Customer retention is cheaper and much more beneficial over the long haul, compared to customer acquisition. Well, that’s according to an infographic published by Invesp. Take a second to let that sink in, and think about all the efforts you’ve directed at marketing and tenant acquisition, as opposed to tenant retention.
Apparently, and rather surprisingly, the bulk of companies fall in this category. According to that survey, 44% of businesses focus substantially on customer acquisition, while only 18% pay more attention to customer retention.
Of course that should not be an issue, especially considering the all-too-common argument that new customers bring in the new cash- but then again, consider this…the average probability of selling to a new prospect is only 5-20%, while existing customers fall within the 60-70% range. Additionally, while 31% of new prospects would be willing to try new products, 50% of existing customers would not have a problem giving it a go.
All things considered, increasing your customer retention rate by 5% subsequently boosts profits by 25 to 95%. And this applies to all businesses, including real estate and property management.
Tenant retention is particularly critical because turnovers are expensive. In addition to lost income, you’ll possibly incur some repair and marketing costs, as you prepare property for incoming tenants. And that’s without mentioning the time that will be consumed screening new applicants, and negotiation corresponding leases.
So let’s look into effective ways you can minimize turnovers by increasing tenant retention:
Conduct Thorough Tenant Screening
Let’s kick off right where it all begins- tenant screening. If you don’t this right, you’re probably in for one very frustrating ride with a tenant, which may eventually end up in an eviction. If you decide to hold on to troublesome tenants on the other hand, you may have to deal with late rent payments, property damage, and multiple disputes culminating in court battles.
For a smooth and comprehensive tenant screening process, ensure you are managing it with flexible project management software like Property Matrix. In addition to employer references, criminal records, credit score and past landlords, pay attention to even the small details like reasons for vacating, cleanliness and overall organization. That will help you qualify only prospects who are cooperative and planning to settle for a long period of time.
Prioritize on Property Maintenance
At the beginning, vacating into new property is exciting for tenants. It’s like acquiring a new vehicle or furniture. Very pleasant at first, but the excitement gradually diminishes with time, as they get used to the property. Ultimately, a tenant begins perceiving you as some huge extortionist who’s persistently making insane profits from them. The property stops feeling like a home or business premise, and more like a system of capitalist walls.
Sadly, for most property managers, it only gets worse because they only contact tenants when rent is overdue. That’s why many tenants have such a bad view of property managers, and hope to vacate their properties as soon as possible.
One of the most effective ways to counter this effect is prioritizing on property maintenance. This not only improves material durability, but also consistently impresses tenants and reignites their excitement. They begin feeling like valued customers, and continue staying at your property with a more positive attitude.
To maintain a good tempo, coordinate all the maintenance activities through your property management system. Property Matrix, for instance, has all tools for maintenance request, speedy response, job allocation and subsequent payment remittance.
Allow For Reasonable Adjustments To The Interior and Exterior of The Properties
Of course property managers, in most instances, want to maintain the property in its new, original state. Making drastic changes means that reinstating the property during turnover becomes expensive and cumbersome.
But, people have different tastes and preferences. Put yourself in your tenant’s shoes for a minute- would you be okay spending years in a home with colors and décor you consider unappealing?
Being open to minor, reasonable changes to both the interior and exterior of the properties may increase the workload during turnover, but it’s definitely worthwhile to keep your tenants happy and satisfied with their environments. However, do not extend your generosity to permanent, irreversible property changes. Otherwise, you may wake up to find out that your tenant has moved a couple of walls, and possibly eliminated some windows overnight.
Master the Art of Tenant Relations
You’re in charge of the property- we all know that, and your tenant acknowledges it too. But, that’s not a license for being submissive to the property owner, and establishing dominance over your tenants. Property management, at the end of the day, is still a business. That means learning how to handle your customers, particularly in antagonistic situations.
Instead of handling a hostile tenant with contempt, counter them with an approachable tone and encourage them to negotiate. Working with a team spirit as opposed to a competitive one can make the difference between a successful and sour tenant-manager relationship.
Even when a tenant is late on rent payments, do not be condescending in any way. Make yourself the tenant’s ally and politely ask them why rent is overdue. If the tenant has been making timely payments in the past, it wouldn’t hurt being lenient enough to grant them additional time to remit payment. Think of that as perks for good tenants.
Finally, digitizing your entire property management system goes without saying. Relying on manual systems not only makes you look retrogressive, but is also cumbersome to tenants. Make their life easier and convenient by migrating to a cloud property management system, where they’ll be able to remotely make payments and lodge maintenance tickets.
We love hearing success stories on property management. So let us know other creative ways you’ve used to improve your overall tenant retention rate.