Multifamily housing professionals from executives to leasing agents believe satisfied residents are happy residents. Looking to buck the trend that satisfied is good enough, industry thought leaders on the Untapped Arbitrage: Resident Satisfaction session at the 2013 Apartment Revenue Management Conference suggested the industry needs to successfully transition satisfied residents into loyal ones. By engaging in loyalty-based customer retention programs, owners and operators are seeing greater returns from improved retention, increased referrals and a stronger bottom line.
Customer loyalty is seen as paramount throughout other industries, explained panelist Francis Chow, Chief Strategy Officer for Ellis Partners. “Take Apple and Starbucks. Loyal customers are willing to pay more for what is essentially a commodity,” he said. “Understanding where leverage is in the customer experience enables owners and operators to create new products and services to garner that loyalty.”
In order to create loyal residents, Equity Residential engages in simple two-question surveys to measure net promoter scores across their residential portfolio. “Measuring the difference between the percentage of customers who are totally and completely satisfied with you (raving fans) and those who aren’t provides us a greater understanding of our passive residents and detractors,” said Equity’s Vice President of Revenue Dave Romano. “You don’t just want satisfied residents, you want residents who sing your praises.”
So how does this loyalty translate into greater returns for an owner, especially during a renewal process that includes rate increases? Equity finds that loyal residents in fact renew and refer more often, with satisfied residents more likely to renew at 63% and dissatisfied residents renewing only 34% of the time.
Session Moderator and Principal of D2 Demand Solutions Donald Davidoff believes listening to what your resident is actually saying makes all the difference. “In response to our renewal rate increase form we received a letter from a resident who had issues he needed fixed in order to stay at our community. He pointed out issues there were against our brand standards, enabling us to correct the value issue for him, and he ultimately stayed in our community.”
To that end, Chow conducted an open-comment survey for a property which indicated a lot of individuals associated the notion of “home” with a smoke-free environment. However, when asked directly, only 65 percent of respondents were willing to pay to live at a smoke-free community (only 17 percent of people said they would be willing to pay more for smoke free). As a result, the community allocated a portion of their unit count to be smoke-free and were able to increase yearly revenue by $115,000, generating additional asset value by more than $1.6 million.
“You can’t underestimate the value of the open text comment answers,” said Romano. “The challenge is finding the consistent theme in those comments and understanding what your resident base is saying so you can work with properties to fix the problems.”
For more, download the Untapped Arbitrage: Resident Satisfaction presentation.
This information was presented at the 2013 Apartment Revenue Management Conference.