Resident Retention: The Difference Between Customer Satisfaction and Customer Loyalty


Depending on the survey source, between 60 and 85 percent of customers who chose a new product or service indicated they were satisfied or very satisfied with their former provider. How could that be? Is it possible that satisfied customers would leave after “gifting” a business with a high customer satisfaction score? Yes.

The reality is that satisfied customers will stay until there is a better alternative offered to them. They have no emotional investment.

The mistake we make is confusing satisfied customers with loyal customers. Research has indicated that there is very little connection between customer loyalty and customer satisfaction.

Just because a resident indicates a high level of satisfaction does not mean that they are or will be loyal to your apartment community.

Customer Satisfaction

Customer satisfaction is just that, a customer’s sense of satisfaction. It means you are giving your customer what you said you would—the things they expected from you based on your original promise. So everybody should in theory have satisfied customers because keeping your promise is sort of basic stuff. It’s a minimum expectation. Customer satisfaction has little to do with customer loyalty.

The 2011 State of Online Banking Report revealed that nearly 66 percent of financial customers reported using online bill pay in early 2011. That’s a large number and I assume most have a positive experience with the process. While banks might easily achieve a 100% customer satisfaction rate (they are doing what they promised), I expect their corresponding loyalty rate is pretty low. Why? There are few opportunities to engage with the customer, resulting in no emotional connection. These customers are often 100% satisfied—0 % loyal.

Do your on-site employees engage with residents as much as possible? Do they understand the difference between satisfaction and true loyalty? If your satisfied residents place their trust only in your apartments and services, they might also feel comfortable leasing from any number of your competitors.

Customer Loyalty

Loyal customers are very different from satisfied customers. Consider who you are loyal to. Surely you’ll answer family and friends. Why? Because of the emotional bond you have with them. Your family and friends can do things you may not like, but you stay loyal because of that connection. The same applies with customer loyalty. Loyal customers will stay with you through thick and thin—there is an emotional connection.

A loyal resident has most likely benefited from such things as a leasing professional’s insight, problem-solving abilities, caring attitude or willingness to go the extra mile. They walk away from each interaction with a positive attitude about the apartment or service AND about the company and the people. In order to gain loyalty, you need to engage the mind and the heart of your resident. It’s all on the emotional level.

The Lifetime Value of a Resident

The lifetime value of a Starbucks customer is $14,009. A high-end hotel operator puts the life time sales value of a loyal guest at over $100,000. What’s the lifetime value of your loyal resident, who pays their rent on time, willingly provides referrals to you, perceives you as a partner, and stays by your side even when you make mistakes? How far do you allow your employees to go to solve their problems? What is their loyalty worth?

Not only is it less expensive to retain a resident than to acquire a new one, loyal residents spend more and are more likely to refer new ones to your business. The longer a resident is loyal, the more profit you will see.

If you care about long term growth and profits, then customer loyalty should be a top priority.

How do you measure resident loyalty? I would love to hear your thoughts on this topic!



President and Owner, Ellis Partners in Mystery Shopping

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Joanna Ellis is CEO and Owner of Ellis Partners in Management Solutions (EPMS) and Co-owner of Renter’s Voice. Under her direction, Ellis has established itself as the premier apartment mystery shopping company in the nation, as well as a respected provider of multi-touch point resident surveys, as part of their retention-focused customer experience program. Current clients include most major apartment developers, management companies, and REITs. Through Renter’s Voice, Ellis helps clients promote and respond to authentic and objective apartment reviews. Having earned a Bachelor of Arts in Business from Texas A&M, Ms. Ellis has spent more than 25 years in the multifamily industry, and she now holds both the Certified Apartment Manager (CAM) and Certified Apartment Property Supervisor (CAPS). She is also a licensed Texas Real Estate Agent. In honor of EPMS’ reputation for integrity, the Dallas Chapter of the Society of Financial Service Professionals awarded Joanna, on behalf of the company, the 2008 Greater Dallas Business Ethics Award for mid-size companies.

One response to “Resident Retention: The Difference Between Customer Satisfaction and Customer Loyalty”

  1. Very nicely put. I’m glad to see this posted, as it is a topic that many business owners fail to understand. The end result of which result in business growth below one’s potential, financial plateus, and/or business failure.

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