What’s Your Renewal Strategy?

While a lot of attention is paid to lining up new residents, one way to address sluggish rent growth can be through retaining residents. Excellent customer service and a personalized lease renewal process that offers more options are the primary ways to keep retention rates up.

In the past, apartment owners and managers were less concerned about resident turnover because double-digit rent growth was common in many markets. But it’s no longer all about landing new leases. Today, a major focus must be on keeping residents content.

Keeping current residents is a far better financial proposition than constant turnover and not having a retention strategy is a major mistake.

“Ignoring the resident renewal strategy comes at a great cost,” said Darcey Forbes, head of real estate operations at Renew. Although rent growth has turned slightly positive lately, the industry is realizing that it has been slow to invest in this crucial retention phase. The renewal process hasn’t evolved in many years. Most customer experience initiatives are still focused on new move-ins.

Even with the new technologies that elevated and prioritized leasing during the pandemic, the renewal and retention of current customers’ data are flat. “Even the ‘Ask to Renew’ is dated and cold,” said Forbes. “It’s the very essence of leaving money on the table when an operator fails to refine the process continually, both in higher turnover rates and decreased insight into a resident’s intention.”

This represents a major missed opportunity. “Often it is a PDF offer or letter attached to an email or a letter is posted into the door jamb of the unit,” said Forbes. “Traditionally, it is a binary question: ‘Will you stay or will you go?’ This moment requires a more nuanced approach, empowering residents with the ability to make informed choices.”

Half of residents leave each year

“No other industry would accept that kind of ratio,” Forbes said. “And 75 percent of those who leave will continue to be renters elsewhere. The renewal-requisition moment lacks the right tools to effectively manage, optimize, and learn from this critical moment in the customer journey.”

As resident needs change, onsite teams need to engage with them more. But these teams can be overwhelmed with inefficient processes and do not always have the time to show a personal touch.

“If we know that 50 percent are likely to renew, how can we use that knowledge to focus on providing personalized service to the remaining residents who need assistance?” said Forbes. “These residents need more options and solutions to their issues.

Encouraging residents to “raise their hands” and providing them with a space to communicate is a critical first step and can help personalize how property managers and owners communicate with their residents.

Renewal process begins on Day One

To improve renewal rates, it is critical to make a compelling first impression, because the renewal process starts on the day that new residents move in.

For those who are interested in making a move, see if they can be accommodated onsite. “Offer alternatives to residents to meet them where they are,” said Forbes. “Maybe they are working from home and need a larger (apartment). Maybe they are moving for a new job.” In the latter case, a sister property could be an option.

Communication with residents should be as easy as possible. “Operators need to meet the renter where they are and in the communication style they prefer,” said Forbes. “Most renters would prefer receiving a text message instead of an email, which may be missed and never read.”

Onsite teams are encouraged to continually remind renters of why they chose to live in that community: the value and differentiation they saw when they signed the lease.

Technology can lighten the heavy burden of processing and administering renewals for site teams, creating time to personalize connections with residents who need more assistance with their renewals.

An automated renewal process can create other efficiencies as well. With the help of automation, WC Smith now responds to renewal offers 11 days sooner than before and has seen more than a 600 percent return on investment based on improved vacancy loss for renewals. Minus the cost of the platform, of course.