High-class marketing for low-income housing: KSI Management's tax-credit marketing strategy has generated more traffic and higher occupancy, bringing the company's portfolio-wide occupancy rate from 93 percent two years ago to 97 percent today.

When residents walk into the leasing office at The Fields of Bethesda, they notice the warm, comemporary look, embellished with yellow and orange accents. A leasing professional hands them a brochure that complements the decor. They begin to peruse the community's amenities and the benefits the Washington, D.C., suburb has to offer, noting the photos, maps and floor plans that help make this community memorable.

Its first-class marketing materials seem suited for market-rate apartments, but The Fields of Bethesda is a tax-credit community--one of 28 managed by KSI Management, the Washington, D.C., area's largest owner and manager of affordable rental communities. And that's exactly the point, according to Karen Kossow, KSI's Assistant Vice President of Sales and Marketing.

"I'm a big believer that the quality of the marketing materials you hand out have an impact on who applies," Kossow said. "Previously, there wits some thought in the industry. that the tax-credit customer was a lesser customer. We believe thin all prospects at all communities should be treated equally in terms of marketing."

KSI's philosophy has generated more traffic and higher occupancy, bringing KSI's portfolio-wide occupancy rate from 93 percent two years ago to 97 percent today. "One Rockville, Md., community that had never topped 90 percent occupancy reached 100 percent in only six months," Kossow said. "And more communities are at maximum rent. Some of the success is market driven, but we are also advertising better."

Advertising better doesn't have to break the bank. In fact, since KSI rolled out its new brand of marketing, costs are down 34 percent from the end of 2003 to the 2005 budget season, according to Kossow.

Sophistication and Standardization 

Jennifer Nevitt Casey, CEO of Bravo Strategic Marketing, has urged owners and managers to shed their misconceptions of the tax-credit resident since she became a consultant in 1994.

"The challenge in the industry is that many have false perceptions about tax-credit renters--that they are lower quality reuters, that someone who rents in a tax-credit community is just lucky to have a home," Nevitt Casey said. "Not at all. These residents deserve to be treated like they made a good housing choice. Hold the customer in the utmost respect."

Since the Low Income Housing Tax Credit (LIHTC) program was created by the Tax Reform Act in 1986, the market has endured cycles of prosperity and decline, at times pitting tax-credit communities against market-rate communities that were trying to attract the same residents. "After experiencing that cycle, more owners are willing to invest in marketing tax-credit communities, knowing the cycle could repeat itself," Nevitt Casey said. "During the first decade of the program, owners were pioneers. In the second decade, marketers are maturing and have a more sophisticated approach."

Part of that sophistication for KSI involved implementing portfolio-wide branding standards. Since 2003, 14 of its 28 tax-credit communities have been transitioned to The Fields brand, which includes a community rename, updated signage and marketing collaterals and inclusion on The Fields' Web site, www.thefieldsapts.com.

"Previous marketing pieces were not as professional or appealing," Kossow said. "Onsite staff did its own fliers and there were no standards. Site teams were used to being able to do what they wanted, and some still try to. But with 28 communities you must have consistency from a branding standpoint while maintaining the individuality of the community."

KSI has extended that branding to the leasing office. "The scheme ties into our marketing materials," Kossow said. "The colors are very warm with a contemporary look."

Nevitt Casey said, "I never recommend cutting corners on logo design, monument signage and the quality of the interior finish of the rental office. This is because people form brand perception by their visual experience with you, and these have the highest impact visually." Nevitt Casey also insists on professional attire or uniforms with name badges for onsite staff.

Spending and Saving

Rebranding a tax-credit community can carry a hefty price tag for an asset with fixed rental rates. "From signage to marketing, it took about $50,000 to transition a community to The Fields brand, and that is money that someone has to be willing to spend," Kossow said. "But I truly believe there are ways to do more with less. Whatever we do, we have to find a lower-cost way of doing it."

While many companies had traditionally relied on expensive print advertising exclusively, KSI discovered that tax-credit renters have sophisticated Internet habits as well, contrary to the beliefs of some apartment owners.

"In 1997, I worked with an owner who thought that the Internet was just a fad and could not be convinced to spend his marketing dollars there," Nevitt Casey said. "And he thought that tax-credit customers would be too 'poor' to access the Internet."

To challenge that belief, RSI hired an advertising agency to conduct a focus group and found that the data supported widespread Internet usage among lower-income renters.

"We were very analytical," Kossow said. "KSI had been focusing exclusively on print advertising because there was a belief that tax-credit customers did not use the Internet," Kossow said. "But I've seen it work. We've made it work."

Kossow said that KSI has found ways to incorporate less-expensive Internet advertising and to use smarter print advertising strategies.

"We shifted from print sources that weren't working as well in our market to ones that worked better in this area," Kossow said. "And we found that in the D.C. market, we have to have a strong Internet presence."

To save additional money, Kossow said that some of KSI's smaller communities have reduced or eliminated print advertising. "We have one 96-unit community that is going from a full-page ad to a half-page ad," she said. "We have 102-unit and 300-unit communities that are starting with an Internet-only strategy. But this only works in specific markets."

Nevitt Casey said that apartment owners should take market-rate techniques and put them on a diet for their tax-credit communities.

"For market-rate communities in moderate markets, I am a firm believer in buying two-page, four-color print ads," Nevitt Casey said. "But this is a luxury that tax-credit communities usually can't afford. You should still use print but not buy so much real estate."

When purchasing ads on Internet listing services, Nevitt Casey said that instead of picking four or five Web sites, advertise with the top two. "And the top two vary from market to market," she said. "Pick the two that are proven in your micro-market and that show the most promise."

Kossow said, "When you are advertising right, you are saving money as well."

Low Budget and High-Tech

Once an advertising strategy is in place, apartment owners can turn their attention to printed and online marketing materials.

"Our brochures are fun, warm and colorful," Kossow said. "We use actual community shots woven into our templates. Each brochure costs between 57 cents and 87 cents, depending on the quantity of the print run. And the whole marketing package, including the bag it comes in, is less than $1."

Once it created the brochures, KSI designed its Fields Web site to match. KSI hired a company to make sure The Fields topped the search engine listings on sites such as Yahoo! and Google. "We designed the site to organically optimize well and we paid a lot of attention to that," Kossow said.

Another high-tech aspect of the site involved adding a third-party software program to allow residents to make apartment reservations online. According to Kossow, one community received 30 reservations in 30 days, and in two weeks, KSI received 132 reservations at 18 communities. From the reservations, KSI saw a 20 percent closing rate, which was in line with typical tax-credit closings. "My expectations have been exceeded," Kossow said.

One of the challenges unique to tax-credit marketing is deciding how to position the income requirements in the marketing materials. "There are two schools of thought," Nevitt Casey said. "Some owners decide never to show the income grid so as not to throw it in the face of the world that this is a tax-credit community. As a result, you get a lot more walk-ins who are over-qualified, and the extra traffic can wear down the leasing team. Or you can tell it like it is and put the income grid in your advertising."

KSI opts to include the grid. "We found it valuable to include the income grid in all advertising," Kossow said. "This helps pre-qualify customers. We also include an income calculator developed by a third-party software provider on our Web site that lets customers know that they over-qualify, but it does not stop them from making reservations."

According to Nevitt Casey, the best strategy is to study the competition's income grid placement. "Talk to apartment publications' account representatives about what other companies have had success with in your market."

Transitioning Techniques

While changing the way a company views marketing for tax-credit communities can be daunting, Nevitt Casey recommends some simple steps to get started.

"Look at your visual brand and see if it needs some dusting off before totally investing in a new campaign," she said. "Before spending a dollar, take what is there and dust it off. Remove the clip art from the logo and give the leasing center a paint job."

Investing in training for onsite staff can go a long way toward getting buy-in for a new marketing approach. "If you have been doing things the old fashioned way for 10 to 15 years, you will need to educate your team," Nevitt Casey said. "They have been order-takers for years and need to learn how to be someone who listens well and creates empathy--and that does a lot for existing customer relationships. If you have a dynamic tax-credit team, that is an accomplishment."

Kossow said KSI is continuing to take its marketing efforts to the next level. "We want all our marketing materials and all our communities to be the most appealing to residents," she said. "We did what we thought would work and tried to add a lot more sophistication to tax-credit marketing."

A POWERFUL PRESS PROGRAM

In addition to advertising strategy and print and online marketing, community outreach is a key component of a successful tax-credit marketing initiative, according to Jennifer Nevitt Casey, CEO of Bravo Strategic Marketing.

"With market-rate communities, it is not imperative that you have a press program in the community where they are located," Nevitt Casey said. "You don't need to send out press releases and press kits. The community generally understands the value of market-rate apartment living."

However, for a tax-credit community, the apartment company must implement a robust outreach program. "You are really going to be doing a lot of street marketing," Nevitt Casey said. "The education process is critical to success. Keep in mind that the community may look down on tax-credit communities and think you are bringing in prostitutes and drug rings."

Also important is promoting your community, by sharing its Web site with human resources directors for local service industry companies. "HR directors look for tax-credit communities to point their employees to affordable housing," Nevitt Casey said.

Jeanine Gajewski is NAA's Manager of Communications. She can be reached at 703/518-6141 Ext. 141 or [e-mail].