The Top 5 Myths of Resident Retention
I’ve worked with a lot of apartment properties over the years, both on the owner/operator side as well as the resident feedback side. In that time, I’ve run across a lot of myths that seem to be passed along from team member to team member until no one is sure how the information first came about or thinks to question it. I’d like to dispel some of the most common myths surrounding tenant retention based on data that comes from hundreds of thousands of tenants across the country through our resident feedback programs. The truth may pleasantly surprise you.
Myth #1: Renting to a new resident at a higher rate is a better financial strategy than retaining current residents
Based on national second quarter figures, the average cost to a property every time a resident chooses not to renew his or her lease is $3,900. That figure takes into account average vacancy loss, time, and wages to turn and re-rent the apartment, as well as hard costs for the maintenance team to make the unit ready for the new resident. Even if the community is able to re-rent that apartment for $50 more per month, it will take 78 months, or 6.5 years to recoup that initial loss. The bottom line is that retaining existing residents is a more sound financial strategy.
Myth #2: Residents are looking for a “sense of community” when it comes to their renewal decision
Based on a national study entitled, “Getting Inside the Head of the Online Resident,” conducted by SatisFacts Research in 2011, a “sense of community” and “resident events and activities” rated as having low importance when it came to their decision to renew their lease. Basic service expectations, such as quality of maintenance service and quality of customer service had the highest importance.
Myth #3: In this changing and uncertain economy, fewer residents are saying they are “Very Likely” to renew their lease
Over the past four years, SatisFacts clients who consistently listened to their residents and focused on the satisfaction topics that matter most to them experienced increases year after year in the percentage of residents who indicated they were “Very Likely” to renew their lease. The economy may be uncertain, but the residents who experience the reliable level of service and value at their community have no reason to look for a home elsewhere.
Myth #4: As long as we have one standard mode of communicating with our residents, that’s all we need
According to the 2011, “Getting Inside the Head of the Online Resident,” study conducted by SatisFacts Research, email and cell phone are far and away the primary ways residents want to communicate with their apartment community, with email leading the charge. However, 28% of residents (including all age categories) would like to communicate via text message. Communities who are not taking advantage of a variety of communication methods are likely not providing the level of service that is now expected. Conduct an audit of your resident contact information. If your community does not have a minimum of 60% coverage for email and 100% coverage for a phone number, you are unable to have confidence in your ability to communicate effectively with your residents. And the ability to communicate is the foundation for all service delivery.
Myth #5: Residents care most about the appearance of their apartment when deciding to renew
According to research conducted by SatisFacts, responsiveness and follow-up by office staff has highest impact on renewal decisions. In fact, one of the best practices in establishing a “Culture of Responsiveness” in your own community is to implement a communication standard to ensure everyone on the team understand what it means to be responsive in your community. An example of a communication standard is: All calls and emails received by 3:00 P.M. require a same day response. Any call or email received after 3:00 P.M. must have a response no later than 10:00 A.M. the next morning. By establishing the expectation, each team member understands the priority and can work to achieve it each day – setting the standard to the tenants that this is a team who is here for them!
The bottom line is that retaining residents not only makes dollars and “sense,” it is an attainable goal that may require no more than a shift in focus toward communicating with them consistently, and in the way they want to communicate. How will you establish your “Culture of Responsiveness?”