It’s no secret that the costs associated with tenant turnover can be exorbitant. A 2011 SatisFacts study estimates move-out costs average around $3,900 per unit, which includes, among other items, $1,200 in lost rental income, nearly $800 in concessions and more than $700 in maintenance, readying and repairs.
So, what can property managers do to encourage lease renewal? After interviewing property managers and retention research experts, I’ve collected a mix of three common sense and creative strategies to increase resident retention.
Start With Customer Service
A 2010 SatisFacts study found that 54 percent of residents choose not to renew leases based on controllable reasons. Poor customer service, lack of responsiveness and dissatisfaction with maintenance requests were cited as the main drivers of resident turnover. Contrary to popular belief, lucrative property amenities don’t make up for deficiencies in service. So, it’s critical that property managers address these issues.
Doug Miller, Founder and President of SatisFacts Research, suggests focusing first on “exceptional service.”
“The marketing fluff is nice, but only if accompanied by exceptional service,” says Miller.
But, what defines exceptional service? Miller defines it as truly meeting residents’ needs, and not by assuming what they want. Studies show residents want courteousness and professionalism; promptness of responsiveness; and, follow-up on completed service requests. As Miller notes, “There’s no rocket science behind it. And it doesn’t cost any more to provide great service than mediocre service.”
I also had the opportunity to speak with Lynette Hegeman, the Vice President of Marketing at Gables Residential. Hegeman echoed Miller’s sentiment that the primary focus should be on customer service. They monitor it by conducting surveys at various milestones of client-tenant interaction. For example, they’ll request feedback from prospective tenants, after new residents move-in, after maintenance and prior to lease renewal.
Focus on Value
Another retention strategy is to focus on providing residents with value, and not just in terms of dollars and cents. So how do we define value? Or more importantly, how do residents define value?
According to Jen Piccotti, Vice President of Education and Consulting at SatisFacts, value is defined as how easy it is to be a resident.
“The way residents see it, [value] is defined as how easy it is to be a resident in this community for the price I’m paying,” says Piccotti. “Staff can gain huge amounts of loyalty by thinking in terms of making life easier, less stressful and more convenient for their residents on a daily basis.”
So while customer service may not be as exciting as offering tenants free iPads with their move-in, it gets right to the heart of the matter. As Piccotti concluded, “It’s what the residents are asking for–because they are most likely not currently getting it to their expectation.”
Perks: It’s All About Innovation
Providing great customer service and value are the first keys to improving resident retention. But amenities are important too. The goal is to find the right mix of offerings that your residents will find compelling enough to want to stay. Creativity and uniqueness go a long way here.
For Gables residents, it’s a range of things, including monthly resident events. Though this might sound expensive, Hegeman explains that community events vary budget-wise month-to-month. In some months, Gables will host swanky events, whereas others are simple, low-budget activities that bring residents together and instill a sense of community. Hegeman says, “Integration doesn’t always mean you have to spend a lot of money. It’s about innovation.”
Gables also offers the Gables Great Reward Program, which rewards residents for tenure. Upon lease renewal, the program offers various bonuses such as carpet cleaning or painting an accent wall as a thank you for continuity.
Some Gables properties offer innovative additions to standard upgrades. One Gables property in Austin offers electric vehicle charging stations, one in Atlanta has a car wash and one in Phoenix scatters recycling bins throughout the community.
There are also opportunities to promote retention with dog-friendly policies, particularly by removing common breed or size restrictions. Roscoe Properties, for example, is one of the very few property management companies in Austin, Texas to welcome Pit Bulls. Such policies boost retention among pet owners, but also attract more pet owners in the first place with a rare, highly-differentiated offering.
Keep It Simple
When all is said and done, the smallest gestures may make or break a tenant's decision to renew. Personally delivering newspapers, handing out coffee as residents leave for work or simply greeting tenants with a friendly “how are you?” can all help in your campaign to hang on to those valuable residents.
What strategies have you implemented that have proven effective in retaining resident retention? Have you found that practicing great customer service has been your primary success in tenant retention? Or have you created unique ways to gain your tenants’ loyalty and renewals? Feel free to share your property management experiences with retention in the comment section below.
This thumbnail was created by Nathan Guy.