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Thursday, July 22, 2010

Resident Retention At Your Apartment Communities: Reasons To Stay

Classifying Your Assets
So how can you tell which aspects of your business are hygiene factors and which are motivation factors? First, you should ask yourself this question: if you do not provide a certain service, are your residents going to get upset? If the result of your service, or lack thereof, is an angry tirade, it is generally a hygiene factor. For example, waiting two weeks to fix a broken window will probably result in a screaming resident causing chaos in the leasing office, and constitutes a hygiene factor. The second way to determine if your “amenities” are actually hygiene factors is to look at your competitors. If every one of your competitors has the same amenity, then it is no longer unique and therefore, not a motivating factor to stay at your community. In fact, some amenities will switch sides over time. For example, online rent payment is still relatively new in the industry and many residents will see this as a value-added benefit to living at your community. But two years down the road, it is likely that most communities will have some sort of online rent payment. At that point, it will have slipped from a motivating factor on the renewal process to an expectation, or hygiene factor.

Remember that classifying your assets and amenities should be based upon your local competition. For example, a feature in a Class A property may be an expectation in one region while being a motivating factor in another region. Additionally, a feature may be a hygiene factor in a Class A property while being a motivation factor in a Class C property. Here are some examples of some common hygiene factors and motivating factors for a sample Class A property. Remember these factors are unique to this specific community based upon its local competition. Another Class A property might classify these factors completely different based upon its own set of circumstances. (Note: I included “Locks on doors” to illustrate that almost every asset in your community could be classified in this manner)

Illustration 2

Two factors probably jumped off the page at you. First, I am sure some of you might have looked at the motivating factor, “Resident Friendships,” with a curious eye. Did you realize that your residents should be considered assets as well? If your resident “Jennifer” has made three good friends at your community, those friendships are unique to your property and reasons for Jennifer to continue living at your community. In our industry, we continually refer to creating a “sense of community” because we instinctually know that residents who form emotional bonds with their community are more likely to stay. Therefore, forming those types of relationships can be very strong motivational factors.

Second, maintenance is generally not a motivation factor for a Class A property. Maintenance is crucial to retaining your residents; however, since it is an expectation rather than a perk, it should fall into the hygiene factor category. In other words, if your residents are paying Class A level rent, they are expecting Class A level service. However, in special cases a specific service can move from hygiene factor to motivation factor if it is truly going “above and beyond.” For example, your maintenance tech enters an apartment for a leaky faucet but also notices that a light was out and they need a new air filter. Without request, the maintenance tech takes care of these issues, as well. Service such as this can be considered a motivating factor if it outpaces the service provided by your competitors.

Using Your New Information
So now you have categorized all your assets and services into hygiene factors and motivation factors, how should you use this information? Categorizing your property’s assets in this way helps you determine where your property’s true value is, and will help you to market it to prospects as well as motivating your current resident to renew. Retaining a resident is a function of satisfying their needs (hygiene factors), giving them reasons to stay (motivation factors), and reminding them that you do both. Maybe you previously considered your maintenance as a motivating factor and now realize that your motivating factors column is looking a bit bare. In this case, you need to increase the number of motivating factors for living at your community. The more cash-strapped your community is, the more creative you have to get. One of the most cost-efficient motivation factors can be establishing a sense of community through inexpensive events and using a resident portal that includes a social interaction component.

Categorizing your assets and services will also allow you to promote your community more effectively to both prospects and residents. Back to the restaurant example, imagine the reaction if they advertised, “All our food is served warm!” They clearly do not understand that this is an expectation, not a perk; therefore, you will probably be wondering how good their food is if “warm food” is the best thing they can advertise. In other words, their advertising has turned into a negative because they did not fully understand their own business and its place in the competitive environment. It is ok to include hygiene factors into your promotional materials, but it is imperative that you understand that they do not constitute some revolutionary feature. Instead, it is best to focus on your motivation factors, which are essentially your competitive advantages relative to your peers.

Ultimately, using these tools will ensure that you have created both reasons for your residents to stay as well as fulfilling their expectations so you don’t inadvertently push them out the door. Once you have implemented these programs, you will be able to more effectively promote your community to both prospects and your existing residents, inspiring more leases and a strong improvement in renewals.

6 comments:

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