By listening to residents throughout the lease term, including during focus groups, property managers can improve key success metrics across the board.
The best companies in the apartment industry work very hard to get their business strategies right. Location, land acquisition prices, asset classes, apartment mix, design, amenities and marketing–these are all critical factors in a successful strategy.
In some ways, getting a business strategy right is a lot like making sure a car is running properly. Every component of an automobile engine needs to be intact and functioning. Spark plugs have to fire at precisely the right moment. Valves have to let in air and fuel in the right proportions. And pistons have to move up and down in the right cadence. It only takes the malfunctioning of one of these critical parts to put a car owner on the side of the road, waiting for a tow truck.
That’s true, too, for a successful business strategy. Every element must be present and working well. But far too often in the multifamily housing industry, a critical component—the customer—is missing altogether, and when that happens, the whole “machine” will at best run unevenly and at worst might even sputter to a halt.
Think about it this way: A company may have the perfect investment strategy. It may have the perfect media strategy. It may have the perfect development strategy. But without the right customer strategy, it very likely is subjecting its whole business model to unnecessary risk. And an inability to manage that risk can easily translate into failed strategies and financial loss for a company.
At first glance, it may be hard to see how the customer in the multifamily housing industry could be viewed as “missing.” After all, property developers are building and managing homes for no one else but their customers. The product—in this case, apartments—has to appeal to the customer. So, how can the renter be missing or ignored? A great deal of time and energy goes into bringing in a new resident. Isn’t that an indication that the industry is focused on the customer? Actually, the answer is, “No.”
Getting Customer-Centric
Simply marketing to the customer or providing good customer service is no longer enough. Today the best practices in strategic marketing have moved beyond the exclusive focus on promoting product and price benefits to consumers. Instead, the marketing process has to shift its core attention directly to the customer. In other words, it has to become customer-centric.
This isn’t to say that customers don’t get attention at various points in the marketing cycle. They do—most often from the beginning of the prospect phase to the time when they sign on the dotted line. But this truncated approach is not what it means to have a customer-centric marketing strategy. A successful apartment manager needs to maintain a long-term two-way relationship with the customer from the prospect phase to the lease phase to the renewal phase to the move-out phase.
A customer-centric approach can yield a wealth of information that can feed into, and ultimately improve, many fundamental aspects of the business: website design and functionality, amenity choices, operations policies, maintenance response protocol, resident retention incentives, and so on. After all, residents know what’s working and what’s not working. They often have strong opinions about how to make things better.
Being customer-centric is the fundamental cornerstone of a company’s brand. Research has shown that 78 percent of customers trust peer recommendations, while only 14 percent put any stock in company advertisements. This tells us that a company doesn’t really own its brand anymore. The customer does.
Consequently, our marketing strategies have to be geared toward influencing the customer’s opinion of the brand experience.
It’s very important to understand that this customer-centric approach is not just about customer service. Being customer-centric means always being in a listening mode, at every touch point, with prospective and current residents. This involves a whole range of interactions with residents, from old-fashioned personal contact to satisfaction surveys to resident focus groups to monitoring and engaging on the Internet and through social media. Each of these vehicles can tell property owners a great deal about their customers, but taken together they are a virtual gold mine of strategic information.
Researchers say, for example, that 40 percent of new prospects never receive a follow-up contact after their initial visit. Think for a minute about this fact. Forty percent of customers, who have taken the time and made the effort to visit a property, are simply ignored. No follow-up at all. That’s most decidedly not customer-centric. Surveys have also demonstrated that simply conducting walk-throughs with new residents will result in an 11 percent jump in overall customer satisfaction ratings. Operations departments might like to know that merely showing new residents where things are and how they work starts customers off on the right foot. Conducting surveys at key stages—prospect, move-in, renewal, and move-out—can provide a treasure trove of useful information to management.
But today’s two-way, interactive environment means it’s also about what the customer is saying, even without being asked. Companies need to listen to what their residents are saying about their living experience on social sites, feedback sites such as Yelp and Apartment Ratings and on community websites. Oftentimes, we can learn more about the resident’s living experience through these vehicles than by putting questions directly to them.
Social Media’s Authenticity a Plus
In many respects, the most authentic customer conversation is that which takes place within the interaction and engagement on social media and other websites. Companies can use social media sites not only to gather useful information about resident attitudes and concerns, but also to engage with customers and exchange views and information. And it’s important to note that social media needs to be local to be most effective. So, community sites, managed locally, are far more effective than corporate websites in terms of generating authentic customer conversation.
For example, creating a community Facebook page where residents can leave messages about their apartment experiences is a quick and easy way to encourage interaction. It’s an excellent way to watch the conversation, but even more importantly, it’s a vehicle to disseminate information and engage residents in authentic conversation. In sum, it’s an important element of customer insight. In another example, conversations on certain social media sites demonstrated that a quick turnaround on maintenance requests has an extremely positive effect on overall resident attitudes toward specific communities.
Engaging customers, however, means that a company has to tailor its “voice” to its different customer segments. Residents come from a variety of socio-economic strata, life stages, personal lifestyles, and so on, and it’s important that companies gain an intimate knowledge of their customer segments. For example, they will want to speak to empty-nesters residents in a different tone and style than to recent college graduates. Or they may choose to engage single residents differently than married couples. The point is that having an authentic voice means avoiding corporate speak, knowing customer segments, and communicating directly to each one.
Believe it or not, customers do want to help make your product better. They want to engage with you. They want to provide you with feedback and be part of the solution. In the end, nobody understands the customer experience better than customers themselves, and insight into the customer experience can help a property company well beyond retention and maintenance. It can impact the development of its brand, bottom line and overall strategic positioning.
Customer insight is a concept that needs to be understood and embraced by senior management, infused in all aspects of marketing, and leveraged in all interactions with residents. Just like an automobile that must “fire on all cylinders” to perform at its peak, an effective multifamily strategy has to include a variety of necessary components. In the end, one of the keys to success in the multifamily industry is to restore the “missing customer” to his rightful place in the business strategy.
Kevin Thompson is Vice President of Marketing at AvalonBay. Follow him
on Twitter @avalonmarketing.
Tips for a Successful Resident Focus Group
AvalonBay Operations Manager Melanie Jones offers advice on how she gets the most out of the focus groups she conducts.
• Always feed the participants. The food is a nice gesture and helps disarm the participants.
• Groups of 12 or less are easier to control and keep on topic.
• Only invite one resident per household. This helps you gain insight into 12 living experiences. Plus, if multiple household members participate they often have side conversations.
• Keep the length of focus groups to two hours or less.
• Conduct groups at the community rather than at an offsite facility. It is easier for residents to attend if they only have to walk down the hall or across the street.
• Remember that residents are participating in the focus groups because they care, so listen to them.
• Groups mixed with men and women tend to generate the most feedback. These genders tend to have different thoughts and will typically feed off of each others’ comments. —NAA’s Ali McSherry