By Earl King
For the past three decades (and then some), I’ve advised contractors not to chase property managers as customers. I’ve always contended, with some validity, that many property managers weren’t motivated by quality and top-notch service, and therefore, weren’t great prospects for service agreement sales.
However, while assisting a client’s salesman in North Carolina two years ago, I could no longer ignore the number of prospective customers we drove past simply because they were under the control of a property management firm. In each case as we passed by, I asked, “Which contractor is taking care of this property?”
To my astonishment, the same names kept popping up. Realizing that these competitors were simply upstanding service vendors, I started pondering the situation.
After all, the buildings we were totally ignoring were otherwise prime commercial service targets, and all with large packaged units or chiller/boiler plants. Therefore, we decided to pursue at least one property management firm, if for no other reason than to discover what the decision-making process entailed.
Our first attempt found us in front of a relatively small management firm, with eight medical properties in its fold.
As luck will occasionally prevail, the firm’s representative expressed much displeasure with his current vendor. He also volunteered that the service company prior to the incumbent also fell short of the firm’s expectations.
In both cases, the service companies
didn’t see his problems as a priority. The representative went on to share that the dispatcher was rude and didn’t return his calls, which was completely unacceptable.
At his request, and as part of the selling cycle, we gave him a tour of our service center and the opportunity to meet both the service manager and the dispatcher.
During our final presentation, we discovered that the previous service suppliers didn’t even allot enough time to perform routine preventive maintenance on the eight buildings.
We then presented a cost justification for each property and verified the tasking time requirements with written documentation. As a result, we landed all eight locations.
Soon after, we found a second player, which made me a believer in pursuing property management groups.
This group also managed medical clinics, and had 11 buildings in total, ranging from 30,000 to 100,000 sq.ft. Not only was the dominant buying motive complete, uncompromising tenant satisfaction, but the conscientious decision maker wasn’t at all interested in low-bid. She also expressed a concern for quick response.
Once again, we reassured our prospect that with proper preventive maintenance, emergency visits could be eliminated, if not drastically reduced. If or when unscheduled calls were required, we explained that we also had the bench strength to handle them.
By supplying her with numerous reference letters and a complete cost justification, we secured the two largest properties with a genuine commitment for adding the remainder as the existing contracts expired.
A few weeks later, another property management success story played out in the Chicago area. The core property was a very large hotel/convention center and performing arts theater, a flagship for the community. We discovered that the property manager was directly employed by the same company that owned this property, as well as scores of others from the Midwest to the tip of Florida.
During our conversation, we found that the current service vendor was a local contractor, and the decision- maker seemed to be on the fence with no real dissatisfaction nor great satisfaction with the present service.
We also uncovered that the same property manager was going to assume the management of nine other hotels, which were much smaller and all in the same general vicinity. The last properties under his jurisdiction were twin, 12-story office buildings adjacent to the main hotel/theater complex.
Our strategy took a new path when the manager expressed he was looking for one means of control for all properties. He displayed genuine interest when we presented the possibilities of monitoring, controlling, and trending all locations from his desk. He became even more enthusiastic when we explained how he could also tie his fire/life safety, and security to the same console.
Ultimately, the sale resulted in a large service contract on the hotel/theater complex, nine smaller hotels, and the twin office buildings.
Presently, we’re developing a proposal for the building automation systems (BAS), fire/life safety, and security for each of these buildings, which the customer requested. He also expressed an interest for a long-range leasing plan for replacement of 12 of the larger packaged units.This would be a sizeable sale with considerable upward expansion capabilities, all negotiated at a desirable gross margin.
During our experiences in prospecting property managers, we learned that some property management groups make better targets than others. For example, search for those that manage higher end properties, preferably professional complexes such as medical and legal facilities. Management firms that primarily control retail and small individual office space aren’t as likely to subscribe to high quality service.
Next, refrain from large national property management groups, unless you have national/regional capabilities. Typically, they have the power to drive down margins and force successful vendors into a contract laden with stipulations, all in favor of the customer.
Furthermore, it’s not uncommon for national agreement vendors to pre-agree upon mark-ups for compressor and motor change outs, and even worse, smaller components.
Finally, look for property managers who are directly employed by the owner of building(s). Not only do they tend to be willing listeners, they’re also closely tied to the bottom line and long-term planning.
Look For Opportunities
As you can see from our experience, the chances of landing a property management service contract are much greater when your group offers services your competition doesn’t. Capabilities such as BAS, fire/life-safety and/or security could set you apart from the company currently taking care of that property.
Another area of opportunity is lease-purchase arrangements. Here, the owner can spread costs over several years while solving critical needs immediately. This also allows for disbursement of funds either in operating expense or capital expenditures.
Substantiate Your Strengths
It doesn’t hurt to go overboard in proving your credibility. A tour of your operation combined with meetings specific, key employees can do wonders in reassuring property managers displaying any doubt or skepticism.
Documentation through reference letters and case study testimonials provides another level of comfort. Here, it’s valuable to offer property managers with return-on-investment studies, cost justification, and life-cycle-costing for them to present to their superiors.
When the situation arises, a maintenance audit of the company’s present program with pictures of problem areas makes for a professional presentation and, once again, gives managers something substantial to take to those above.
Most of my personal property management sales in the past two years resulted in relatively short selling cycles such as 30 to 60 days. However, this isn’t always the case. By nature, this type of sale is a relationship building adventure. It’s not unlikely that some will take many months to bring to fruition.
There’s no question that property management firms offer many profitable opportunities. Although you’ll need to be selective and creative, and have a little more patience than usual, this prospect shouldn’t be overlooked. I know from my recent experiences all across North America, I will be on a mission from this point forward.
Earl King has provided consulting, on-site training, and support on commercial service for three decades in 32 countries. For more information, call King Productions International at 515/834-2474. The next commercial service agreement workshop will be in Philadelphia, May 4-5.