Percentage Rent Deals

Product Design Internship

June - Aug 2021

Customer Adoptions Team

1 Designer, 3 Developers, 2 QA Analysts, & 1 Product Manager

Team overview

VTS has been growing rapidly over the past couple of years, resulting in a lot of new sales to large customers. Many of these large customers are strategic to VTS' future and several are also investors. Some of these strategic customers have experienced product blockers that have prevented them from rolling out broadly within their leasing teams. While most blockers are prioritized into the product roadmap and delivered as part of regular product delivery, there are a number that are more subtle and bespoke which often leads to a lack of prioritization.

The Customer Adoptions Team exists as a customer facing Product, Engineering, and Design team tasked with solving these bespoke blockers in partnership with Client Advisory. My job has been to provide design solutions for these customer problems and create more dynamic user experiences on the VTS platform, specifically when brokers create contract proposals.

Percentage Rent Deals

Context

Percentage rent refers to an additional rent agreement between the landlord and a retail tenant. This retail deal says that after the tenant makes $X in gross sales, a percentage of all the sales above that threshold will be paid out to the landlord. Typically, the $X value is determined with an industry standard calculation; this is called a natural breakpoint. However, there are cases where the $X value is set through negotiations and based on nuanced factors (such as the COVID pandemic, where tenants knew they would be financially impacted) ; this value is called an unnatural breakpoint.

Problem

As a user, I want to model my retail deals using multiple tenant sales breakpoints. Right now, VTS offers the ability to add only one sales breakpoint. Not only that, I am unable to easily switch between starting with a natural breakpoint or an unnatural breakpoint. With more complex deals coming up, I am left with having to type out the breakdowns into an "additional details" field.

Solution

I led the design for a new dynamic iteration of the existing percentage rent modeling section within proposals creating page on VTS. The solution allows users to toggle between what state they want to start with (natural or unnatural) and allows for the inputting of additional sales breakpoints as well as breakpoints that would occur in later terms of the deal.

Exploration and Usability Testing

I conducted a series of usability test sessions with current customers under the purview of the Customer Adoptions Team. I asked leasing representatives to outline a typical experience in creating dynamic percentage rent deals and how the current VTS design helps or inhibits that workflow. Using an existing set of early wireframes, I validated the design directions that would effectively streamline the aforementioned workflow.

Using miro, I synthesized notes from the usability test sessions and tracked recurring themes to prioritize needs for the redesign. These findings were shared with and affirmed by the rest of the team.

Prototyping

When asked, users expressed not being able to input additional unnatural breakpoints on top of a natural breakpoint as the biggest reason why they decline to use VTS for percentage rent modeling.

Starting with the ability to toggle between starting states (natural vs. unnatural), I designed out a sub-section to house additional breakpoints (aka thresholds). In later test sessions, the text buttons worked more effectively than the toggle.

The ranged format to show the floor and ceiling of each breakpoint was nice to display, but wasn't 100% validated to be helpful during user test sessions. Additionally, this would make engineering work more complicated because two input fields would mean an overhaul of the backend design that maps what is considered a numerical floor with the addition of a ceiling.

Not seeing this ranged format as necessary enough to devote further engineering time that would involve other teams, my compromise was to keep a single input field for simpler view of breakpoints while also decreasing noise on the screen.

Launch & lessons learned

The input design on the proposals workflow page is currently in development. Success will be measured by a combination of tracking new deals created with percentage rent and customer experience stories from the Client Advisory team.

As a company at the forefront of revolutionizing commercial real estate workflows, we struggle with a lack of standardization within the industry to measure what product experiences are successful. However, this provides opportunities for VTS to lead and define new workflows. My solution on percentage rent modeling solves a crucial blocker experienced by leasing reps that are having to make new deals with tenants in a post-pandemic world.