Are leasing agents salespeople or customer service representatives?
If you ask someone who knows the ins and outs of the industry they would say that truly great leasing agents are both. An excellent leasing professional needs exceptional sales skills to close the deal, but then be able to transition to a customer service representative who can fulfill the promises made during the sales process and recover and reconcile service pitfalls.
However, the customer service mindset can sometimes spill over and eclipse the sales element needed during the initial leasing process. Basic principles of behavioral economics and consumer buying behavior are forgotten and therefore lead to lower conversion and closing rates. Two simple principles– scarcity and loss aversion– can and should be executed with each and every prospect.
Scarcity refers to the idea that people place a higher value on an object that is scarce and attach a lower value on something that is abundant. The easiest way to understand scarcity is in terms of a product that is released as ‘limited edition’. Because there are so few of the product, consumers deem it more valuable.
Leasing application: Take a cue from airlines’ websites. Have you ever noticed the notation next to the price of a ticket that says ‘2 remaining at this price’? That phrase is intended to play upon your reaction to scarcity. Make the same notations on your property’s website and pricing sheets when it comes to availability of apartments and floorplan types. Remember to reinforce the principle by limiting the number of apartments shown to the prospect as well.
Loss aversion is the belief that people strongly prefer avoiding loses to receiving gains. Imagine loss aversion in terms of gambling. Studies show that a person will have a stronger emotional response to losing $100 as opposed to their emotional response of winning $100. Although that may sound strange, the reason a person would have a stronger reaction to losing $100 is because it was their money to begin with as opposed to the ‘free’ money won during the process. This concept of ownership is referred to as the endowment effect.
The endowment effect is the simple principle that people assign more value to a product simply because they own it. Think back to the last time you held a garage sale. More than likely you haggled with a stranger over the value of a piece of furniture they thought was overpriced. In actuality, you were more than likely falling victim to the endowment effect and placing a higher value on the piece because it was your furniture.
Leasing application: We want to communicate a message to our prospect that plays on their loss aversion bias coupled with an attempt at the endowment effect. Throughout the leasing process– over the phone and on the tour– refer to a specific apartment as if the prospect already has ownership. Use phrases like ‘your apartment’ and ‘your bedroom and closet’ throughout your conversations. When it comes time to close your prospect, instead of using the line ‘you’ll be getting the perfect apartment’, instead try a phrase like, ‘you don’t want to lose your perfect apartment.’