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Property Management: Retaining Residents by Building a Sense of Community
Published: September 29, 2008
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| Daniel Babka |
By Daniel Babka, president, Rental Marketing Success
The top amenity desired by residents (according to recent studies by the National Multi-Housing Council and the National Apartment Association) isn’t a granite counter-top, six-panel doors and crown molding. It’s a sense of community: a feeling of belonging that cuts across luxury, A, B and C-grade properties.
Yet once they sign that lease and plunk their money on the desk, most of those residents will fade into the woodwork and become background music. The smile they saw when you first greeted them, has been replaced with a blank stare or a glance in their direction that suggests you see them now as more of an interruption to the paperwork, than a valued client or resident.
Sand and water will forever run through your hands, just like residents will. And attrition happens. Great businesses lose good customers through no fault of their own. That’s why all your employees need to understand that “marketing is your business.” Shrinkage happens when you don’t market. According to the latest surveys by SatisFacts Research, 65% to 70% or more of your existing residents will move from your property each year, while the cost of replacing them continues to grow more expensive (averaging close to $3,000 a turnover, including maintenance and lost rent).
Research tells us that the cost of attracting a new customer/resident is roughly seven times what you’ll spend retaining an existing one. Much of what happens on your property, from a budget and expense point-of-view, is beyond your control with utility costs, taxes, supplies and most vendor costs rising right along with the price of oil. At $145 a barrel, that affects plastic, the costs of carpeting, service calls, labor —you name it. You can’t control the local economy and job market or the direction and desirability of the neighborhood. So what can you control?
Most property managers and executives accept that this turnover is just the nature of the business. The implication is that we can’t do much about it, and, therefore, most management companies don’t even budget for it. This reinforces our looking at resident retention as an afterthought, the summer barbeque and holiday party, a resident newsletter or an occasional owner contribution to the petty cash fund.
However, nearly 60% of this turnover is controllable: home buying and relocation add up to just 40%. John Kenneth Galbraith, perhaps America’s most famous economist, described our holding on to conventional wisdom as “clinging to a raft” that protects us from the painful job of thinking. “When people are faced with the choice between changing one’s mind and proving there is no need to do so, almost everyone gets busy on the proof.”
It’s time to start thinking outside the box. Resident retention is much too valuable to simply be treated as an afterthought. When residents aren’t engaged (through lack of involvement/recognition or because they feel you’re not listening to them) and when management lacks visibility (when managers don’t get out of their offices, are swallowed-up by excessive paperwork, interact only minimally with residents and don’t have a handle on their satisfaction levels), more people move.
Failing to realize and act on the importance of building a community is a reflection of modern American life in the cities and suburbs where most of us live and work. It’s not unique to property management. We don’t know who our neighbors are anymore—whether we live in a single-family home, a condo or an apartment. The idea of building a community is a foreign concept to most employees and management executives. It’s not part of the picture we talk or think about anymore, and it’s missing from our job descriptions. There are typically no financial incentives for our achieving these turnover decreases or special recognition awarded to doing it well.
Despite the overwhelming evidence of the importance of resident retention, people just don’t get it…even though you’d be hard-pressed to find another single-line entry (beyond these turnover numbers) with a more dramatic impact on your property’s value and bottom-line.
Resident retention involves promoting a sense of connectedness to one another, to the places and neighborhoods where we live. That means creating opportunities for shared experiences, helping residents grow roots by promoting social gatherings and other business networking opportunities, promoting events held on site that draw on common interests you have identified, offering renewal incentives like “Help with your Home or Home Office” (maintenance staff or independent contractor time doing things that wouldn’t normally be covered by a service request), assisting with shelving and closet organizer enhancements, monthly drawings and promotions, occasional weekend and after 5pm office hours.
Resident retention isn’t just defined by what people get or what’s given away. It’s focusing on how people feel about where they live. You’re intentionally cultivating a service culture that increases and measures their satisfaction. Forget the scattershot approach—make building a real community synonymous with upgrading your property and distancing your competition.
(Daniel Babka is president of California-based Rental Marketing Success focused on developing innovative training and marketing programs, workshops and tools for property management companies.)
