The Property Management Show

Managing Properties in One of the Country’s Toughest Places What does it take to get an amazing reputation, not just on Google, but also on Yelp? Our guests on the podcast today are from R.E.M. Residential. It’s one of the highest-rated residential property management companies in all of New York. They have not had a negative review, not even on Yelp, since 2017. How can they manage in one of the toughest markets in the world while keeping people happy without people-pleasing? We’re about to find out. Introducing R.E.M. Residential R.E.M. was started in 2000 by Rick Elezi. Rick came from an extensive real estate background. He started out as a porter, and he also worked as a doorman and handyman. Shpresa Elezi met him because her dad was a resident manager next door to the buildings where Rick met. They began doing property management in 1995, and five years later, R.E.M. was born. Rashaad Middleton is the company’s director of management. He started with R.E.M. about 14 years ago as a broker. Ten years ago, he became the director of management. He’s been a landlord for two years, so he understands both sides of the rental relationship. He’s proud of the retention rate of the company, both with clients and employees. Fourteen years in, he’s happy. Lara Lapysh has been with R.E.M. for seven years. She started as a broker and has been growing the condo department. She specializes in condos and co-ops. R.E.M., she says, is a family. The industry has a large turnover rate, and she enjoys being an old-timer in the company she’s committed to. How To Maintain Zero Negative Reviews in a Thankless Industry We know the property management industry can be thankless. The concept of property management is simple but keeping up with the concept is hard. It’s really just about meeting needs and exceeding expectations. We all have basic needs wherever we happen to live. We want to know that things will work. Doorknobs turn and there aren’t any leaks. When you go to the bathroom, you want to know that the bathroom is going to work the way a bathroom should work. When clients or tenants approach the team at R.E.M. Residential, the goal is to give them what they want. It’s not just fixing what needs to be fixed. The team helps them solve problems. They’re bringing a better experience to the people they work with. Property managers cannot control everything. Some situations have no resolution and no one is perfect. But, when the focus is on relationships and innovation, exceptional customer service can be achieved. One of the main complaints people have is that they cannot get to a live person when they’re making a phone call. When property managers and their teams are willing to talk to people, those clients and tenants will feel updated. They’ll feel taken care of. Sometimes, that’s more important than an instant resolution to a problem. People appreciate a personal touch. Spresha says she has had disagreements with people, and those people recommended the company to other people anyway. The disagreement is not the problem. As long as you’re communicating and sharing your expertise, even your adversaries will relate to you. Layers of answering machines and automation do not resolve anything. There’s a lot of disagreement in property management. It’s part of the job. The team at R.E.M. Residential is dealing with sophisticated, educated, and successful people. They might tell their property managers what they want, and those property managers will respectfully disagree. This is the job. What makes the relationship work anyway? Communication. Common ground can be found. A perfect record of reviews is more about relationships than resolving management issues. Keeping Relationships Happy When People Are Not Happy You cannot make everyone happy all the time. The key to keeping the relationship happy is getting back to people. Right away. Don’t promise you’ll call back in an hour and then wait two days to call. Even if it’s bad news, communicate immediately. Be respectful. Use soft words. Treat tenants and owners and building board members like humans. Guide people in another direction if they can’t get what they want. Property managers can establish better relationships with tenants by explaining that they need to implement what their owners require. You’re the liaison between landlords and renters. You have to get to know the people you work with and show them that you’re sticking around when it comes to service. For example, Rashaad has rented apartments in many of the buildings managed by R.E.M. People know him. He showed a lot of his fellow tenants an apartment. They remember he was easy to work with, and they remember when he got them a deal. When those tenants find out he’s also working with the management company, they know that he understands their needs. Your contract with your tenant does not end when the lease is signed. The job of a property manager is to advocate for everyone; owners and tenants. A little bit of effort makes a big difference to your tenants. A human element is necessary, even when important things are automated for efficiency and accuracy. When you work towards tenant retention, remember that you have tenants who love to communicate online and via text but you also have more traditional tenants who want to pick up the phone and have a personal conversation. Be prepared to use the apps but also have the conversations. Reach everyone. Automation and Personal Relationships: A Both/And Situation There’s a place for automation. A need for it. Specific things can be automated when the human element is not taken away. Tenants can pay rent online and schedule maintenance through an online app, or they can call their property manager and talk about a problem that’s happening in their apartment. Be flexible. Make sure both options are there and make sure your tenants know that both options are there. The team at R.E.M. Residential provides their personal phone numbers to owners and tenants. No one has abused that privilege yet. There’s absolutely a need to automate. You cannot manage properties in 2022 and 2023 without automating. Stay ahead of the tech curve and invest in what you need to run your business better. Ultimately, however, you have to remember that a property manager’s job is to be a human and to talk to humans. No app will resolve a conflict between seven people in a room. Balancing the workload at R.E.M. is largely about instinct and knowing how each team member works best. Brittany calls it “a vibe.” No one is overloaded. Personalities are matched to properties and clients. Property managers are asked if they have time to take on another building or another client. They’re not assigned new work without consent. No one needs to have their time wasted or compromised. It’s easy not to respond to people who are calling for help or to complain. Most of your clients understand that a large part of your day is putting out fires. You’re a property manager. If you tell them that you’re prioritizing what you need to do, and you’ll get back to them about their situation as soon as possible, they’ll be okay with it. They’ll know they’re going to get what they need. People want to be heard. They don’t want to feel like they’re sending something into the black hole and they don’t want to give up on ever hearing back from their property manager. A cheerful response is essential, too. Spresha says she hires receptionists based on how they sound when they answer the phone. Communication goes a very different way if there’s a bad attitude or a voice that sounds rushed and disinterested answering the phone. Retaining Property Management Clients with Service R.E.M. has never lost a client, except for a couple during COVID who could not travel the way they intended and thus decided they did not need a property manager. Their retention rate when the building isn’t sold is near perfect. A customer may sell the building and that typically means they’ll lose the client, but when a building is in the position it needs to be in that it can be sold, they know they’ve done something good while managing it. R.E.M. Residential does not want to be the biggest property management company in New York. They want to be the best. Retention at the employee level is also near-perfect. It’s a family. They’ve been a family for a long time, and sometimes they argue and sometimes they come together. The team socializes outside of work. They have wonderful personal and professional relationships. Without trying to team-build, they manage to do a lot of team-building. Rick makes most of the decisions, but when suggestions come up, they’re heard. Sometimes, he has to be worked on and sometimes he listens to their opinions right away. If someone makes a mistake, there’s an immediate meeting. The management team at R.E.M. Residential knows that everyone they’ve hired is good at what they do. But, mistakes get made. The purpose of talking about the mistake is to make sure it doesn’t happen again. Mistakes are not a problem, but repetitive mistakes are a failure. There’s also a collaborative vibe to the team. They cover for each other and they contribute to problem-solving and workload issues. This isn’t just to help their co-workers. It’s also to protect their brand. If one person drops a ball, the entire brand suffers. This understanding brings the team together. Be Obsessed with Reviews Rick admits to being obsessed with reviews. That shift has made the whole team pay more attention. Everyone is checking in on their reputation online. Everyone monitors reviews at R.E.M. Residential. They also ask for those reviews naturally. And, they suggest that the positive review is not for the company, but the specific person who helped them. Usually, it’s the building super. If a tenant calls in and says they are moving out after five years, they’ll be asked if they were unhappy. Usually, the answer is no. They simply need a bigger space or a smaller space or they’re interested in living in a new neighborhood. So, the team asks that tenant to go online and leave a five-star review for the building super. Anyone who calls is asked to provide a five-star review for their super or any team member that contributed to a good experience. This request is always made verbally, on the phone. If one of the property managers sees someone in person, they’ll also ask for a five-star review that way. Seize the opportunity. Have a conversation about the experience, and then ask for the review. This establishes a commitment. Secrets to Success: A Review No negative Yelp reviews. Now you see how it’s possible. The secret to the success R.E.M. Residential has achieved is: Having actual people pick up the phone. Encouraging property managers to do what they’re supposed to do with support. Communicating even if there are disagreements. Asking for five-star reviews for specific people, like a building super. Hiring people who fit your team immediately. There’s no formula. Everyone on the podcast admits that. The business works because the people in the business hold the same values and they work well together. Their strategy is to treat people well and go off all the best gut instincts. Creating a culture of accountability and collaboration translates to better client experience, which contributes to client and employee retention. If you’d like to talk more about this podcast, please contact us at Fourandhalf. EmailThis field is for validation purposes and should be left unchanged.First Name(Required)Last Name(Required)Email(Required) Phone(Required)Company NameComments or QuestionsThis field is hidden when viewing the formDate MM slash DD slash YYYY The post Managing Properties in One of the Country’s Toughest Places Without People-Pleasing appeared first on Fourandhalf Marketing Agency for Property Managers.

Note: The names in the video are swapped. The first guest shown is Tommy Chambers and the second is Chris Harold. We welcome you back to the Property Management Show with your hosts, Marie Tepman and Brittany Stephens. In Part 1 of our conversation with Chris and Tommy of Chambers Theory, we talked about how they used data and innovation to expand their customer lifetime value amidst area-specific market forces that tend to shorten it. Here, in Part 2, we’ll cover how they balance profits, people, and the customer experience. Retaining Property Management Employees A happy property management team will almost always lead to a happy set of property management clients. How is employee retention encouraged at Chambers Theory? In a number of ways. First, there’s a new role: Director of People and Culture. That role really sprung from fast growth. In four years, they grew to 30 employees and while every employee is moving in a different direction, helping the company succeed is the end goal. There’s also a focus on work/life balance. The team is friends outside of work. Many of them have been together for 15 years. When you’re working with fellow humans and not just working in a company, it’s easier to focus on what you do together. Committing to a capacity-to-care ratio. 8Profit sharing so that a portion of the company’s profits are dispersed among the entire team. Everyone benefits from company growth. There’s a timeline for reviews with the team where each employee gets to discuss their own plans for career advancement. Tommy and Chris have also borrowed a measure from Navy SEAL Team 6, which is focused on two things: performance and trust. You want high performers who you can really trust. And sometimes, if a particular team member isn’t performing well, they’re worth keeping close because you know you can trust them and their peers can trust them. Capacity-to-Care Ratio The capacity-to-care ratio began as a look at how many properties per person made sense to keep the team functioning as well as they wanted. Companies that have problems with quality seem to have a higher property per team member ratio. A 100:1 ratio makes it hard for those team members to care about the 100 properties they have to manage. It doesn’t matter how good you are, if you’re too burdened, you’re losing your capacity to care. To increase that capacity to care, the ratio has to be lower, and/or more infrastructure is needed to support the team. Each team member at Chambers Theory is specialized in what they do. And, more experienced hires have more capacity. So, increasing capacity has become a key metric. Right now, the company is at 24 properties per staff member. They’re investing heavily in the staff ratio, but expect to grow to 30 properties per staff member before too long. They’re skeptical of going any higher than 35 to 1. Even if the team seems capable, they’ll want to hire enough people that the ratio stays closer to 30 properties per staff member. How to Stay Profitable While Focused on Capacity-to-Care How do you balance taking care of your team with making money? Profitability is more likely – even if it’s tighter – when you have better quality of service and higher average rents and lower vacancy rates. Hire so that you’re prepared for growth and not waiting for it. And, remember that employee retention increases profitability over time. Your employees, when they have the capacity to care, will continue to improve their service and be more efficient. You’re not spending money on hiring and training new team members when you have great retention. Referrals as a Source of Growth When new business is continually coming in the door and current clients are easily retained, there’s little to worry about in terms of profitability. Chambers Theory has a stream of referral business that comes in because most of their clients are Foreign Service and military clients. They have a presence in the community and throughout the Washington, D.C. area. They like to say that all of their clients become friends and all of their friends become clients. Developing relationships is a huge part of their business model and their plans for growth. They know their capacity to care is higher and that turns into a powerful referral machine. Clients are served well, so it’s easy for them to earn new business based on their reputation. After four years in the property management business, they have around 700 single-family homes they’re managing in northern Virginia. There’s also a small portfolio of properties in Oregon that make up about 80 doors. They see the sales market softening eventually and a lot of accidental landlords looking for help when they cannot sell their homes. Protecting Reputation and Asking for Reviews It’s amazing what happens when you ask for a review. Their team has focused on building relationships, so quickly solving problems when someone is unhappy is almost intuitive. On the other side, when they have done a good job, they’re quick to ask their clients to please put a positive review out there. People love helping other people. Customer service culture is not just about what you do for your clients. It’s giving them an opportunity to do something for you. They want to help, and you have to accept their willingness to help by sharing a good review. Reviews are about emotional intelligence and paying attention to communication. Can you pick up on cues of dissatisfaction? Do you know when a client is satisfied? When you lead with gratitude, you get a good response. Emotional intelligence prioritizes personal emails over automated emails, for example. Instead of sending an automated email to ask for a review, a dedicated team member writes a personal message that’s gratitude-based. Growth isn’t without pain, and sometimes you have to decide what you want to sacrifice. Tommy and Chris weren’t willing to sacrifice their services in order to make more money. Are they profitable? Yes. Could they be more profitable? Also, yes. Yet, they were not willing to stretch their team members too thin in order to be more profitable. As they continue to grow, they’re also looking at automation. Some things are automated, but never the actual relationships they have with their clients. They could have an automated repairs department, and they could send out an automated email asking for a review every time a problem is solved. But, they don’t. There’s only so much that can be automated before that personal relationship and level of service is lost. There’s a team at Chambers Theory that’s only responsible for calls. They’re trained to use their emotional intelligence to respond to calls and get back to people quickly. Even if the solution is not immediately available, their clients know they’re being heard. This is Trust Equity. Imagine you’re going on a long trip and you start with a full gas tank. Every mile of the trip, you’re depleting what’s in your tank. Think about that tank as your relationship with your clients. How far will you go with clients if you don’t fill up the tank? Automation versus Personal Touch Everyone has shifted to automation. And while the team at Chambers Theory invests heavily in technology, it’s not used for communication or personal relationships. It’s leveraged within the team so that people can provide personal service. Three areas of automation are working well for them right now. Inspeqt. This is a tool that allows property managers to go into any house and scan bar codes on appliances and systems. It provides an inclusive look at everything in the house, which allows for recommendations on repairs, replacements, and upgrades. If a water filter is broken, the Inspeqt app identifies the exact filter that’s needed and even facilitates a purchase on Amazon that gets it there the next day. This saves so much time. Instead of calling a contractor and waiting days for a new water filter to be installed, the problem is handled on the day it’s reported. This is extra value to owners and tenants. Minut. A Minut device is especially useful for vacant home and second home property management, which is the majority of their portfolio in Oregon. A device similar to a smoke detector is installed and it measures humidity levels, heat, and noise levels. If something is wrong, there’s an immediate notification. If it’s the middle of winter, for example, and the temperature has dropped to 60 degrees and continues to get lower, they know the pipes are in danger and it can be addressed. Collecting data and creating apps. Chambers Theory has a Director of Operations who is a wizard at collecting data and building apps for the team to use. Metrics and performance data can be accessed immediately and everything can be automated that isn’t external facing communication. Repetitive, internal tasks are easily automated and simplified. A lot of companies talk about their mission and their vision. They have powerful slogans. It’s one thing to tell people what you believe in, but the real proof is when you show them. Chambers Theory has managed to do that, and we’re so glad that Tommy and Chris joined us to talk about what they believe in and how it has helped them grow a successful property management company. If you’re enjoying The Property Management Show, please leave us a rating or review on your listening app of choice. And, contact us at Fourandhalf if you have any questions about this conversation. NameThis field is for validation purposes and should be left unchanged.First Name(Required)Last Name(Required)Email(Required) Phone(Required)Company NameComments or QuestionsThis field is hidden when viewing the formDate MM slash DD slash YYYY The post Balancing Profit, People, & Customer Experience appeared first on Fourandhalf Marketing Agency for Property Managers.

Note: The names in the video are swapped. The first guest shown is Chris Harold and the second is Tommy Chambers. The Property Management Show is back with Marie Tepman and Brittany Stephens from Fourandhalf, and today we’re talking about customer lifetime value.  When we think about customer lifetime value, the biggest variable that comes to mind is the length of time a customer stays with your company. But what happens when your service area is full of military or intelligence personnel, who only need your services while they are deployed overseas? Our guests today are Tommy Chambers and Chris Harold from Chambers Theory, and not only have they discovered how to protect their customer lifetime – they also found a way to expand it through innovation. Customer Lifetime Reflects Customer Satisfaction This season of the podcast is all about companies that are doing so well their customers don’t want to leave.  Chambers Theory tracks a lot of data to review and improve their performance, and according to that data, they’re a company that’s doing very well. We asked Tommy and Chris to talk about some of their most impressive statistics.  Two of the statistics they are always tracking are days on market and average rents. This property management company has lower days on market and higher average rent than any of their competitors. With a slogan that says “Real Estate with Intelligence,” Chambers Theory has managed to embody what they say about themselves. They collect data on their own performance and that of their competitors, and then they use it to their advantage.  Days on Market Average Rents Sometimes, the results of their data seem intuitive. A property in one area is going to rent faster than a property in another area simply because it’s a more desirable neighborhood.  But it helps to know those numbers.  At Chambers Theory, they look at the historic data and they use their experience to make intelligent decisions and improve the metrics that they invest so much time into collecting.  Here’s what they’ve found: Chambers Theory has rents that are an average of 27 percent higher than their competitors. The average rent in the northern Virginia market is close to $3,500 a month.  The average days on market is 12. This is notable because their competitors have an average days on market of 30.  The data they collect is used to make intelligent decisions and to improve the work they do for their clients Which helps with their client retention rate.  The simple act of measuring is what’s important. It’s important to the company and their clients. Measuring allows you to see how you can get better and then track your improvement over time. New solutions and innovations show up and the entire team works together to improve.  But, you can only improve by tracking your progress and monitoring the numbers you care most about. Client Retention Rate At Chambers Theory, the client retention rate is over 95 or 96 percent.  Tommy and Chris are quick to say that a lot of that has to do with the team and how well they are able to service their clients.  They also have a stellar reputation in the industry.  Reputation, systems, and a well-focused team are the reasons that they retain so many clients.  Two specific things have pushed this client retention rate even higher: A team member was recently promoted to Director of People and Culture. All staff achievements are communicated to clients, and Chambers Theory has become a fantastic place to work in an industry that has a reputation for quick burnout. There’s a lot of value invested in the community of the team. Tommy likes to say that by “serving each other, we become free.” The team has that mindset every day, and that mentality allows them to maintain high retention rates with both clients and employees.  A unique value proposition to their clients also keeps retention rates high. A large percentage of the clients they serve are military and Foreign Service workers. So, when they go overseas it’s usually for three or four years and then they come back to the area and move back into their homes. So, they close out their property management contract when they come back to Virginia, and then they re-hire their property managers when they’re reassigned again a year or two later. They’re now offering a different model of property management to those clients where they assist in the management of the home even while the homeowners are living in it. They’ll take care of bill paying and maintenance coordination and scheduling even while the property is being occupied by the owners instead of tenants. Tommy and Chris also point out that they let go of clients who are not willing to be responsible for their properties. They want their tenants to have a good experience too, so if owners are not willing to invest in the property and take care of their home, they are willing to take on that attrition.  Keeping Property Management Clients Close  The innovative program they’ve designed for homeowners who come and go every few years is called the Home Escrow Account.  Their clients keep them as a property management partner even while they’re living in the home themselves. There’s a different fee structure; there’s no percentage of the rent collected. But, it provides a continuity of service to the property and to the owner.  This service has led to an increase in accounts not being closed when a homeowner returns from overseas.  If you’re a property management company that’s serving a large military community, this is the type of program that can drive your client retention numbers much higher. There’s a lot of overhead when you have to close and re-open an account. Why not see if there’s a way to do it better? This program has also had an impact on the referral network at Chambers Theory. The extra level of care that’s provided makes a big difference. It’s a higher emotional need. When you know a client is coming back to live in their own home, you’re treating them and their experience differently than you would an investor who would never live in one of their properties.  This can do a lot for lifetime customer value. Imagine if you did not have to lose those owners who come back from an overseas deployment. Client Retention and Employee Retention An important point that sometimes gets lost is that employee retention is directly related to client retention.  Taking good care of a property management team is more likely to lead to higher satisfaction with your property management clients. It delivers consistent service and a direct connection between your clients and your employees.  In Part 2 of this conversation, we’re going to talk more about the importance of employee retention and how it serves client retention.  No one likes a cliffhanger, but we definitely want you to tune in next time so you can enjoy Part 2 of our conversation. In that episode, we’ll also touch on how they balance profits, people, and the customer experience. Contact us at Fourandhalf if you have any questions, and we’ll see you soon for Part 2. LinkedInThis field is for validation purposes and should be left unchanged.First Name(Required)Last Name(Required)Email(Required) Phone(Required)Company NameComments or QuestionsThis field is hidden when viewing the formDate MM slash DD slash YYYY The post Expanding Customer Lifetime appeared first on Fourandhalf Marketing Agency for Property Managers.

Customer Lifetime Insights and Marketing Let me ask you a question. When was the last time you made a big purchase? Imagine you realize that you need a new car. What would you do next? If you’re like most people, you would probably head over to Google or your preferred search engine. What would you type in that search bar? What results would you get back? Most of us would get some ads on top and then some search results with star ratings. You’ll probably see some articles with titles like “The 10 Best Cars of the Year.” And, by the way, if you actually read those articles…none of them will actually agree on what the 10 best are. That’s because everyone defines “the best” as something different. All these results you see are intentionally driven marketing pieces created by people who want to lead you to their sales funnel. You might click on articles. You might check out some head-to-head comparisons. After a while, you’ll realize that you’ve collected enough information and that you’re more knowledgeable than you were when you started. You’re actually ready to buy. But, why? What’s actually going on here? And, most importantly, what does this have to do with property management? Everything. And that’s what we’re talking about today, on The Property Management Show. Buying Decisions and Property Management Content What happens as we move through our buyer’s journey on the internet? We spend hours and sometimes days doing research and reading articles and consuming data and content. This is all done to make us feel better about the big decision we’re about to make. All the pieces of content we consume during the journey shape our expectations and nudge us closer to making that decision. All of us are like this, especially when we’re making big decisions such as hiring a property manager. So if your customer’s buying decisions and expectations are influenced by the content they’re seeing during the exploration phase, then it’s in your best interests as a property management business to have your educational content out there for prospects to consume before they even give you a call. This makes sense, yet we encounter a lot of property management business owners who don’t believe in content marketing or don’t think it’s worth the hassle or the investment. The content you create is here to fill information gaps. It also helps when prospects are trying to make a buying decision or looking for a solution to a problem they’re experiencing. Content creates a relationship between the prospect and the business, and it helps the prospect make a decision. You can’t expect leads to pour in the moment you publish a piece of content online. The effects are more delayed, and sometimes it can take a year or more for your content to generate a huge increase in business. But, here’s what’s interesting: Research has shown there’s a positive correlation between content and customer lifetime. Customer Lifetime Averages Fourandhalf actually did an industry study on property management marketing last year, and we found some interesting things about customer lifetime. Before we nerd out on all the data pieces of this study, let’s do a quick poll: How many of you listening right now know how long your owners stay with your company? If you have a number in mind, how confident are you of that number? If you couldn’t come up with the number or you hesitated a bit, you’re not alone. In the Midwest, 10 percent of property management business owners had no idea how long their owners stayed. In the South, 5 percent had no idea about their average customer lifetimes. In the Northeast and West, there were even fewer people tracking, and that was interesting to us. For those who did track or at least try to guess how long their customers were with them, here are the numbers we gathered: Property management companies from the West and Midwest keep their owner clients for 1 to 6 years longer than their peers in the Northeast, on average. The most common customer lifetime length in the West and Midwest was 4 to 7 years. In the Northeast, it was 1 to 3 years. In the South, the length of customer lifetimes was evenly distributed between 1 and 3 years, 4 and 7 years, and even 10 to 15 years. Understanding Customer Lifetime Value Knowing how long your owners stay with your company is key to understanding customer lifetime value. There’s a lot of discussion in the industry right now about customer retention and the importance of providing the best client experience. That’s great in concept, but what are you implementing to improve client experience and customer value, especially if you have limited resources? How do you, as a business owner, prioritize efforts and resources related to retention and client experience versus the other needs of your company? This is where customer lifetime value comes in. If you only look at the annual contract value when you’re making these decisions, you’ll see that clients staying for one year are just as valuable to your business as those who stay 10 years. Owners who stay for a year versus 10 years are fundamentally different, of course. Understanding customer lifetime value and the factors affecting it will allow you to make smarter business decisions. Marketing Decisions and Customer Lifetime Value (CLV) You might be wondering: What business decisions require you to take customer lifetime value (CLV) into consideration? If you guessed marketing, you’re spot on. Marketing is not the only business practice that’s influenced by customer lifetime value, but it’s what we’re exploring on the podcast today. Some key marketing questions centered around CLV are: How much should you spend on owner marketing? What channels should you use? What is a good ROI for your marketing dollars? How much should you spend on retention campaigns? Who do you target during those retention campaigns? Making marketing decisions with CLV in mind prevents you from accidentally ignoring aspects of your marketing that impact your bottom line. Think about that earlier story about buying a car. It’s clear that people move through the marketing funnel in a non-linear way. During the exploratory phase, the minds of owner leads are still open to suggestion. No strong opinion has been formed yet. Once they do focus on the opinion, they’ve formed, it stays with them even after they become your client. Closing the sale is the start of the relationship. It’s important to remember that. Looking at the Data around Marketing and CLV What do we know about marketing and CLV based on our research? YouTube Videos According to our research, property management companies who use YouTube videos for marketing are 12 percent more likely to retain their clients for 8 years or more. This sounds random, but it makes sense. YouTube is the second-largest search engine in the world, only behind Google. People search for consumer content on YouTube, and they expect to find videos and education. What does this have to do with customer lifetime value? It goes back to the content that’s consumed as prospects are in their exploratory process. The more informed an owner is before making a decision, the more they’ll have realistic expectations of what property management is and what it isn’t. They’ll understand the true value of professional property management, and they’ll stay with you for longer. Brand Recognition The more you show up when prospects search for answers online, the more familiar they are with your brand. Then, they’ll trust you more. This happens before they reach out to you, so when they do reach out, you have a lot less convincing and selling to do. There’s less friction than what you might encounter with someone who is learning about you for the first time. Trust and Reviews In the context of business. Trust is synonymous with stars. Who doesn’t love stars? In preschool, your teachers handed out gold stars as a reward. It was the thing to have. Now, we’re still vying for those gold stars. Our research found that property management companies prioritizing online reviews are 16 percent more likely to beat the industry average when it comes to CLV. You might be wondering if the higher star ratings simply attract higher-quality owners. That would explain the correlation between online reviews and customer lifetime, right? Actually, taking control of reputation doesn’t mean filtering out negative reviews. It includes a whole system that requires thought and intention. It requires property management companies to identify their touch points and follow-ups, and conduct a full analysis of feedback and reviews. The most important thing you can do with those online reviews is to help your organization improve. The key here is that when property managers who prioritize online reviews routinely ask for feedback from their clients, those business owners actually listen. If the feedback is less than ideal, they do something about it. The goal is to foster trust and then live up to that trust. Automation Automation, which is a fan favorite when it comes to business priorities, boosts customer lifetime value by just 5 percent. Remember, prioritizing your online reputation increases CLV by 16 percent. This finding is interesting and tells us that you shouldn’t automate just for the sake of automating. You need a clear strategy and a clear understanding of your current process and systems. Just doing automation in a vacuum is an expensive way to make mistakes faster. Marketing Spends and CLV This might surprise you. It turns out that dollars spent on marketing by themselves do not correlate with higher customer lifetime. This confused us because it seems so simple: the more money you have, the more you can do to impact customer lifetime and attract better leads. So, what does this mean for property management? This finding suggests that where and how you spend your marketing dollars is more important than how much you spend on owner marketing. As for customer lifetime value, that should serve as the North Star, which can guide you in the right direction. Spending money on acquiring customers is good, but don’t ignore your existing customers. It’s more expensive to acquire new owners than it is to keep existing owners. Don’t be blinded by lead volume when you’re thinking about marketing. Remember that not all leads are created equal. If you intend for your business to thrive and survive in the long term, be prepared to do what you can to hold onto your clients for longer. That’s what we have for today on The Property Management Show. In our next few episodes, we’ll look at real examples of how focusing on customer lifetime value, owner retention, and even employee retention can impact your property management business. If you have any questions about owner marketing, please contact us at Fourandhalf. X/TwitterThis field is for validation purposes and should be left unchanged.First Name(Required)Last Name(Required)Email(Required) Phone(Required)Company NameComments or QuestionsThis field is hidden when viewing the formDate MM slash DD slash YYYY The post Customer Lifetime Insights and Marketing with Marie appeared first on Fourandhalf Marketing Agency for Property Managers.

Customer Analytics with Aurelie Lemmens Today’s guest on The Property Management Show is Aurelie Lemmens, an Associate Professor of Marketing at the Rotterdam School of Management, Erasmus University in The Netherlands, and Academic Director of the Expert Practice on Customer Analytics at the Erasmus Center for Data Analytics. Dr. Lemmens is an expert on the topic of customer churn and has written peer-reviewed papers on the topic. Defining Customer Analytics What does customer analytics mean, specifically to a property management company? Here’s the general definition of customer analytics: The idea is to leverage as much data as you can gather about your customer. You’ll want a good collection of data at the point of customer acquisition and even before that – when they’re visiting your website. You want data about the customer when they’re signing a management contract or filing a complaint. You want to collect data on that customer when they’re saying something positive or negative about you and when they’re canceling their contract. Leveraging all that data with sophisticated analytics can help you decide what the best action might be for your customers at each of those points in time that we mentioned. You want to find the optimal action to reduce churn and increase profitability. Mentioning data and analytics can sound pretty technical. But, these churn analytics can help you better understand why your customers are leaving and whether it’s worth your time and resources to try to keep them. Studying Customer Analytics and Churn Two main points are important to remember from the study conducted by Dr. Lemmens and her colleagues. First is the notion of incremental lift. What will be the impact of your marketing intervention on the customer? What will happen with the customer that would not have happened if you did not perform a certain action? This sounds easy, but it’s actually pretty complicated because it’s hard to observe what’s happening based on what you didn’t do. How can you see the impact of choosing to take one action and not another? Second is the notion that all customers are different from each other. You have to recognize and understand all the different types of customers you are working with. Only then can you design an action that speaks directly to Customer A and not Customer B, who will have their own actions designed based on who they are and how they behave. How should you choose which customers to work towards retaining? That’s another takeaway from this study. Those Likely to Churn, Those Likely to Stay, and All the Others When companies think about preventing churn, they tend to focus on identifying the people most likely to leave. That’s the first step. Then, they’ll figure out what they should do to keep them from leaving. But, if they’ve already made up their minds on some level to leave, can you really manage to keep them? Is it worth your time and resources? This is a natural reaction. It’s tempting to try and prevent people from leaving when we’ve identified that they’re likely to leave. But, this strategy could have you retaining customers that are hard to retain or maybe not worth retaining. There are also your customers on the other end of the spectrum. They are happy, and there is a low probability that they’ll leave. You don’t need to do much to keep them happy. They’re already there. Those customers in the middle are where you should focus. There’s no reason to believe they’re planning to leave but there’s also no reason to believe that they’ll be with you for the long term. You’re not really sure where they are in terms of staying with you. Maybe they’ll consider leaving, but there’s more of a chance you can keep them. Those are the customers who you want to reach with interventions. Predict what their level of responsiveness will be to those interventions. Basically, you’re studying the customers who are on the fence. Some Customers are Sleeping Dogs Research has shown that you have a negative impact on half of your customer base if you target them. Half of your customers want to be left alone. They don’t need intervention from you, and if you bother them with constant emails or offers – you’re just going to lose them. Some of those customers might also have forgotten that they’re unhappy, but when you intervene, you remind them of that unhappiness. They’re sleeping dogs, and if you keep contacting them or you keep trying to ensure you’re holding onto their business, they’re going to resent it. To reduce churn and increase profitability, you need to figure out which customers are worthy of your intervention without a high risk of waking up those sleeping dogs. How can you do that? First, you need to define what KPI you want to look at. Maybe sending your customers a $5.00 gift won’t make a difference now, but it will contribute to a long-term relationship. Decide what you want to measure. Once you know the KPI, the easiest thing to do is to have a documented trail of your effort. So, you’ll put half of your randomly chosen customers into Group A, and you’ll give them something specific. Maybe it’s a thank-you email with a $5.00 gift card. With the other group of randomly chosen customers, you’ll do nothing. Once you get the data that tells you what kind of impact that had on whether they renew a contract with you or increase what they spend with you, you’ll be able to make some connections and see how that action impacts your customer lifetime value. Compare Group A to Group B. This kind of test allows you to see, on average, if sending the thank-you email with a gift was a good action to take. Which customers reacted? Which did not? Analyze Who is Responding to Interventions With this type of test, you can analyze who is responding to interventions and how it impacts customer lifetime value. The beauty of this testing is that you get an estimate of how much profit you can generate once you roll out the campaign on all your clients. Figure out how much money you want to spend retaining all of your clients or most of your clients or some of your clients. The A/B test can be done on a small scale, and it doesn’t cost a lot to find out what works best. Find out what your customers are reacting to in a positive way. Maybe you’re a property management company owner and you’re about to offer renewals to all of your owners. You can decide if you want to send an email asking for renewal commitments, send no correspondence at all, or send an email with a gift, asking them to consider renewing for another year. The way your clients respond will tell you which method might work best for your company. Remember what was mentioned earlier: all customers are different. You might be able to create categories of customers based on their similar responses to a test like this. As a property manager, you have different customer groups already. There are investors who come to your company and don’t want to have a lot of involvement with how their properties are run. This is a Business-to-Business relationship that you’re managing. But, accidental landlords who have a single home to rent might need a different type of strategy. They don’t think of themselves as business owners and they may need more nurturing in their Business-to-Client relationship. Each of those customer groups will also have their own reasons for churn. Communication Fatigue and Communication Quality Communication fatigue is real, and maybe your clients are tired of hearing from you. Dr. Lemmens says this is possible, and it depends on the quality of communication. She gave an example of a charity she worked with, where donors were able to decide which project to give money to. By doing that, they had a sense of agency when they donated money. They could decide how their own funds were being used, so the communication was relevant to them because it involved projects they cared enough about to fund. For property managers, you need to think about the quality of your communication as well. Those annoying emails are bad. Meaningful emails are good. When you have quality communication, it will help you retain clients, not hurt you. You can no longer rely on automated notifications and consider that to count as quality communication. You have to engage with your clients and be willing to experiment with communication in order to find out what works and who likes what type of outreach. Customer Lifetime Value and Analytics Churn impacts customer lifetime value, and you have to remember that customer lifetime value is a forward-looking metric. It estimates future revenues. Two things make up that lifetime value: The revenue a customer brings in. The amount of time a customer stays with you. You don’t know how much a customer will spend with you in the future. And, you don’t know how long they will stay. It’s only what you perceive. Lower churn increases customer lifetime value, but lowering the churn KPI is only a small part of the story. What’s important is this: how much money is there going to be left on the table after you try to keep that customer? What do you have to spend to keep them for long enough to make the spend worth it? In a more realistic sense, the past is predictable. You know what they have spent. You can use that information and take action based on what has already happened. It will help you decide how much a customer is worth in the future and it will cut down your churn. Know your numbers, and don’t be afraid to dive into the data and analytics behind your customers. There is a lot more we could talk about on this topic, and if you have any questions about our conversation with Aurelie Lemmens, please contact us at Fourandhalf. CommentsThis field is for validation purposes and should be left unchanged.First Name(Required)Last Name(Required)Email(Required) Phone(Required)Company NameComments or QuestionsThis field is hidden when viewing the formDate MM slash DD slash YYYY The post Customer Analytics with Aurelie Lemmens appeared first on Fourandhalf Marketing Agency for Property Managers.

Welcome back to The Property Management Show. If you joined us on Part 1 of this podcast with Ray Hespen, you learned about why it’s important for property management business owners to pay attention to churn. You need to do more than pay attention – you need to measure it. We’re back to talk about how you can prevent owners from leaving in the first place. Measuring Owner Churn If you’re not measuring your churn, you don’t know how big of a problem it is. Owners have different goals. Whatever your business goal is, owner churn should be a KPI. It impacts your growth and profit. We cannot think of a single property management strategy that would not need a metric measuring churn. So, who should measure it? That depends on how your property management company is structured. Ray says that whoever is responsible for owner engagement after the sale should ultimately track owner churn. All Churn is Not Created Equal You need an ideal customer profile. This is something that gets talked about a lot. Who is your perfect client? Churn from anyone who does not fit that profile is likely okay. Churn from perfect clients is not okay. It’s important to keep track of who you’re losing and who you’re keeping. You need a scorecard to show you whether you’re losing those perfect clients or others that you took on knowing they weren’t a perfect client. Then, you’ll need to decide how much you’re willing to invest to recover the clients you lose. It may be worth it to recover the perfect clients. Resident Satisfaction and Owner Churn In Part 1 of the podcast, we talked about two things that impacted owner churn: Maintenance visits to the property (more visits = better retention) Staying below the 12 percent maintenance costs threshold The third thing is resident satisfaction. There’s a direct correlation between lease renewals and owner renewals. This makes sense and it matches the maintenance indicator. Residents who are not satisfied with maintenance will not stay in a property. When lease churn is higher, owners will reconsider their property management relationship. Sometimes, property managers worry about providing great service to residents because they don’t want owners to believe that it’s at their expense. That’s crazy. Owners should want you to treat their residents well. When you retain tenants, owners save money. When a resident leaves a property, here are some of the things that happen: The property manager has to do an inspection. The property manager has to organize repairs and replacements. The property manager has to find a new tenant quickly to avoid a long vacancy. And all those costs are passed to the owner. Retaining a resident for five years requires resident satisfaction. It’s worth it to you as a property manager because it helps you keep your owners. Keeping Churn Low: A Dashboard If you want to keep your property management company’s churn low, you know you have to measure it first. Then, you have to think about these three specifics. There is probably a way in your accounting software to capture this data. Which owners are at risk of being above that 12 percent maintenance cost vs. rental income threshold? Know who they are. Give them the white glove treatment and take good care of them. Focus on resident satisfaction. Look at the things you can control and correct any issues quickly. The average rental unit has an average of four service issues a year. Be attentive. Measure the percentage of owners who opt into preventative maintenance services. Drive that number higher because we know that the more maintenance visits you make, the more likely you are to retain clients. These are the metrics you need when you’re fighting against churn. Get the numbers and then make a plan. Tell your property managers that you want the number of owners enrolled in preventative maintenance services to be 30 percent higher by the end of the year (this is an example). You’ll find it addresses all three of the points that we made about why property owners leave their management company. You get only one shot at an investor. We can’t invent new investors for you to chase down. Make it count and keep them as long as you can. If you can implement programs that reflect what we know, you can see some changes in your owner churn numbers. When Should Churn Make You Feel Okay? If you lose an owner and you know that you did everything you could to keep them, let that owner go in peace. When you can look at their account and see: High resident satisfaction. Lots of maintenance oversight. They’re well below the 12 percent threshold. You know there’s nothing you could have done to keep them. Their departure was totally outside of your control. It has nothing to do with what you’re doing for them. Zero churn is not realistic. Not everything is in your control. You cannot save every single owner, so focus on the factors that you can control with the owners who can be kept. Consider this scenario: an owner dies and the trust decides to auction off the property. That’s going to be some churn and there’s no sense in trying to fight against it. You won’t convince the family’s trust to stay with you. You’ll waste your time and resources. Set goals and targets that are reasonable. According to Ray, PropertyMeld keeps about 90 percent of their clients, while the industry standard in software is to try and hit 80 percent. Saving everyone is not a good use of resources. Be strategic. Property managers need to establish a healthy amount of churn. What Else Does the Data Say? Other interesting data points have Ray and PropertyMeld digging a little deeper into some areas of property management and owner churn: Sticker shock with internal maintenance teams. When an in-house maintenance team costs more than what an outside vendor would cost, there’s a higher risk of churn. If your internal maintenance team is performing for less, you have an advantage. Are you driving down the costs for your clients or not? This is something to look at. Repair estimates. Really high estimates upset owners. Even if the work isn’t performed – getting that estimate puts them off. When you hand your owner a very high estimate for work they may have requested, it’s going to start chipping away at their confidence in what you can deliver, and eventually, they’ll leave. Invoice costs are rising. We talked about ghost repairs early in 2020. Since then, HVAC invoices are up 118 percent. Plumbing invoices are up 60 percent. That’s just over two years. This could be a battleground in the future. Owners seem to be stomaching the costs right now, but there’s no telling where the next year or two will take us, and this is a crazy real estate market. Property Management Company To-Do List You have some new knowledge and insight into your churn numbers and what may be driving them. So, what are your next steps for your company? We have them for you: Find your churn number, know that it can be better, and move it. Start tracking what you need to know. Pull it out of your accounting software. Whatever the number happens to be, make a decision to hold onto 10 percent more owners. Go big with preventative maintenance. Watch for your clients who are closing in on that 12 percent number. Focus on tenant retention. Don’t do one. Do all of them. PropertyMeld is presently beta testing a PropertyCare Plus plan which builds a catalogue of services for owners. They can choose what they want, whether it’s annual HVAC clean up, gutter cleaning, semi-annual inspections, etc. Preventative maintenance, we know now, is critical. It’s also a logistical nightmare for property managers. Ray and his team are taking a stab at making it easier. These insights can help you hold onto more owners. If you’d like to talk about them or anything related to your property management marketing plan, please contact us at Fourandhalf. Contact us at Fourandhalf with any questions you have about our conversation with Daniel Craig of ProfitCoach. CompanyThis field is for validation purposes and should be left unchanged.First Name(Required)Last Name(Required)Email(Required) Phone(Required)Company NameComments or QuestionsThis field is hidden when viewing the formDate MM slash DD slash YYYY The post How to Deal with Owner Churn appeared first on Fourandhalf Marketing Agency for Property Managers.

On The Property Management Show today, we’re talking with Ray Hespen, who has been here before to talk about maintenance, data, his company PropertyMeld, and the dangers of ghost maintenance requests. Today, we asked him to discuss what some of his recent data has been telling him about customer churn in the property management industry. How Can We Describe Owner Churn? When we think about churn, we typically think about losing a customer. The property management space includes more third parties than it did 10 or 15 years ago. You’re working hard to hold onto the customers who are trusting you with their property and paying your property management fees. How good are you at hanging onto those customers? How many of them do you lose? Understanding your churn rate is not complicated math. Let’s say you sign up 100 owners this year. At the end of the year, you have 80 of those owners still with you. This means you have a 20 percent churn rate. Mastering Your Churn Number Forget growing your business by 200 doors this year. That’s a big, bold, and brave statement. But, it doesn’t matter how many doors you add if you cannot hold onto your current customers. This has a much bigger impact on growth than a lot of people realize. Customer retention impacts your earnings in a potentially huge way. Let’s say it costs you $750 to gain an owner. That’s inclusive of your BDM costs, your marketing budget, etc. Let’s say you earn a 40 percent margin on that customer and earn about $2,200 a year in revenue. For an average or small company, the difference in hanging onto that customer for five years instead of three years is pretty meaningful. But, if you’re a company with 500 doors, the difference in three-year customers versus five-year customers can add up to a million dollars in profit. The difference over 10 years is actually $4.9 million in revenue (5-year customers) versus $2.8 million (3-year customers). Your acquisition cost is the same, whether you hold that customer for one year, three years, five years, or longer. But when you hang onto that customer for longer, you earn higher revenues. This has not been a talking point for property managers the way it should be. Everyone knows losing a customer is bad. But, if you do the math on how much money you’ll make when you keep those customers – those retention goals take on a new urgency. This needs to be a key metric. It’s potentially more important than acquiring new clients. You can spend a lot of time on conversation rates and leads per month. But, you have to think about your churn rate, too. What to Assess When Evaluating Churn Why are owners churning? You need to spend time understanding why customers leave and then trying to make things better whenever possible. Ray stresses the importance of collecting qualitative and quantitative data. Quantitative is hard data. It involves numbers, and it’s critically important. Qualitative data requires conversations that are sometimes difficult to dig into. Customers won’t always tell you the real reason they’re leaving. How can you uncover it yourself? In America, we’re less direct than people are in other cultures. You have to get to the real reason an owner is leaving. Here’s a great story that delivers a good analogy: A woman goes to a grocery store and says she’s looking for potatoes. The salesperson takes her to that section and asks why she needs potatoes. She says she’s having guests for dinner. The salesperson asks who she’s having for dinner. It’s her mother-in-law. The salesperson asks why she’s making potatoes for her mother-in-law. The woman says because the mother-in-law hates rice, so she can’t make rice. That’s the kind of investigating that’s needed to get to the root struggle and the reason for your churn. Instead of agonizing over what makes people leave, you can take a different approach and figure out why people stay. Solve problems early. Studying Why Owners Leave Property Management Companies PropertyMeld works with 190,000 investors. That’s a lot of data. That data is being used to look at owners who stay and leave property managers. Some common themes and threads have emerged. They looked at everything from communication to maintenance to whether owners seemed to respond better to simple billing or complex billing. Some of the data has proven inconclusive and some of the data was surprising to Ray. Here are some high-level pieces of information that you need to know right now, based on the work that PropertyMeld has done: Measure your owner churn. You cannot change what you don’t measure. Three things seem to have the largest impact on whether owners stay or leave their property managers. First, let’s look at measuring your owner churn. You need to know who churns after the first year, after the second year, after the third year – etc. Now. Let’s talk about those three things that matter most. But first, the biggest surprise: Communication may matter less than you think. A lot of property managers like to talk about personalized touches, answering the phone, and the importance of communication. But, does it matter? Based on Ray’s data, it’s somewhat insignificant. People don’t care about personal phone calls. They don’t want to call for a pizza, they just want to swipe something on an app and the pizza is outside their door in half an hour. They don’t want to go into a cell phone store and talk to a salesperson, they want an automatic upgrade that lands the new phone at their door in a day or two. Your owners want to know what to expect and they want to know that you’re taking care of everything for them. No one is making phone calls. They’re using live online chats and they’re sending emails. Owners don’t leave because you’re not calling them. They’re not staying because you are. The top three things that impact churn the most are as follows: More maintenance being done for lower costs keeps owners. Interventions are required to keep owners at or below the 12 percent of maintenance costs/rental earnings threshold. Resident satisfaction and lower turnover. Let’s talk about those first two and save the third one for the second part of our podcast with Ray. Volume of Repairs: The More Work, the Less Churn Property owners don’t know how much work you do for them. You can call it “invisible work.” There’s a perception of what you’re doing and then the actual amount of work you’re doing. What’s surprising is that the more maintenance work that was done, the more likely it is that an owner will stay with a property manager. This was surprising to Ray, who expected the opposite. But, when 15 percent more maintenance work was being done for an owner over average, that owner was more likely to stay with their property manager. More maintenance actions are better for client renewal. This opens you up to an opportunity to improve your preventative maintenance offerings. As long as it’s not expensive, owners welcome having you inside the property, making these minor and preventative repairs. The 12 Percent Rule We know that owners want more maintenance done. But, we also know that once an owner’s maintenance costs go over 12 percent of what they collect in rent, they’re far more likely to leave their property manager. This is a magic number, and we’re not talking about institutional property management clients. These are small, everyday investors who own a property or two. They have a gut sense of how much money they should be making. So, when you stay below this 12 percent number while still providing frequent and necessary repairs – you’re in a good spot for client retention. If you go over that 12 percent number, your chance for churn is higher. Doing more maintenance at a lower cost is your formula for retaining clients and owners. What is Normal Churn? How much churn is normal, and how much churn is too much? That’s a benchmark we still need to set. PropertyMeld is still collecting that data and will share it with the industry as soon as it’s documented. Fourandhalf did an industry survey that didn’t specifically cover churn, but did ask about net changes to units managed over time. It also provided other useful insights like median customer lifetime in the industry and correlations between marketing and growth. Get those survey results at 2022.pmgrowsummit.com and check out Marie’s talk on the Ghosts of Marketing Past, Present, and Future. If you’d like to hear more about what Ray discovered about churn and property management, don’t miss Part 2 of this podcast. Contact us at Fourandhalf with any questions you have about our conversation with Daniel Craig of ProfitCoach. The post What Factors Affect Owner Churn? with Ray Hespen appeared first on Fourandhalf Marketing Agency for Property Managers.

Daniel Craig on Why Customer Churn is a Silent Killer Daniel Craig from ProfitCoach is joining us on The Property Management Show today to discuss the problem of churn and the value of retention. Walk down memory lane with us for a bit, and you’ll remember that Daniel’s first benchmarking study led to the NARPM Accounting Standards and a new focus on property management profitability. On our podcast, we’re discussing how client retention and client lifetime value affect your property management company’s profitability. Churn Kills Profitability If you have a low rate of client retention, your property management business has a leaky bucket. When it comes to your sales and marketing efforts, you’re investing a lot of money to ensure doors are coming into your business, but those new doors end up going out the back door. The money you’re spending on sales and marketing doesn’t contribute to profitability because you can’t earn anything significant. Too much business is being lost. Your customer’s lifetime value is what contributes to profitability. If you can’t keep your clients, you’re basically operating at a net loss on your sales and marketing spends. When we look at overall profitability in any organization, profit increases when revenue rises. It’s that basic. When you don’t have decent lifetime value from your customers, your rate of growth suffers. You lose the opportunity to make more profit off those customers. Doors have to stay with you for the long term, otherwise you lose money. Reputation and Customer Experience To really maximize the dollars you spend on sales and marketing, make sure two things are in place: A good reputation Delivery of a fantastic customer experience You’ll undermine your entire marketing effort if you don’t already have a good reputation established. That reputation is a foundation upon which you’ll build with your sales and marketing dollars. The customer experience is what prevents churn and the loss of existing profit. Organic referrals are a big part of your marketing strategy. People don’t always think of it as a strategy, per se, but it should be considered exactly that. Referrals don’t just happen. They happen when an outstanding customer experience is provided. It inspires your clients to talk about you. With a good reputation and a significant referral strategy in place, your sales and marketing efforts will work better. Creating the right customer experience will drive new business and retain existing business. You can throw a lot of money into marketing your property management company, but if you’re not establishing yourself as a reputable company, your marketing dollars aren’t going to spread as wide for you. Leads will get more expensive, and your lead quality goes down. The people contacting you when your reputation is subpar may not be the right clients for your company. Tracking Who You Keep and Who You Lose Is your glass half full or half empty? Meaning, are you calculating who you keep or who you lose? From a metrics standpoint, it’s important to watch your churn. But, don’t lose the real value in tracking that churn. You can look at it as a way of diagnosing the chinks in your armor when it comes to customer experience. Are you delivering what you’re supposed to deliver? Churn can give you the insight you need to see where you’re falling short of your ideal. Your property management company needs a specifically designed customer experience. How is that delivered? Is it delivered that way every time? The churn can provide some feedback on how well you’re delivering that experience. You need to collect feedback from your customers all the time, but you may get more honest feedback when those customers leave your company. Avoiding churn and being a more profitable property management company is about having a clear vision of what you’re leading your team towards. Each team member has their own job. But the job of everyone at your company is to provide the experience of working with your company. Daniel says that at ProfitCoach, each team member asks these questions to know whether they delivered the ProfitCoach experience: Did they own the client’s outcome? Did they make it easy? Did they do it in a way that provided an extraordinary service so the client goes out and talks about it? When your vision is clear and your team knows what they’re delivering, you’ll find that you have more referrals and churn goes down. You can cut down churn by focusing on customer experience. Average Churn Rates for Property Managers The first benchmarking study said the annual average churn rate for property management companies is 25 percent. Another study will be revealed at NARPM National, and we asked Daniel if he had any guesses or gut feelings about what would be revealed for average churn rates with the new and more recent data. He expects that the new study will show an initial drop in churn and then an uptick. Here are the factors contributing to that: First, with the initial study showing the 25 percent number, owners might have realized that their churn rates could be lower, so they set about improving their own client retention. That would lead to a lower churn average. But. There’s a lot more competition since that first study was released. The landscape is far more competitive and there’s a lot more tech. Let’s also consider the market. While Daniel says he hates to ever blame the market for customer churn, in this case it’s hard to dispute that a lot of homes were sold in the last year or two. As ProfitCoach ingests all the data, Daniel expects a drop in average churn during 2018 and 2019, and then an increase in averages for 2020 and 2021. The industry can do better than 25 percent. When we’re talking about churn, Daniel advises that anything under 15 percent is great. Some companies manage to stay under 10 percent. Under 20 percent is okay. But, having churn that’s higher than 20 percent isn’t good. It’s hard to grow when 25 percent of your business is churning out the door. Growth tends to be linear and churn is exponential and percentage based. In general, property management companies add anywhere from 10 to 30 doors per month. Some do more, but that’s a safe range for the purposes of looking at how churn can hurt. We’re talking about single-family homes under management. Once you hit 1,000 doors, a 25 percent churn rate means that you’re losing 250 doors a year, or 20 doors a month. It’s hard to grow with that kind of loss. The average churn rate for a professional service business is around 16 percent. Yes, property management is different so maybe we cannot put it in the same bucket as all other services businesses. But, you can look at property management in Australia, which has a much deeper market penetration rate than the U.S. In a 2020 Real Estate Dynamics Rent Roll Growth Report, they noted an average attrition rate of 17.3 percent. Twenty-five percent is too high of an average for our industry. Churn and your Ideal Client A lot of property management entrepreneurs are thinking thoughtfully about churn and how it relates to customer experience. Remember that some churn has to happen in every company. You need to let go of those owners who are not a good fit for your ideal client profile. One of the things Daniel quickly noticed with the consulting work he does at ProfitCoach is that a lot of property managers will actually make more money when they fire certain owners. Those are the owners who take too much from you. Those doors are a loss when it comes to revenue versus time spent on them. When you have owners like that, raise your prices to the point that it’s worth it for you or they leave. Are you measuring churn by owners or by units? Everyone does things differently, but Daniel recommends measuring churn by units so you really know how losses are affecting your portfolio. You might lose one client with 200 properties. You wouldn’t consider that a loss of one revenue stream. You’re losing hundreds of revenue streams. This speaks to that ideal client. Maybe you don’t want to work with large investors who have hundreds of doors, because the risk is too great if you lose that client. You’ll have to be a perfect fit if you’re in the business of serving owners with large portfolios. They’ll expect different things from the owner who has a couple of duplexes. Maybe your ideal client is in the single-family space. It might mean a smaller portfolio size and you’ll have more owners to eat with, but it could also mean more profitability. Those owners with large portfolios end up with a lot of leverage over the management company. It can be a less profitable relationship for a property manager. How to Budget for Retention and Sales/Marketing Customer retention can be a line item in the way you look at financials. But, it must be an internal investment. Supervisors have to take responsibility for having an ongoing conversation with their direct reports. Everyone needs to be equipped and empowered to understand and architect how the work gets done. This impacts labor efficiency and customer experience. Outside help to retain clients and avoid churn is great – but all levels of management have to be part of the strategy. One of the data points from the first benchmarking study showed that ROI on sales and marketing spend is all over the place. There’s no real relationship reflected in the data that shows how it impacts profitability. We asked Daniel what contributes to that. He believes is comes down to the mindset of the owner. As an owner, do you view marketing and sales as a thing you have to do? Or, is it central to what you’re about? If you see sales and marketing as nothing more than a chore, you’ll take shortcuts. You have not embraced a better vision where you think of sales and marketing as more central to the essence of your organization. You don’t have to be a marketing expert. But, you do have to participate in the marketing and sales of your company. You can delegate the implementation. You can work with partners on strategy. But, you can’t plan a marketing budget and then walk away. When a property management company wants to grow, they may spend a lot of cash on marketing without any strategy for growth. They might not even know what results they’re looking for. That is going to slow the ROI you see on your marketing spend. It also comes down to long-term versus short-term goals. Short-term strategies are expensive and easy. You can invest in Google Ads to gain leads. But, even better and more economical are those long-term strategies like content marketing. Referrals are long-term. They work and they’re affordable. If you want to make the best use of your marketing budget, think about long-term marketing strategies. We’re excited about the upcoming benchmark study and we hope we’ll see you all at NARPM National. Daniel will be there, and he’s going to have a Beat the Benchmark game. You’ll have the opportunity to make some wagers on what you think the benchmark study will reflect. When you win a category, you get a prize. Contact us at Fourandhalf with any questions you have about our conversation with Daniel Craig of ProfitCoach. The post Why Customer Churn is a Silent Killer with Daniel Craig appeared first on Fourandhalf Marketing Agency for Property Managers.

Meet Ray Hespen! He is the CEO and Co-founder of Property Meld. You might recognize him if you attended PM Grow Summit 2022, where he spoke about maintenance as an owner retention tool. He’ll be on the podcast talking about Owner Churn. The post Podcast Sneak Peek: Owner Churn with Ray Hespen appeared first on Fourandhalf Marketing Agency for Property Managers.

Meet Aurelie Lemmens! She is the Academic Director of the Expert Practice on Customer Analytics at the Erasmus Center for Data Analytics in The Netherlands. She’ll be on the podcast talking about Customer Churn. Check out the video for a sneak peek of our interview with her. The post Podcast Sneak Peek: Customer Churn with Aurelie Lemmens appeared first on Fourandhalf Marketing Agency for Property Managers.