Preventing landlord churn
Keeping owners on your rent roll has never been more important. We’ve spoken before about the rising importance of customer experience in property management. And while we’re experiencing a pandemic right now, rest assured that there are, and still will be landlords, renters, and property managers—during the crisis, and after.
How that arrangement looks for the remainder of 2020 is unknowable at this point. What we can safely assume, however, is that renters will need somewhere to live, and landlords will not be in the mood to sell these properties if they can avoid it. That means Property Management is likely to keep the lights on, even as sales and other income plummets.
The spectre of rent roll attrition
This uncertain environment has already proven the value of customer loyalty to businesses. Never have our collective fates been more in the hands of customer loyalty. And of particular concern right now to property managers is the spectre of landlord/owner churn and attrition.
Yardstick lets you find out what landlords are thinking, early
So what causes landlords to leave an agency? And specifically, why would they want to leave yours? Well, we’ve now built a tool that will help you find the answers to these questions as early as possible, so you can save as many as possible from leaving.
The tool in question is a new feature in Console Cloud called Yardstick. It’s a net promoter scoring (NPS) tool that agencies can use to understand how healthy their relationships are with clients by measuring customer sentiment.
But how exactly does net promoter scoring work, and why should you use it? We explain.
What is an NPS or net promoter score?
An NPS or net promoter score is a simple measurement of your customers’ satisfaction and loyalty. It’s a type of customer intelligence that can be used equally as a leading indicator of rent roll growth and churn.
How an NPS survey works
Most commonly, NPS surveys ask customers one question: on a scale of one to ten how likely they would be to recommend your business to someone else. Most companies who do this also include an optional follow-up question, which asks customers to cite the reasons for their score.
The survey organises your survey respondents into three groups: promoters (those who gave you a score of 9-10), neutrals (who scored you a 7-8), and detractors (who scored you 6 or less).
Your detractors are people who are considering leaving your agency. But they haven’t yet—and they might be saved if you act on this information. Detractors can also be bad for business because they tend to be more vocal about their dissatisfaction than those who are classified as neutrals.
Neutrals aren’t unhappy with your business, but they may not be completely satisfied, either. Your neutrals might seem like a group that you don’t need to worry too much about for now, but they’re an incredibly valuable source of feedback. Ask them what they think of your business, and what you could do to improve your service.
The more of these you have, the better! Promoters are not only your happiest clients: they’re your most valuable. They are the ones most likely to give you a positive review and to refer you to new business or additional properties to manage. But don’t take them for granted or give them a sloppier service than you’d give anyone else just because they’re nice. Their loyalty is just as easily destroyed by poor service as anybody else’s.
The beauty of NPS is in its simplicity. It takes something nebulous and difficult to quantify, such as how customers are feeling, and gives you a concrete score. That customer insight means your business can focus its efforts on making the right business decisions ahead of time, and save landlords before they leave.
In this way, too, your NPS becomes a leading rather than lagging indicator of growth and churn. That is, rather than waiting for the proverbial canary in the coal mine to pass out (an example of a lagging indicator), it can predict if the canary is feeling a little lightheaded (a leading indicator).
Use Yardstick to calculate your overall net promoter score
This is the part where the ‘net’ in net promoter score comes to the fore. While knowing who your lovers and haters are is useful to manage those individual relationships, it’s hard to use that data en masse to benchmark your business. That’s where a global score can help.
Your net promoter score is calculated as follows: find out what percentage of your owners are promoters, and what percentage are your detractors. Subtract the percentage of your detractors from the percentage of your promoters. This should give you a score of between -100 and +100 (and if it is outside this range, something has gone wrong). The closer you are to +100, the more of your customers love doing business with you. The closer you are to -100, the more of your customers are your detractors, and probably looking to leave.
What should your NPS be?
It shouldn’t be below zero, where more customers are detractors than promoters. Generally, your NPS should be as close to +100 as possible. But how can you tell how good your score is relative to other agencies? Survey Monkey’s global benchmark data, which accounts for more than 150,000 companies’ net promoter scores globally, may help.
Their data suggests professional services companies can expect to fare slightly worse than retail and consumer services companies. Here’s a breakdown of NPS scores from professional services respondents:
So how does your score compare?
Now that you’ve got the sense of what an NPS measures and how to know if yours is healthy, let’s move on to how Console Cloud’s own NPS tool, Yardstick, can turbo-charge your business.
How Yardstick works
Console Cloud’s Yardstick NPS tool is a semi-traditional net promoter scoring feature. It allows you to send a one-question survey (with the follow up open-ended question) and collates the answers automatically for you. It will also help you calculate your overall net promoter score so you can benchmark and begin improving your performance.
But Yardstick also takes it a step further. When you send your one-question surveys, you’ll be able to see exactly who gave you which score and what they said about you. This makes it even easier for you to immediately understand who your happiest (and unhappiest) customers are, and to nurture those relationships.
And finally, because Yardstick talks to the rest of your office data, you’ll be able to immediately see who scored your business what in other parts of the platform too (such as the Owners tab). That keeps this data top of mind and visible, so you can act on it accordingly.
Our Console Cloud customers now have the tools to find their own score with Yardstick, and learn what their owners think about them. If this is you, what should you do with that information? We’ve got some tips.
Use Yardstick as a leading indicator of churn and growth
Property Management is uniquely positioned to receive clear signals about landlord churn and rent roll growth from their NPS. This is because unlike purchasing shoes or choosing a hairdresser, the buying cycle in property is slower and more deliberate.
Given this, owners considering leaving or giving you new business are likely to feel a certain way for a sustained period before taking action. And that means your promoter score reflects their feelings now, giving you a window into their future actions. For that reason, your NPS is likely to be a much more accurate predictor of growth and churn than in some other sectors. Hooray for quality business intelligence!
What to do when you discover owners at risk of churning
Leaving aside natural portfolio attrition from things like changes in a landlord’s circumstances—which is unlikely to be predicted in an NPS survey—what do you do when you discover your owners are thinking about leaving you?
Good question. While the individual reasons for unhappiness are possibly infinite, broadly speaking they can be grouped into certain categories, as follows:
(1) Someone in your business screwed up an interaction or transaction.
It happens. But if your business hasn’t taken responsibility and owned up to the error or fixed it, this can quickly erode their trust and faith in you. If the matter was a while back, still make good—you might be surprised what a genuine apology can do for the relationship.
(2) You didn’t screw up, but there has been a general lack of rapport or understanding between you and the landlord
This is a common one. In the same way that not all coworkers will like each other, so too do property managers and owners not always see eye-to-eye. If there’s been a communication breakdown, address it, and see what steps can be taken to improve that relationship. Sometimes, however, an amicable relationship may not be possible, and what’s best for the owner is simply to work with another property manager—preferably within your agency.
(3) The landlord expects unreasonable service or is otherwise time and resource-intensive to manage
This type of unhappy customer may be the exception to the rule, even in these uncertain times. Owners that take the most time for you to manage are also costing you the most money to manage. Unless their fees are high enough to compensate for this extra time, and their property/ies is/are bringing in enough for them to be worth your while, it might be time to let these ones go.
(4) Your customer experience needs help
This is perhaps one source of churn you have the most control over. Find out where that experience is falling down for owners and fix it. Are you able to demonstrate your value? Are their needs being met?
Are your self-service options usable, or painful? How easy it for owners to communicate with you? How quick is your turnaround for tasks and information? Do you have any issues with file handovers of information sharing?
All of these sorts of things can impact how landlords feel about you. Speak to your detractors (everybody, in fact, but start with detractors), get their feedback, and craft a plan to improve the customer experience from there. Need a bit more information understanding what customer experience actually is? We’ve got you covered in this article.
(5) Someone else is luring them away with a deal or other inducement
While you may not be able to save this client (at least, not without deals or discounts of your own), you should be able to get some valuable feedback from them about your business and their experience. What would it take to get them to stay?
Use Yardstick to generate testimonials, reviews, and unlock new business opportunities
On the flipside, Yardstick will show you who your promoters are. These are the customers that make the best candidates for positive reviews and testimonials and can often either refer you new business or give you more of their own. The key is simply to ask them. Ask them if they’d like to leave a review. Ask them if they have any other properties you can manage.
Track your NPS over time to observe changes in landlord sentiment towards your business
What is a good cadence for releasing NPS surveys? Conventional wisdom suggests no more than once per quarter.
In part, this is about not exhausting your owners’ collective patience and skewing the scores towards the negative (as they become sick of taking your surveys). But in part, it also better accounts for fluctuations that will occur over time as new strategies are put in place. Measuring teething problems may not yield useful results.
Ultimately, understanding your NPS through Yardstick is a small but powerful way to help your business shift gears towards better customer retention, and growth at a smaller cost. And it’s just one tool of many in Console Cloud that can help you power-up your business.