Chicago’s Waterton Residential realizes 324 percent ROI through its online resident-referral program.
Many property management companies wonder whether investments in social media provide a tangible return, and especially whether those efforts can convert into real dollars. Property management firm Waterton Residential’s year-long, social media-driven resident referral program shows that apartment providers can harness the power of social networks to fill apartments, save money and staff time, and improve a community’s NOI.
With social media tools, resident referral campaigns have come a long way from the days when community managers designed resident referral fliers, printed them and hung them on every door. The online tools Waterton used turned this physical process into a campaign that is virtual and trackable by allowing residents to post referral messages to their newsfeeds in social networking sites.
Apartment communities have always had resident referral programs because they work. In a 2009 Nielsen Online survey, “Recommendations from people I know” scored highest in effectiveness among all forms of marketing communications, both traditional and online. Capturing resident referrals through social media can add legs to a marketing plan without adding budget dollars.
The Social Sell
Waterton, a Chicago-based firm with 15,000 apartments in 12 states, found substantial return on investment (ROI) in its one-year test of the social media-based resident referral program. The company sent five e-mails to each of 7,000 residents for whom they had a valid e-mail address. Through social media, the campaign reached 87,072 of those residents’ online friends, family and acquaintances.
To use the tool, property management team members access a Web portal and create a customized e-mail campaign to residents. The e-mail describes the company’s resident referral program and encourages residents to click on an embedded link within the e-mail to spread the word to their Facebook, MySpace and Twitter contact. Or, if residents prefer, they can forward it via e-mail.
With a click, residents post a message (also customizable by the property manager) to their newsfeed, promoting the community to their online friends. Interested friends can click on the feed to visit the community’s website, where they can learn more and contact a leasing agent. It’s a low-pressure, soft-touch sell among friends, and it reaches a wide audience because the average social media user has more than 200 Facebook friends and Twitter followers.
Referral ROI
Tracked against a list of all referral bonuses paid across the 21 Waterton communities taking advantage of the social media-based resident referral program, the company reported 446 closed resident referrals. Since referrals are somewhat organic, not all of those leases can be attributed to the program. However, 22 percent of the residents who successfully closed referral leases clicked on the link in the RentMine-Online referral program campaign. Further, 12 percent (or 54) of all Waterton’s resident referral leases in the past year were
converted by residents who participated fully through the social media-based online referral process (open, click, sign-in and refer/endorse online).
Assuming that signed leases prevent about two months of vacancy, the revenue generated by 54 leases at an average monthly rent of $900 yields $97,200 in revenue generated. The campaign cost an average of $1,500 per community for a total cost of $30,000, indicating an ROI of 324 percent.
Waterton also witnessed increased resident referral rates from using the social media-based online referral program. The referral rate for the program was 6 percent, two and a half times higher than the company’s standard 2.4 percent referral rate.
The company’s largest community, the 2,340-unit Presidential Towers, had an even more significant ROI. The community closed 19 referral leases through the program, generating $34,200 in revenue from filling vacant apartments while spending $2,000.
Positive Buzz
Direct referrals weren’t the only benefit Waterton realized through its social media referral campaign. With many communities still learning how to live in the world of online rants and criticism, Waterton sees using social media as a cost-effective and search engine-friendly way to generate positive buzz that spreads rapidly in cyberspace. Resident recommendations, though incentivized, are credible to those residents’ online contacts.
Further, the tracking and reporting available with social media provides valuable data to better understand the communication preferences of residents. The online tool used by Waterton allowed the company to precisely track resident referral activity and offer early participants a small incentive to increase overall participation rates.
With the tracking capability, companies can know exactly
who contacted whom and whether they used Facebook, Twitter, MySpace or e-mail. This in-depth information allows companies to track which residents are top referrers, while the program enables those top referrers to easily reach their friends, co-workers and beyond.
Virginia Love is Vice President, Training and Marketing,
Waterton Residential. Ed Spiegel is CEO, Rentmineonline.com.