A Focus on the BASICS of Property Management Pays Off.
A client with a 5,000-unit portfolio of B- and C-rated communities completed "Annual" Resident SatisFaction Telesurveys for the first time in 2000. After conducting the telesurveys, and subsequently implementing a variety of property specific and company-wide, changes, the company wanted to see what impact the changes had on their resident satisfaction scores. To say they were pleased with the 2001 results would be an understatement.
What kind of improvement did they see? Bottom line--there was a 14 percent increase in the percent of residents who responded that they were "Very Likely" to renew their lease. A 14 percent increase in renewals for a 5,000-unit portfolio equates to 700 more renewals--and alternatively, the potential for 700 fewer move-outs. Multiplying 700 fewer move-outs times the rule-of-thumb that each move-out costs at least $2,000 translates into a $1.4 million dollar improved bottom line. What did the company do that had such a positive impact on their residents' satisfaction and desire to renew?
The starting point was what happened when the reports were completed last year. Senior management provided each property with copies of the satisfaction telesurvey results and each was given several weeks to develop resident satisfaction and retention action plans that addressed the issues raised in the property report (especially "Red Flag" scores). Managers then presented their recommended action plans to senior management. Upon approval, each property moved forward with implementing their plan. In addition, monthly staff meetings were held to review the progress made on each plan.
The payoff became quite clear in 2001 when the company completed telesurveys for the portfolio again. The table on page 50 highlights the change in scores from 2000 to 2001, and how these scores compare against the average national database scores.
SATISFACTS RESIDENT SATISFACTION TELESURVEYS: CLIENT PORTFOLIO 2000 VS. 2001 SCORE COMPARISON NATIONAL SATISFACTS COMPANY COMPANY DATABASE 2001 2000 PERCENT ITEM AVERAGE AVERAGE AVERAGE CHANGE Percent of Properties Winning SatisFacts Superior SatisFaction Award (4+ Avg. Score) 24% 35% 14% 150% Average Score 3.79 3.82 3.65 5% "Very Likely" to Renew Lease 51% 56% 49% 14% Apartment 3.66 3.63 3.49 4% Office--Courteous, Professional 3.97 3.96 3.93 1% Office--Responsive, Dependable 3.83 3.8 3.71 2% Maintenance--Courteous, Professional 4.03 4 3.92 2% Maintenance--Response Time 3.71 3.73 3.24 15% Maintenance--Quality of Work 3.83 3.89 3.7 5% Maintenance--Problems Still Exist 36% 34% 46% -26% Exterior Curb Appeal 3.82 3.91 3.66 7% Building Interiors 3.55 3.6 3.35 7% Would Recommend 84% 80% 78% 3% KEY: Below 3.0 = Warning Signal, 3-3.5 = "Red Flag", 3.5-4 = Average, 4-4.5 = Superior, 4.5-5 = Exceptional.
The results from this portfolio's studies confirmed what we have been able to prove statistically: there is a direct correlation between the performance of the maintenance (response time, quality of work, completing work) and not only the overall satisfaction with the community, but ultimately on the likelihood that the resident will renew their lease when it expires.
Let's start by looking at what happened with the maintenance-related scores (see the "Key" at the bottom of the chart for an explanation of the 1-5 scoring system). Obviously the company focused on the findings from 2000 and directed a great deal of attention to improving the speed that service was provided and quality of the work done. The maintenance response time average satisfaction score jumped 15 percent, going from the "Red Flag" range in 2000 to a solid average score in 2001 of 3.73. In addition, the 2001 score moved from well below the national average to slightly better than the average. Another key improvement was on the question of whether a resident was experiencing a maintenance problem in their home. The percent of residents who reported that problems existed dropped 26 percent from its 2000 level. Additionally, this score was now below the national average. Satisfaction with the maintenance staff's work quality improved by 5 percent; while the average score for how courteous and professional the maintenance staff only improved slightly, the 2001 score was in the "Superior" range.
Ratings for exterior curb appeal and building interiors/amenities both grew 7 percent from 2000. The increase in the exterior curb appeal took the previous average into the "High Average" range. More importantly, the growth of the building interior score went from a "Red Flag" in 2000 to an "Average" score in 2001.
While all of the other questions saw only modest growth in scores, some were still quite significant. For example, only a modest 4 percent increase in how satisfied residents were with their apartment moved the average satisfaction rating from a "Red Flag" score into the "Average" range. How important is it that a resident be satisfied with their actual apartment home? What impact does that have on the likelihood to renew? The answer is quite obvious. Likewise, the average scores for the office staff (courteous/professional, responsive/dependable) grew by a very insignificant amount. But the good news is that the portfolio's office staffs already received "High Average" scores and the increase, and while small, solidified residents' perception that the staff provides above-average service.
As of result of changes made at each property, especially in the maintenance area, the portfolio's 2001 average score grew 5 percent, moving from a "Low Average" to "High Average" score. Due to their efforts the portfolio averse came in slightly higher than the national database average. In addition, as a result of the improved scores, the percent of their properties that won a SatisFacts Superior SatisFaction Award increased 150 percent, with 35 percent of the properties winning the award in 2001. And, as covered above, the bottom line impact was significant, with a 14 percent increase in the percent of residents who responded that they were "Very Likely" to renew their lease. Again, the correlation between improving satisfaction in the maintenance area and the likelihood to renew proved true. While common sense tells us this, seeing hard facts that confirm the impact is quite powerful. As noted at the beginning, in the case of this client's 5,000-unit portfolio, the impact was a dramatic potential $1.4 million positive hit to the bottom line!
What does all of this mean? A focus on the basics of property management pays off. In the case of this 5,000-unit portfolio, there is a potential $1.4 million impact. Make sure your staff is courteous, professional and dependable (also, keep an old proverb in mind when thinking about who to hire and/or retain: "Don't open a shop if you can't smile"). Make sure residents are satisfied with their home. Sweat the details when it comes to curb appeal. And, most importantly due to the direct impact on bottom line satisfaction, promptly and adequately take care of resident and building maintenance issues.
Our research shows that many issues impacting turnover are much more controllable than many realize. The key is to track satisfaction and respond. Performing resident surveys, developing sound action plans that address overall property and individual resident issues, and making sure staffs understand the impact of their performance on the performance of the property (and also on their own success) can have a dramatic impact on the bottom line by improving satisfaction, reducing resistance to rent increases and minimizing unnecessary turnover.
Doug Miller, President of SatisFacts Research and The Miller Marketing Group, has more than 16 years experience as acting and/or on-retainer Director of Marketing for a number of property management firms, including Forest City Residential and Boston Financial.
Doug Miller, President of SatisFacts Research and The Miller Marketing Group, has more than 16 years experience as acting and/or On-Retainer Director of Marketing for a number of property management firms, including Forest City Residential and Boston Financial.
|Printer friendly Cite/link Email Feedback|
|Date:||Jul 1, 2001|
|Previous Article:||COMPETITION COOPERATION IN SOFT MARKETS.|
|Next Article:||SUBMETERING RESULTS IN MULTIFOLD BENEFITS ACROSS THE COUNTRY.|