Property Management is essentially relationship management. Customers expectations have changed. More than ever, Property Managers need to place relationships at the center of their business. Creating and nurturing valuable relationships starts with measuring and analyzing customer satisfaction.
Relying solely on metrics such as vacancy rates, arrears rate or number of inspections outstanding doesn’t cut it anymore, they are seen as a given and don’t make any business stand out. Customer satisfaction is all too often a forgotten performance metric but is the one impacting your business bottom line the most.
Here are the four elements being impacted:
- Tenants turnover
- Landlords turnover
- Staff turnover & engagement
- Brand reputation & new business opportunities
A tenant turnover costs on average $1,800 per property, between loss of management fees, repairs, cleaning, advertising, inspections, and letting-related costs. With an average annual turnover of 30%, for a portfolio of 100 properties, this represents $54,000 annually.
Moreover, a high turnover rate may lead to Landlord questioning performance.
The industry average landlords churn is 15%. For an average $2,500 annual contract value (8% management fees on a $600/week rental), a 15% churn represents $375 per property.
For a portfolio of 100 properties, this churn represents $37,500 annually.
Staff retention & engagement
Lack of systems for transparency and accountability leads to poor team engagement. Low engagement leads to lower productivity (18%), higher absenteeism (37%) and error rates (60%). All of which negatively impact the business’ bottom line.
According to HR experts, the costs of re-staffing a position is at least equal to 40% of its total annual compensation.
Property Managers turnover rate varies between 22% and 45%, which means a cost of $5,280 to $10,800 per Property Manager’s position (based on a $60K annual salary)
72% of landlords trust online reviews as much as personal recommendation, and 90% of landlords say that positive online reviews influence their decision.
Studies show that average or bad online reviews cost 22-60% new business opportunities.
For a portfolio of 100 properties looking at growing at a rate of 1 new property per month, the impact of reviews can cost $6,600-18,000 annually in lost business opportunities.
How to reduce the costs and start turning relationships into profits
Show your customers that you care
Give customers an opportunity to raise concerns internally on a regular basis, nurture the relationships while strengthening your brand with a customer satisfaction programme.
Automate regular customer satisfaction surveys with industry-specific questions providing actionable data
Although NPS systems provide some insights they are a tool that only provide limited actionable data for your Property Management business, as opposed to a specific property management customer satisfaction survey.
Have a proactive approach to management
Understanding the expectations, detecting problems early, rectifying, and substantially reducing the customer churn.
Build a culture of performance
Provide transparency and accountability on customer satisfaction across the board, facilitating support of team members and healthy competition.
Strengthen your brand
Identify happy and unhappy customers and turn promoters into good online reviews, don’t forget that today’s tenants can become tomorrow’s landlords.
Want to take your Property Management business to the next level? Schedule a free strategy session with Max here