Don't forget about residents after they move in.

There is no better way to start this article than with the pearl of wisdom a resident shared with SatisFacts Research during a telephone survey.

"The office staff is great before you move in, hut after you move in the service stops. I've seen a lot of people leaving the community because of the bad service.

I was a panelist this year at an apartment association roundtable on the effect new technology" has on office operations. At the end, planners asked attendees what topics would be valuable for future roundtables. Some interesting suggestions were made about Internet marketing and corporate marketing. What struck me was that not one attendee mentioned resident retention. I pointed this out, then the discussion quickly moved to the latest trends in specialty advertising products (coffee mugs, etc.).

This experience, similar to the quote above, put into perspective for me the changes the apartment industry needs to make, with the starting point being that sound Resident Relationship Management[TM] (RRM) concepts need to receive the same amount of attention as leasing. The result will provide ownership with the greatest possible returns. Reviewing our resident satisfaction research findings, as well as research into evolving trends, sensible paradigm shifts were identified. The great news is that tools now exist that offer the ability to improve staff efficiency and effectiveness, enhance the resident experience, increase satisfaction and reduce turnover.

Sixty Percent of Turnover is Controllable

Soft markets and the more than $3.000 cost associated with move-outs (vacancy loss, concessions, marketing and advertising costs, commissions, referral fees, hard costs, staff time) have started the industry's shift of focusing more attention on "closing the back door."

Making RRM as important as leasing makes sense because approximately 60 percent of turnover is controllable.

Each year our resident satisfaction research confirms that what drives the likelihood to renew is the percent of residents with outstanding work orders, staff responsiveness, work quality, security, perceived value and residents' pride in their apartment and community. As you will see, the correlations are powerful--there is a clear return to investing in improving staff effectiveness and efficiency.

When it comes to customer service, keep in mind a lesson from industry consultant Rick Ellis: The owner is tops--and to maximize their returns, management must treat residents like they're No. 1. Anne Sadovsky, another top industry consultant, supports shifting focus. "U.S. News and World Report stated that 68 percent of consumers discontinue using a given business due to disinterest and poor treatment," Sadovsky said. "More than 40 percent of renters choose the lifestyle. They rent because they want freedom from homeownership, they want to be cared for. They don't just want it, they demand it--and they know that they have choices."

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And the Survey Says

The research included in this article, including results from surveys with nearly 50,000 residents nationwide, shows there is no correlation stronger than that between outstanding work orders and satisfaction. Given the strong correlation between satisfaction and the likelihood to renew, it's clear more attention needs to be focused on service. Questions use a five point rating scale, with 1 being "Extremely Dissatisfied" and 5, "Extremely Satisfied." Scores of 1-2.99 are a "Red Flag," 3.00-3.39 a "Warning," 3.50-3.99 "Average," 4.00-4.49 "Superior," and 4.50 to 5 is "Exceptional."

The table on page XX summarizes resident ratings. Scores below the 4.00 "Superior" level indicate attention is required. Of particular importance are the ratings for the responsiveness, dependability and speed of the office and maintenance staffs. "Average" scores should not be interpreted as solely a staff issue--there can be staff level, education, budget and systems issues all at play.

Note the "Average" rating for "Apartment." If residents think their apartments are average, how do we expect them to respond to the rent increase letter? These results also show that more attention must be devoted to security.

Given the correlation shown between outstanding service requests and satisfaction, the significance of 79 percent of residents submitting a service request in the past year is clear: there is great opportunity to affect satisfaction. Of those residents, 32 percent reported a problem remained. Reducing this percent from 32 percent to 25 percent translates into increasing satisfaction from 3.93 to approximately 4.10; increasing satisfaction to 4.10 translates into an increase in the percent of residents "very likely" to renew from 48 percent to approximately 65 percent. For a 300-unit property, this means 51 fewer move-outs. At $3,000 per move-out, this translates into a $150,000 positive financial impact--showing a clear benefit of investing time and resources into RRM.

Paradigm Shifts

SatisFacts Research shows that the industry must consider changes in the way it does business, including a greater focus on resident retention.

1 Residents Want Online Solutions. Studies show the Internet has arrived as a leading advertising source of prospect traffic. Likewise, research and results show that when given the opportunity to take advantage of online functionality, residents are responding very favorably. As Joe Durzo, Senior Vice President of Archstone-Smith, said, "We're finally catching up to other industries, such as those led by L.L. Bean, Amazon, FedEx, and eBay, where customers choose their method of interaction. This is where our customers expect us to be."

2 Make Resident Relationship Management as Important as Leasing. Given that reducing turnover has a greater financial impact than renting, marketing teams must not only begin paying as much attention to resident retention as they do leasing, but even more so on the best practices that truly affect the likelihood to renew.

For example, properties should not let soft retention programs, such as parties, delivering move-in gifts and preparing and distributing newsletters, interfere with letting the staff promptly and properly handle service requests and other needs, as this is what drives retention. "Social activities" has never made SatisFacts Research's top 20 list of reasons for not being "very likely" to renew, nor suggestions for the community.

Our research does show that the entire community staff's primary focus should be on ensuring residents' core needs are met--residents want, deserve and will reward the staff for this. They want the staff fixing toilets and air conditioning, not, for example, planning and staffing parties that residents most likely will not attend because they don't have the time or inclination.

3 Accelerate the Adoption of New Technologies. Technology is rapidly changing customer expectations and how myriad industries do business--and the apartment industry has begun the transition. "If our industry was ready to move as fast as the consumer, the leasing office could soon be a thing of the past," said Mike Mueller, CEO of Realty Datatrust-VaultWare. New technologies and systems are making improvements possible in staff efficiency and effectiveness, as well as improving service. These include Web-based property management software with new functionality (including robust service request management modules), resident portals with online work order functionality, maintenance call centers, resident satisfaction feedback loops, automated rent payment programs and other new online services that offer valuable functionality and conveniences.

Jim Kjolhede, COO of Archon, feels these innovations will have a positive effect at the community level. "Our office teams today spend 75 percent of their time in an administrative role," Kjolhede said. "The new software allows us to flip time allocations to 75 percent focused on customer relationship management--on sales and re-sales as opposed to administrative tasks."

4 Adjust Staffing to Enhance Resident Relationship Management. Technology is changing the office. But what are the implications of reducing burdensome administrative tasks? One change could be to segment leasing and customer service duties, or simply to change the "leasing consultant" title to something more encompassing such as "Resident Service Specialist."

"The 'mythical' leasing consultant spends most of the time on daffy resident and property operational issues, not the sales function itself," said Ron Coben, CEO of MessagePro. Coben questioned the situation, adding, "But can any one 'leasing consultant' truly be expert in sales, operations and customer service?"

Lisa Trosien, TheApartmentExpert.com, said studies indicate the majority of the leasing consultant's effort is dedicated to customer service, not sales. "Perhaps the leasing staffing model needs to be redesigned," Trosien said. "Maybe the model is X 'salespeople' and Y 'customer service reps.' "Also, see No. 7 on beefing up maintenance staff in turnover season, so resident needs are met during the heavy lease expiration season.

5 The Shift to Call Centers. More and more companies are using outsourced call centers to handle leasing and service requests. One benefit is offering residents extended access to personal, professional service. Centers can offer superior call handling due to a singular role, no distractions, detailed information gathering (regarding service requests) and integration with property management software (to generate work orders). They eliminate many of the calls that properties miss. Centers are a cost-effective alternative to limited-scope answering services. Saving staff time and improving service is significant given the service-satisfaction-renewal correlation.

6 Customer Service "What" and "Why" Training. Enormous funds are dedicated to leasing seminars, yet little attention goes into educating teams on how to reduce costly, controllable turnover. Training plans should begin including why customer service matters and how to improve service. For rationale behind this paradigm shift, look no further than the powerful correlation between responsiveness on satisfaction and reports that maintenance technicians often waste one or two hours per day deciphering work orders.

Focus on: how to take work orders, including better information gathering; fully utilizing property management software service request functionality; the importance of maintaining current, correct resident contact information (home phone, email); and the financial implications of turnover. Sadovsky said, "Team members must buy into the necessity of utilizing the tools available so they can spend more time on customer relationship management and maintaining satisfaction."

7 More Effective Uses for Soft Marketing Program Funds. SatisFacts' research indicates there are financial benefits to shifting funds budgeted for move-in gifts, newsletters (do them online) and social activities toward hiring additional maintenance staff. Instead, hire extra help for the heavy turnover season, so work orders will not take a back seat to preparing make-readies. This point is significant: Due to the service-satisfaction-renewal correlations, the most important time of year to be on top of work orders is during the season when most leases expire.

8 Be Realistic About Home Buying. "Home buying" is the No. 1 reason residents move. Sun Tzu, author of the 2,500-year-old book "The Art of War," asks what one should do with adversaries that are more powerful and have more resources. His answer: Make them an ally. Our industry tries to "convince" residents not to chase "the American dream" of homeownership--a dream supported by the IRS, Congress, the powerful home-building industry and ads by financial institutions pitching low mortgage rates.

Consider rent-to-buy programs, where a percent of rent is applied toward closing costs. This creates a front-door marketing advantage and helps close the back-door by creating an incentive for residents to rent longer. The latter does not stop turnover, but does delay it.

9 Better Accommodate a Mobile Population. The American population is extremely mobile. While most companies have transfer policies, "relocation" being the No. 2 move-out reason suggests creating and aggressively promoting a user-friendly inter-company community referral program.

10 Adopt Win-Win Lease Renewal Programs. Consider the "average" rating residents give for their apartment and the number of apartment-related items on the top 20 non-renewal and suggestion lists. As time passes, apartments show more wear and tear and perceived value drops. Then a rent increase letter arrives, stating residents have to pay more for something they think is only "average." It is understandable why a resident then begins investigating options.

Instead of incurring the enormous costs associated with move-outs or offering renewal incentives, such as cash, trips and TVs, consider investing in an in-unit upgrade program that offers value to residents and owners. A menu is offered including improvements such as carpet cleaning, painting, closet organizers, window treatments, lighting, etc., with the value of incentives growing the longer a resident has lived in a community. Such a program addresses the perceived value issue, and can not only reduce turnover but also increase the value of the asset.

11 Security Concerns Will Not Diminish. This is one of the top areas of resident concern. More attention is needed as its importance appears to be growing. Options vary in cost, ranging from neighborhood watch programs and improved lighting, to building controlled access entry systems, apartment intrusion alarms and fencing the community. Gates are an option; however, operation problems can outweigh benefits.

RRM Makes (Dollars and) Sense

There are clear benefits for adopting sound RRM programs. Increased resident satisfaction will reduce turnover. Owners gain financial rewards. And the tools now exist to take the big step forward. Kjolhede said, "The systems and technologies we have committed to will let us reduce employee turnover, increase resident satisfaction, decrease resident turnover and, thus, increase revenues. Players that will win down the road will be those who adopt innovations."

A resident SatisFacts Research surveyed provides a fitting close: "They have signs about specials to get people to move here, but they do not try to keep us."

'Not Very Likely to Renew'--Top 20 Reasons

Rank   Category                   Frequency

1      Buying Home                    20.2%
2      Relocation                     17.9%
3      Rent Increase                   6.5%
4      Rent-to-Value                   5.4%
5      Maint.-Responsive               4.9%
6      Safety-Community                4.3%
7      Office-Responsive               4.2%

Rank   Category                   Frequency

8      Neighbors                       3.8%
9      Maint.-Work Quality             3.5%
10     Office-Courtesy                 3.3%
11     Office-Work Quality             3.2%
12     Safety-Neighborhood             2.7%
13     Moving Home                     2.6%
14     Apartment-Condition             2.2%

Rank   Category                   Frequency

15     Community-Clean                 2.2%
16     Community-Parking               2.1%
17     Safety-Gate                     2.0%
18     Apt.-Need Different Size        1.8%
19     Maintenance-Courtesy            1.6%
20     Location Overall                1.5%

National Satisfaction Scores
For Five-Point (1-5)
Scaled Response Questions

Category                    Score

Office Staff
Courteous and
professional                 4.17

Maintenance Staff
Courteous
and professional             4.15

Maintenance Staff
Quality of work done         3.99

Office Staff
Responsiveness
and dependability            3.95

Apartment
Appearance and condition     3.91

Exterior Curb Appeal
Grounds, landscaping,
building, lots               3.90

Building Interiors
Hallways, laundry
facilities, lobbies, etc.    3.85

Maintenance Staff
How quickly requests
are handled                  3.74

Safety and Security
Level of satisfaction        3.66

Overall Average Score        3.93

The above table contains results from surveys of nearly
50,000 residents nationwide. Questions use a five point
rating scale, with 1 being "Extremely Dissatisfied" and
5, "Extremely Satisfied. "Scores of 1-2.99 area "Red
Flag," 3.00-3.39 a "Warning," 3.50-3.99 "Average,"
4.00-4.49 "Superior," and 4.50 to 5 is "Exceptional."

National Satisfaction Scores
For Percent Answering 'Yes'
To Yes/No Questions

Category                            Percent

Maintenance Requests
Percent submitting
maintenance requests
in the past year                      79.7%

Maintenance
Maintenance                           32.5%
problems still exist

Renewal Likelihood
Percent citing
Very likely to renew                  48.5%

How to Improve a Community Top 20 Resident Suggestions

Rank   Category                   Frequency

1      Safety-Community                8.5%
2      Community-Parking               8.0%
3      Better Residents                7.0%
4      Safety-Gate                     6.9%
5      Community-Cleanliness           6.8%
6      Maintenance-Responsive          6.0%
7      Safety-Neighborhood             5.0%
8      Office-Responsive               4.5%
9      Community-Landscaping           4.2%
10     Maintenance-Work Quality        4.2%
11     Safety-Building                 3.6%
12     Office-Work Quality             3.4%
13     Lower Rent                      3.1%
14     Office-Courtesy                 2.9%
15     Community-Laundry               2.4%
16     Community-Lighting              2.3%
17     Safety-Fencing                  2.2%
18     Apartment-Condition             2.1%
19     Community-Exterior              2.0%
20     Community-Halls                 1.9%

Turnover and Resident Suggestions Revolve Around Basics

Nowhere does the need for focusing greater attention on service become more apparent than when reviewing the responses from residents who did not Answer "very likely" when asked how likely they were to renew. The vast majority of the top 20 potential non-renewal reasons are controllable, with the highest category relating to staff performance.

Of those residents who did not respond "'very likely to renew ":

> 26 percent cited specific staff performance reasons.

> 18 percent cited financial and perceived value reasons.

> 12 percent cited apartment issues.

> 11 percent cited staff "controllable' reasons.

> 11 percent cited safety/security issues.

> 1 percent cited property improvement issues.

> 1 percent cited amenities.

> Less than 0.1 percent cited social activities.

Doug Miller, President of SatisFacts Research, has nearly 20 years' experience in multifamily marketing, research and training and has worked with more than 1,000 communities nationwide. Chris Pulket is Vice Present of Operations for SatisFacts and cohort to the Joint Program in Survey Methodology at the University of Maryland-College Park. To reach SatisFacts, call 866/655-1490, send e-mail to [e-mail], or visit www.satisfacts.net.