How the Long Tail applies to Property Management
Posted by Nate Burnes on Fri, Jul 09, 2010
I am sure many of you have heard of the concept of the Long Tail. If not I would recommend reading Chris Anderson’s book The Long Tail.
In a nutshell the theory of the Long Tail is that our economy is shifting away from focusing on the mainstream products and markets, of which there are relatively few. Instead, the focus is shifting to the masses, which are located at the tail of the curve. By reaching the masses the market actually becomes much larger than focusing on the big few. This is quite a powerful theory and is clearly evident in different parts of out economy.
So what does this have to do with Property Management?
The game within the property management market is for firms to manage as many properties as they can providing they are making money on each. Obviously it does not make sense for a PM firm to manage a property if they are losing money. How much money the firm needs to make will differ from firm to firm, but there is a minimum that they must make.
As a property owner you want to get the best service for the least cost. Nothing novel there. Owners of smaller properties are increasingly looking at self-managing their property. A great cost savings, but do they have the experience and expertise to manage their most important asset? Sometimes yes, but more likely no.
This is where The Long Tail comes into play. Property Management Firms need to focus on the properties that can afford to pay them the full service fee. However, what if there was a way for them to service the properties that are unable to pay the full fee? What is the cost to service a property went down? The number of smaller properties (anywhere from 2-25 units) is growing throughout the country. Wouldn’t it be great if the Property Management Firms could service these properties?
Access through Technology
There are a great many software packages out there aimed at the property management space. Many are helpful and serve a great purpose. However, when it comes to transferring best practices around the operations of a property the playing field is sparse.
With the advancement of technology (especially cloud computing) property management firms can offer their expertise to the smaller properties and still come out ahead. Simple to use tool enable property owners to store, manage and track all the relevant property information at a fraction of the price of full-service fees.
A win-win Scenario
Property Managers
• Access to ‘new’ customers
• Addition service offering
• Access to new revenue streams
Property Owners
• Can build brand as knowledge leader
• Ass to experienced professionals
• Low-cost option; can pick and chose what service you want from the firm
• Safety-net of the PM firm to help
This is a different way for property managers to think and a new offering they can provide to the market. Those managers that have the vision can take advantage of the technology available to them and put themselves in a position to capture a whole new set of customers.
Part of the beauty of this is that the property management firms can still differentiate themselves by customizing their offering. Some may decide to offer accounting only, others may simply offer the best practices and set up. The firms can provide a list of all the services they can help the property owner with and let the owners chose what they want. This way, both parties are getting what they want.
