Renewals Need Strategy, Not Just Process
Synopsis
In today’s competitive apartment market, resident renewals are more crucial than ever. The days when property managers could afford to focus solely on new leases are gone instead shifts to creative, strategic approaches to renewals that leverage technology, personalization, and strong people skills, are becoming essential for maintaining occupancy rates and ensuring resident satisfaction.
Darcey A. Forbes, Holli Beckman, and Tony Sousa (from left to right) leading an education session at the 2024 ONE Conference & Expo.
Technology, personalization, and people skills are now key to improving the renewal process. But yet, just a few years ago, apartment owners and managers were okay with resident turnover because they were seeing double-digit rent growth in just about every market, according to Tony Sousa, Vice President, RPM Living. “It was all about getting new leases,” he said. “There was a tremendous focus on resident acquisition, but today, ignoring a resident renewal strategy comes at a great cost,” said Darcey A. Forbes, Head of Real Estate Operations at Renew, said.
But today, there’s a renewed interest in apartment resident renewals. In particular, knowing that “half of your residents will leave each year,” Forbes said. “No other industry would accept that kind of ratio. And 75% of those who leave will continue to be renters somewhere else.”
Sousa and Forbes were joined by Holli Beckman, Chief Marketing Officer, WC Smith, during a session at the Texas Apartment Association’s annual ONE Conference & Expo in April in San Antonio that shared some of the recent strategies and tactics regarding resident renewal strategies.
Using resident surveys and insights to predict can help understand resident attrition. Forbes mentioned one apartment company that cited that 11% of residents of who rated their stay neutral or not satisfied moved out the first year. To improve renewal rates, Forbes said it is critical to make a great first impression because the renewal process starts the day they move in.
Sousa said renewals had just become a process, but today, there needs to be a strategy. “It’s not just having your team operating under the gun to get the renewal notices out,” he said. “Because we stopped listening to them, rushing through that process, some communities lost a great opportunity to build relationships with their residents.”
The panel pointed out that blending technology with a personalized touch is far more effective, emphasizing that the first time the onsite team connects with their residents shouldn’t be at the time of renewal.
Forbes said operators need to meet the renter where they are and how they want to be communicated. Most renters would prefer receiving a text message instead of an email, which may never be read, the panel said.
Beckman noted that 25% of her residents prefer self-service, adding, “When renewal time comes, if it’s an automated process for them – that’s gold.”
Renewal Process Starts on Day One
At WC Smith, with a portfolio based in the Washington, D.C., market, residents stay an average of 47 months or nearly 4 years, Beckman said.
“That’s impressive when you consider we are seeing about 10,000 new apartments being built in our market in each of the past 10 years,” Beckman said.
“From Day One, and throughout the resident life cycle, you have to continually remind them of why they chose to live in your community – the value they saw when they signed the lease.”
WC Smith provides an automated email campaign that includes a move-in orientation video with content used to ensure the move-in goes as smoothly as possible. The video walks through the welcoming, starting with Day One, giving details such as what to expect on move-in day, where the loading bays are located, where to park, and where the amenities are, etc.
At some buildings, Beckman’s teams also offer new renters a refresh orientation one month after they move in.
“Chances are, they’ve been too busy moving in and they’re not going to remember all the things they saw during their initial leasing tour,” she said. “You have to remind people why they chose you and resell to them each day because if you don’t, your competitors will.”
Personalization Helps Address Nuanced Needs
“But go sit in the shoes of your on-site team to see how cumbersome and time-consuming it is to process a batch of renewal letters,” Forbes said.
“Using technology to automate allows the gift of time to allow for focused attention.
Technology can take on a lot of the heavy burden of processing and administering renewals for site teams to give time back to the teams to personalize connections with residents who need more assistance with their renewal.
This can happen by streamlining and digitizing the experience – making it easier to renew or to signal they need to move.
Focus on those who need help with their decision, Forbes said, “and address the nuanced needs of a resident at critical moments. Ask residents about their experience and their likelihood to renew more than once per year.”
For example, if a resident’s refrigerator breaks three or four times, “make sure you tell them, ‘I hear you and this is what we’re going to do,’” Sousa said. “Getting maintenance orders done on time and done correctly is your best renewal strategy.”
Improving Resident Response Time by 11 Days
By automating its renewal process, WC Smith had people respond to renewal offers 11 days sooner than it did before.
“This gives our teams more time to market and release the apartment, reducing vacancy loss,” Beckman said. “It also allows our team to reach out and discover why the resident is leaving. If it is due to a location change or size change that can’t be handled at the current property, we may still be able to assist them at another property within our brand.”
WC Smith saw a more than 600% ROI on the software based on the vacancy loss reduction cost, plus improved forecasting for renewals minus the cost of Renew.
Forbes said technology can help with the prioritization and personalization of renewals based on what the individual renter needs.
“Sometimes they want a larger unit, sometimes they want a smaller unit, sometimes it makes sense for them to move to one of the company’s sister communities,” she said.
“Happy employees make happy residents, so any monotonous tasks that can be taken off employees’ plates is a win for everyone.”
Learn more: TAA Events | ONE Conference & Expo