Although renewals are a vital component of the leasing lifecycle, operators have long approached them with a less-than-optimized process, one that relies heavily on overextended site teams performing a series of manual tasks, often without the sufficient time and energy to do so. And with years of searing-hot demand for new leases, many operators were perhaps tempted not to give renewals the focus and resources needed to execute them well.
Virginia-based KETTLER has always viewed resident retention as a priority, but last year, the company decided it needed to introduce more automation and technological firepower to its process to maximize the financial and operational benefits a successful renewal program can provide.
“I think one thing that’s been de-emphasized in our industry is the way that technology has grown and matured, and how it can really help us with what has always been an extremely manual process,” says Cindy Fisher, President of KETTLER.
Among the retention challenges the property management firm was experiencing were pronounced lag times in the decisions of residents after receiving first renewal offers, a lack of insight into the reasons behind those decisions, overburdened site teams and too much friction in the process in general. Team members were responsible for collating and triple-checking items such as pricing, renewal letters and follow-up efforts.
“The emphasis to improve the process was there on our end, but there weren’t a lot of solutions,” Fisher says. “For the bigger technology providers that we worked with, it was a niche space, and they really hadn’t created anything that encompassed the entire process.”
KETTLER ultimately opted to partner with recently launched software provider Renew, which focuses strictly on the renewal process. KETTLER began with 16 pilot properties in its conventional portfolio in the latter half of 2022 then added six additional conventional properties to the platform after the pilot. What makes the partnership unique is that Daryl Smith, Senior Vice President and Chief Marketing Officer for KETTLER, provided operator-based insights as the tool was being refined.
So far, the results have been compelling at the properties where KETTLER has implemented the technology. On average in the industry, 15% of residents make a decision within 14 days of receiving their renewal offer; KETTLER’s rate at the properties using the new platform climbed to 45%. Additionally, each property has experienced an average decrease in vacancy loss of five days per unit since implementation. According to industry benchmarks, residents provide notice to vacate 51 days prior to lease expiration. KETTLER’s average at the properties has climbed to 68 days, which allows the company to minimize vacancy loss, improve occupancy forecasting and optimize rents accordingly. The company is also gaining insights as to why residents are leaving.
“Without a detailed outlook of where occupancy trends were headed, we couldn’t proactively manage rents to optimize any desired growth,” says Kimberly Ramsey, Senior Vice President, Community Operations at KETTLER. “It put us in more of a reactive state of pricing and revenue management versus a proactive state. We also wanted more insights, including better documented reasons as to why people are moving out, to give us a better chance of referring them to our sister communities.”
Greater Visibility
Knowing residents often move for factors such as the need for more space, job relocations, lifestyle changes or the desire to buy a home, KETTLER wanted more visibility into the reasons why residents opt not to renew. The company is utilizing its new platform to refer departing residents to other communities within its portfolio, and for residents for whom a sister community doesn’t make sense, the company can provide leads to other operators for a fee.
“People like to stick with a brand whenever possible,” Ramsey says. “So, if there are things about their current community that might not meet their needs—or if they need to relocate to a different market—that can save marketing dollars for us, because by retaining some of our valued residents, we’re not having to spend that cost-per-lease. We’re also getting better insights as to why people are choosing to move and can determine whether there is anything within those responses that’s controllable for us.”
The renewal optimization initiative fits into KETTLER’s overall centralization strategy, which also includes centralized sales functions, accounting, contract processing and certain maintenance components. When renewal offers are distributed, they are housed within a centralized database where all associates have access to the details of the entire process, meaning any associate can effectively assist the resident at any time. Additionally, a centralized team takes over the “paperwork” aspects of the renewal transaction when it’s complete, meaning site teams can move along to the next renewing resident rather than become bogged down with data entry.
Ramsey says that while automating renewals has lightened the load for onsite teams so they can focus on the customer experience—and enabled the company to approach the entire renewal process in a more consistent way—a human component must remain present.
“You must have the human touch to balance the tech-driven efficiencies,” she says. “Our associates continue to follow up with renewing and vacating residents as necessary. We’ve also added a Senior Director of Customer Experience. A positive customer experience throughout the resident lifecycle also helps to organically earn renewals."
While renewals are overlooked to some degree on an industry-wide basis, the argument can be made that they are even more critical in the current apartment market.
“Especially in today’s climate, where rents have begun to stabilize from the strong post-pandemic uptick we experienced,” Fisher says. “You’re sometimes experiencing stronger rents from existing residents than customers coming through the door. For that reason alone, it’s critically important to take care of the valued residents that you have and deliver an experience that earns their renewal.”
Paul Willis is a Content Director for LinnellTaylor Marketing.