by Kevin Murphy
Generally speaking, it’s been quite a while since the multifamily industry has evaluated the renewal process for opportunities to optimize results. Already overextended site teams are left to manage retention efforts – and in most circumstances, that translates to very little communication or process, and little visibility into a renter’s intentions.
This is not at all a knock against hard-working front-line employees; these associates often just don’t have the time and bandwidth to create, implement and track a quality renewal experience. The end result is frustrated renters, 50% resident turnover rates and significant money left on the table by operators. By introducing automation to the renewal process, apartment communities can create a much more seamless experience for renters earlier in the lease cycle that provides more frequent touch, delivers deeper insights, and helps both renters and staff make more informed decisions. It’s no surprise, therefore, that retention rates are positively impacted.
But an optimized process that utilizes technology can do more than create a better system for residents and staff. It can produce faster renewal decisions. And, whether the resident decides to stay or go, either scenario provides an array of financial and operational benefits.
A Big Boost
The benefits of higher retention rates are clear: when a resident stays in their unit, that means reduced turnover costs and marketing expenses. One operator has even shared that strong retention rates mean less stress—and thus increased job satisfaction and better mental health—for onsite teams.
But what may be less obvious is the multi-pronged impact that earlier renewal decisions can have. When residents make quicker decisions, operators can improve occupancy forecasting and make better real-time pricing decisions. If a renter’s decision is to leave, the apartment community can reduce vacancy loss by getting a head start on marketing the unit.
Analysis by Renew shows that operators who have automated their retention process collect renewal responses, on average, 72 days before lease expiration. The average property gets a 3x lift in renewal responses in half the standard time.
By improving its renewal process through the use of software and automation, one apartment firm has been able to reduce its average vacancy loss by five days per unit. The same operator also has found that 45% of its residents make a decision within 14 days of receiving their renewal offer—far surpassing the industry standard of 15%.
Simply put, driving faster renewal decisions has a significant benefit on occupancy forecasting, real-time pricing and vacancy-loss reduction. That goes a long way toward enhancing the financial and operational performance of a multifamily portfolio.
A New and Broader Perspective
As operators think about how to improve their retention process and strategy, it’s important to realize that a strong renewal program should be about more than simply keeping Resident “A” in Unit B. As I wrote recently, this touchpoint is an opportunity to provide renters with relevant pathways to either renew at the same community or move them to another property within the portfolio, depending on their current needs. An optimized retention plan makes giving residents these options possible.
The bottom line is—well, the bottom line. The multifamily industry has historically spent so much time and energy on the front end of the business, marketing to renters and securing the lease, with much less attention once the renter is in the unit. It seems abundantly clear that some amped-up focus on a true retention strategy is long overdue. Fortunately, operators don’t have to go it alone or place the onus on site teams. With the availability of the right technology, retention optimization (and its many benefits) is an achievable goal.