobile phone is a huge convenience. It provides texting capability and real time communication. Tenants have the ability to pay rent online and pick up other offers like renter’s insurance.
Technology enhances relationships. It doesn’t replace them.
This is a modern and new experience, but it has not taken long for every customer to expect this ease and this technology. Your millennial tenants expect it, but so do your baby boomer tenants.
Marketing and Sales: How Much is Enough?
Alex had to ask what he loves to ask: What is the percentage of revenue that a healthy growth-minded business should spend on marketing and sales?
Chris started with the number that the Small Business Association supports: between 7 and 8 percent for a company that earns less than $5 million. Double that if you’re in the $10 million to $50 million range.
But, you have to understand your business model first. The percentage is immaterial if you’re not sure who you want to market your services to. Figure out what you need and grow your customer base. If you have 10 customers, you probably want to get 10 more customers. But, can you increase the services you’re providing to those 10 customers? That’s a different type of marketing. Getting a new customer is more expensive than getting more from your current customers.
Dial into your business model first. Then, see if you can maximize revenue from your current customers. Then, ramp up your marketing efforts and really grow your business.
Profile of a Successful Property Management Company
Chris works with 16,000 property managers and their companies. He’s a good person to tell you what he notices about the really successful business owners.
First, they’re all in. They aren’t real estate companies that hold onto a property management division just so they have regular monthly income. Successful management companies appreciate and respect the industry. It’s more complex than it looks.
Next, successful management companies are empathetic. They’re service-oriented, and they’re technology enabled. They’ve retired the big three-ring binder that property managers of the past have loved so much, and they’re getting rid of paper.
The empathy and the dedication to service shows up in a number of different ways. For example, are you looking at your client base as the number of doors or units you manage?
Those aren’t doors. They aren’t units.
If you think of yourself as being in the business of providing homes, you’re probably a good property manager.
Another quality Chris sees in his most successful clients is their willingness to focus on residents. This doesn’t mean they don’t care about their property owner clients; of course they do. But, if you keep your tenants happy for one year and then for two years and then they keep renewing their leases year after year, you’re doing something really terrific. You’re also making more money.
Finally, make sure you’re showing up. Be there for your customers in good times and bad. Don’t wait for a pipe to break to show your residents and your owners that you care.
To drive your business to the success you want, you need to run an efficient company through technology and strong, strong relationships. It’s the only way.
Here’s a recap on what a successful management company looks like:
- It’s empathy-driven.
- It’s tech-enabled.
- It’s service-oriented.
- It understands the difference between homes and doors.
- It’s showing up in good times and bad times.
Humanize who you are, and double down on tech.
Growth and Acquisition: When Buildium Bought All Property Management
Acquiring All Property Management (APM) made sense to Buildium because it provided another service channel for current customers. Buying leads from APM cannot be a customer’s only channel, but it can be one channel. It allowed Buildium to differentiate from their competition, and the integration is ongoing.
Chris appreciates the opportunity to integrate the technology between the two companies even more. Offering a marketplace to their customers is an idea that’s still pretty exciting, and it allows new customers to come into the fold. Even if a property manager isn’t using Buildium, they can get some value from the company and see how they work.
Providing additional channels to help your clients grow their business will help you when that channel aligns with what you’re doing.
The parting words of wisdom from Chris Lister come from a quote that one of his customers gave him. He paraphrased it to say:
If you go after growth before you are on the efficiency journey, you’re gonna lose.
Everyone wants to grow. It’s a healthy desire. But, make sure you understand your model. Be efficient. Then, you can successfully introduce growth.