The $11,000 Piece of Paper

Thanks Heather! I think 2010 could very well end up being a big "reassessment" year for multifamily, where every established practice gets analyzed to find out whether it really is achieving the goals we want to achieve!

Here are a few responses from Facebook:

Thanks for the comments, Sandy and Annemarie!

Sandy, I wish more than anything I knew the magic reason why our industry places so much more focus on new leases compared to resident retention. It mystifies me, to be honest with you. Is it an obsession with shiny new things? Is it a misguided incentive system? When I see absolutely no emphasis on understanding why a community lost a given resident, but cheers a new lease, I am absolutely floored. It makes no sense from an operational, financial, or logical point of view.

As for what should be changed, that is a laundry list of items, so let’s focus on an idea relative to this post: I believe every single community needs to survey their residents to understand what they like, what they don’t like, why they continue to living at their community, and whether they plan on moving. When trying to renew someone, a community should have “insider” knowledge of why that resident is there is in the first place.

Thanks for the comment Zac. I was getting a great deal two years ago, but they increased me $100 last year and are trying to increase me another $44 this year. Can't imagine they can get that price on the open market, let alone a higher price to compensate for the turnover cost, so I'm really wondering where the revenue management software got that number...

Thanks for the comment, Tiffany! I have actually worked on-site, as well, so I've definitely sent my share of the $11,000 letters!

As for other ways to get a hold of your residents that are renewing, I think that an email could be ok for getting in touch with them. It would have to be personalized or feel like it was personalized, however. Off the top of my head, I would think that this might be a good start: "Hi Tiffany, it looks like your renewal date is just about here, so I wanted to get a hold of you to get a feel for what your plans were for next year! Can you give me a call so we can discuss?"

Obviously, that's not a perfect email in the least, but there are a couple of things that I think are an upgrade: 1) It doesn't immediately list price, 2) It attempts to find out what their thoughts are on renewing so you can personalize your sales technique to them, and 3) It focuses on a "renewal date" rather than a "lease end date". One assumes they stay and the other assumes they leave!

I have a question for you though: When you say it takes 5 days, you mean it takes that long to actually get a hold of them, correct? I just did a quick calculation and let's say there is a 300 unit community, and even though you'd like to manage your move-outs throughout the year, there are going to be peak months. so let's say 30 move-outs for the peak months. If each phone call lasts on average 15 minutes, then that would be essentially one full day of work over the course of a month. But that means it is only about a half hour of work per weekday, which should be manageable. I understand it might take a few calls to get a hold of them, but leaving a message only takes about a minute per call, so it shouldn't affect things all that much... Am I missing something?

I really like that approach, Tiffany. Even more, when shopping for different items, it's always fun when the salesperson really works to find the so-called loopholes that can get the customer more money off. In reality, those loopholes are often there by design, but it gives the customer the impression that the salesperson is their ally and really working hard to save them some money. I think that approach would work well with what you are trying to do.

@Tiffany - Glad I could help! Keep us in the loop on how it goes! (I'm sure others would love to hear what worked and what didn't!)

@Larry - I agree 100% with you, but there is also a major difference with the apartment industry - we are one of the few industries that actively sets an expiration date with our customers. Although that may be necessary with the contract, it means we have to be even more vigilant with our retention efforts!

@Christine - it sounds like you all are doing a lot of great things over there! I'm a BIG fan of the upgrade on renewal concept - do you give them a selection to from which to choose from? Would you mind sharing more details about that? (Feel free to blog about it if you feel inspired!)

Thanks for the comment, Aprille, and I totally agree with your monthly marketing calendar. I always suggest scrapping the giant summer party and replace it with smaller events throughout the year. Better consistency, same budget, and hits more residents closer to their renewal date...