Steps to a Successful Amenity & Ancillary Service Program
Part 2: Analyzing the Data Increases Opportunities
Ancillary services have become a significant part of a successful approach to managing a community. Furthermore, the revenue they generate is no longer “bonus money”, but is now a vital part of the properties overall financial make-up through expense reduction, cost defrayal as well as another important revenue stream. But beware, there are more services and providers than ever before so remember to do your due diligence. If the deal sounds too good to be true it may cost you in the long run, especially if you end up with a poor performing provider. Any revenue you receive or save from these programs may not compare to the potential lost revenue if residents move out.
The information you have created in the Agreement Matrix (see Part 1: Getting a Handle on Your Agreements) will provide a great overview of what services and agreements are in place at each property.
The next step is to analyze this information to determine where the opportunities lie. Here are a few of the many questions you can ask yourself:
- Are there any services, contracts, or programs that you would like to
implement at any of your communities?
- How many providers are you using to provide the service?
- Can you reduce the number of providers?
Tip: Usually the more business you can guarantee or direct to a
provider, the better the pricing and customer service you will
receive. In addition, the fewer providers you use, the less time you
will spend managing the programs (fewer points of contact, fewer
checks to look for or cut, fewer contracts to understand, etc).
- Are the offerings and benefits consistent?
- By contract?
- By provider?
- Are any of the agreements expired or about to expire?
- Are there any new providers you should consider?
The goal is to understand:
- What agreements you currently have
- When the agreements expire
- How well the provider is servicing your company
- How much business you are currently giving them
- How much additional business you can send a particular company’s way
By adding this to the other information already gathered, you will be able to determine which categories and companies to start negotiations with.
Remember, implementing an effective Ancillary Services program requires more than just a casual glance each year or two at the services and revenue they generate. Contracts need to be monitored and managed at all levels in order to derive all of the benefits of such a program, including opportunities derived from the pending expiration of existing contracts. Staff and other resources are required to perform the ongoing and systematic process of continual review.
Those companies who wish to focus on their core competencies and still not miss out on all the opportunities available to them are turning to Ancillary Service experts that can help manage and guide their clients through this rapidly changing world. Regardless of whether you outsource or do it yourself, it is no longer an optional aspect of property management.