By
Doug Miller and Chris Pulket
Word Count: 3209
As most national reports continue to show, soft markets, heavy concessions and flat-at-best rents persist across most of the nation – and are expected to continue for the foreseeable future. We have all heard the horror stories of sub-markets where prospects are being offered up to four months free rent.
Given the difficulties on the rental side, resident retention is getting more and more attention as companies seek to find ways to “shut the back door.”
The key to improving performance is to reduce turnover – and the key to reducing turnover is to improve resident satisfaction. The satisfaction research we conducted last year with tens of thousands of residents from across the majority of the country once again show the answers to improving satisfaction and the likelihood to renew comes from a focus on the
“basics” of prompt and professional attention to service requests, ensuring residents have positive feelings about their home, and that residents feel reasonably safe. The investments that permit property staffs to improve their performance in these critical areas, our research shows, deliver powerful returns.
Since the cost for each move-out is at least $3,000 (and much more if up to three or four free months concessions are given), our research would suggest that the way to increase NOI is to ensure that the best possible level of service is delivered – which can lead to a 1%, 5%, 10% or more reduction in turnover. What a dividend! Every move-out that is saved means much lower turnover costs! Controllable turnover will decrease the more residents perceive value for the rent they pay. If expenses must be cut, don’t cut back in areas that impact servicing resident requests - focus on reducing the money being spent on “soft” marketing programs (i.e. social activities, gifts, etc.).
Given the immense pressures of concessions, vacancy loss and reduced rents, some firms have attempted to boost NOI by cutting back on staffing, most notably maintenance staff. Our findings suggest that such decisions have a significant negative impact on satisfaction and the likelihood to

renew. Our 2003 national SatisFacts Index reported that percent of turnover that was controllable increased to 74%!
There are several possible causes for this increase. Residents submitting work orders increased to 79% from the 72% mark in 2002. This jump in the number of work orders submitted increases a property’s exposure to how well the requests are handled…so handle them with care. You do not want to turn an important customer touch point into a negative experience. Make how you handle service requests an opportunity to show residents the value they are receiving for their rent. Another important finding was that the percent of residents with outstanding service requests increased from 20% in 2002 to 27% in 2003. With the strong correlation between the percentage of residents with outstanding requests and the percentage who respond they are “Very Likely” to renew their lease, it was not surprising our findings showed a reduction in the renewal likelihood…which dropped from
56% “Very Likely” in 2002 down to 51% in 2003!
This article will delve deeper into our findings, including an in-depth review of the factors for the reduction in the likelihood to renew, as well as some ideas on how to incorporate addressing these “basic” issues into a successful
Resident Relationship Management™ (RRM) program.
 The majority of turnover is controllable
 Success begins with the staff, attitude, education, and operational systems
 Residents want and reward a focus on the basics
 The percent of outstanding work orders, staff responsiveness, work quality, a sense of security, and perceived value drives renewals
The Impact of Service Requests on Renewals
Year after year we see that how well service requests are handled continues to be the key driver in the renewal decision.
As Graph 1 shows, this powerful correlation remained the case again in
2003: the higher the percentage of residents with outstanding maintenance problems, the lower the percent of residents who respond that they are
“Very Likely” to renew their lease. The renewal potential drops significantly as the percent with outstanding issues increases.

Graph 1: Impact of Outstanding In-Unit
Maintenance Problems on Likelihood to Renew
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
0% 20% 40% 60% 80% 100%
Series1
2003
2002
Residents w/Outstanding M aintenance Problems
How do outstanding service issues impact satisfaction? Graph 2 shows the same type of correlation as the previous graph: satisfaction drops from the
“Superior” range into the “Red Flag” range as the percentage of residents with outstanding issues grows. Focus time, effort and funds into making sure your system to provide customer service is as effective and efficient as possible.
Graph 2: Impact of Outstanding In-Unit
Maintenance Problems on Overall SatisFaction
5.00
4.00
3.00
2.00
1.00
0% 20% 40% 60% 80% 100%
Residents w/Outstanding Maintenance Problems
Graph 3 shows the same relationship we reported last year… office staff responsiveness, maintenance response time and work quality continues to have a clear and strong impact on satisfaction!

5.00
Graph 3: Impact of Office and Maintenance
Response Time and Quality
4.00
3.00
2.00
Office
Response
Maintenance
Response
Maintenance
Quality
1.00
0% 20% 40% 60% 80% 100%
"Very Likely" to Renew
The important message here is that these issues are controllable. The returns on investments in these areas are clear: there are many potential
RRM program components, but the focal point should be in ways that permit for improved staff efficiency. With limited budget dollars and staffing, it’s clear funds should be directed to areas that will specifically address real service issues. Some of the key areas to focus on involve staff education
(regarding taking and servicing work orders), staff size (having the proper size staff to effectively handle annual or seasonal work order needs) and utilizing the full capabilities of your property operating system (using the maintenance modules to help make the tracking, handling and completion of work orders more efficient).
Overall Findings
Our resident surveys cover a broad range of satisfaction areas, with residents answering questions using a 5-point rating scale (1 being
“Extremely Dissatisfied” up to a 5 being “Extremely Satisfied”). Scores above 4.50 are considered “Exceptional,” from 4.00 – 4.49 “Superior,” 3.50
– 3.99 “Average,” 3.00 – 3.49 are “Warning” signal, and scores below 3.00 represent a “Red Flag.”
Scores dropped from 2002 to 2003, we feel, because of the impact of reductions in staffing. These results add weight to our position on the need to prioritize funds towards areas that improve the staff’s ability to deliver service to residents.
Category
2003
Score
Comment
2002
Score
Maintenance Staff Courteous and Professional 4.21 Superior 4.25

Office Staff
Maintenance Staff
Office Staff
Courteous and Professional
Quality of work done
Responsiveness and dependability
Grounds, landscaping, building, lots
4.21
4.03
4.00
Superior
Superior
Superior
4.24
4.09
4.07
Exterior Curb Appeal
Apartment
Building Interiors
Maintenance Staff
Appearance and Condition
Hallways, laundry facilities, lobbies
How quickly requests are handled
3.99
3.95
3.92
3.79
Average
Average
Average
4.02
3.97
3.93
Average 3.96
Safety and Security Level of satisfaction
Overall Average
Score
3.77
3.99
Average
Average
3.91
4.06
Category
Maintenance
Requests
Maintenance
Renewal
Likelihood
Percent who had requests in the past year
Maintenance problems still exist
2003
Percent
79.11%
27.90%
2002
Percent
72.91%
20.71%
Percent citing "Very Likely" to renew 51.33% 56.49%
Referrals
Percent who would recommend their community
The most important messages from these tables are:
84.18% 88.94%
 Residents rated the speed with which work orders are handled as only modestly “Average,” and this score dropped from 2002, which ties in with the points made earlier.
 Residents giving their actual apartment an “Average” score has significant implications. If they do not have strong feelings about their home, how do you expect them to respond when they get their annual rent increase letter? What is the impact on perceived value? Asking them to pay more for something they do not have strong feelings for…will only push them to go out into the market to see what their options are!
 79% of residents submitted maintenance requests last year, which increased from 2002. Since there is a strong connection between how these are handled and renewals, properties have great exposure to negatively or positively impact retention.

 Of those who submitted work orders in the past year, 27% of residents cited that maintenance problems remained in their apartment, and this figure increased from 2002. Reducing the resources dedicated to handling service requests led to an increase in outstanding requests; given the correlation between this and the percentage citing that they are
“Very Likely” to renew, this increase negatively impacts retention.
 The latter point of the negative impact increased outstanding work orders has on renewal likelihood is confirmed by the findings. When the percent with outstanding issues increased from 20% in 2002 to 27% in 2003…the percent of residents who said they were “Very Likely” to renew dropped from 56% in 2002 to 51% in 2003!
 As the percent of residents with outstanding work orders increased from
2002 to 2003, the percent stating they were “Very Likely” to renew dropped almost 10%!
Most Turnover Is Controllable
51% of residents said they were “Very Likely” to renew. The more interesting data comes from the 49% who did not respond this way; these residents are asked a follow up question of why they did not respond that they were “Very Likely.” And the key finding is that 74% of these residents cited controllable reasons, up 14% from 2002!
This finding, and those that follow, clearly provide validation of the points made on the need to not only avoid cutbacks in funds directed to staff, staffing, education and operational systems…but to even consider investing more because research confirms the return for investing funds to increase staff effectiveness and efficiency!
When reviewing the table of non-renewal issues cited, keep in mind the financial impact of every point, even the ones only citing 3%: 3% of a 300 unit property’s 150 move-outs equals 5 residents; at a cost of $3,000-
$5,000 (if heavy concessions) per move-out, a 3% item has a $15,000-
$25,000 bottom line impact. Taking a broader look, if 74% of turnover is controllable and you can reduce this by identifying the issues and taking action, what could the return be for investing funds in the ways discussed earlier?
Reducing a 300 unit property’s turnover just 5% boosts the bottom line
$45,000-$75,000!
These findings show the importance of focusing on the real issues of satisfaction and retention. The priority must be on addressing the basics of
Resident Relationship Management™ - not on traditional programs like social

activities, newsletters and the like. Highlights of the following table of the top reasons why residents say they were not “Very Likely” to renew are:
 At least 6 of the top 10 potential non-renewal reasons are directly related to the basics of staff performance. Items like “social activities” were not a top rated non-renewal reason…but maintenance response time (#4 nationwide, up from #9 in 2002), office responsiveness, maintenance work quality and office courtesy are!
 Overall, 21% of residents cited “staff related” reasons.
 22% cited “staff controllable” reasons.
 11% of residents cited financial and perceived value issues.
 8% cited property improvement issues.
 10% cited apartment feature, condition and appearance reasons.
Rank Category and Ideas
Buying Home: Consider a rentto-buy program where a percentage of rent goes towards
1
2
“Why Not Very Likely To Renew?” – Top Rated Reasons closing costs with local builders.
This becomes a marketing advantage, plus will tend to lead residents to stay longer so that they can build up their down payment. You can also attempt to shift your marketing messages and programs, so as to try to appeal more to longterm renters.
Relocation: Have a sound, well promoted inter-company property referral program.
2003
Frequency
19.1%
16.8%
2002
Rank
1
2
2002
Frequency
24.3%
17.5%
3
Rent Increase: The increase is usually not the issue…it’s the perceived value. Consider a menu of lease renewal incentives focused on in-unit improvements that will help residents “love” their home again (carpet cleaning, painting, closet organizers, window treatments, lighting, etc.). The value of incentives grows the longer they 6.8% 3 6.9%

4
5
6
7
8 have lived there. A dual benefit is improvements also enhance the value of the asset.
Maintenance Response Time:
Techs can waste 1-2 hours per day deciphering work orders. So help them by educating office staff on the key questions to ask on the most frequent service requests, and improve the information given on work orders. Enough staff? How about pulling money budgeted for social activities and gifts, and use it to at least enhance the maintenance staff during the heavy turnover season? Educate the maintenance team on any areas of weakness. Make the most of the service request functionality in your property operating system. Implement
“best practices” program and monitor performance metrics.
Rent-to-Value: See “Rent
Increase.”
Office Responsive: See
“Maintenance Response Time.”
More than 50% of leasing staff time is not leasing…it’s providing customer service. So educate the office on how to take work orders, how to maximize the use of the property operating system. Implement “best practices” program and monitor performance metrics.
Maintenance - Quality of Work:
Quality can be a function of inadequate staff size, education needs, and the need for work orders to be processed properly by the office staff.
Safety – Community: Options
4.9%
4.9%
4.0%
3.6%
3.5%
9
4
6
2.7%
6.0%
3.4%
11
10
2.6%
2.7%

9 vary in cost, ranging from neighborhood watch programs, to building controlled access entry systems, revenue-share apartment intrusion alarms, and fencing and/or gating the property.
Office Courtesy: Hire right…hire the attitude, teach the technique! You can’t teach a non-“people person” to be nice and concerned.
10
Neighbors: Enforce “house rules and regulations.” Don’t be short-sighted…make sure selection criteria has not been loosened too far, as residents will see the difference.
11
Office Work Quality: See
“Maintenance Response Time” and “Office Responsiveness.”
12 Moving Home
13
14
15
16
Apartment – Condition: If they don’t love their home, how will they feel when they get their rent increase? See in-unit lease renewal incentive program under
“Rent Increase.”
Community Cleanliness: Dirt does not sell. Consistent cleanliness, not just around the office! Also focus on dumpsters, and pick-up schedules. Review with vendor or staff, and push for better performance.
Safety – Neighborhood: See
“Safety – Community.”
Community Parking: Re-evaluate site, dumpster locations, striping, and lease terms
(number of cars permitted per apartment). Consider contracting for a professional evaluation.
3.5%
3.2%
2.9%
2.8%
2.3%
2.1%
2.0%
1.9%
12 2.6%
7
8
5
19
16
15
18
3.1%
2.8%
4.6%
1.4%
1.9%
2.1%
1.5%

17
18
19
20
Apartment – Need Different
Size: If you do not offer the size needed, use inter-company property referral program.
Location – Overall: Can intercompany property referral program help?
Safety Gate: It is often cited that gates do not work; the resident perceives that they are not getting something they are supposed to be getting for the rent they pay. If you have a gate, make sure it works. If it rarely does, consider options.
Can't Afford: Can inter-company property referral program help?
Apartment - Space, Design: Can inter-company property referral program help?
1.8%
1.8%
1.8%
1.5%
13
N/R
17
20
2.3%
1.9%
1.3%
21 1.5% N/R
Found Better Deal: Why were they looking? Typically due to perceived value. See in-unit lease renewal incentive program under “Rent Increase.” 22 1.4% 14 2.3%
Resident Suggestions Confirm the Desire for “Back to Basics”
All residents are asked “What can be done to improve the community?”
Responses are very similar to the non-renewal issues, and the suggestions once again focus on “basics” like:
 At least 5 of the top 10 suggestions are directly related to the basics of staff performance.
 26% of suggestions were “staff related.”
 56% were in areas that are “staff controllable.”
 Only 3% related to rent!
 23% were property improvement suggestions.
 15% were related to apartment features, condition and appearance.
How To Improve The Community – Top 20 Specific Suggestions
Rank Category and Ideas
1
2
Safety – Community
Community Parking
2003
Frequency
8.1%
7.5%
2002
Rank
6
1
2002
Frequency
5.7%
8.2%

3 Community Cleanliness
4 Safety - Gate
5 Better Residents
6 Maintenance Responsiveness
7 Safety - Neighborhood
8 Office Responsiveness
9 Maintenance Work Quality
10 Community Landscaping
11 Safety - Building
12 Office Work Quality
13 Office Courtesy
14 Lower Rent
15 Safety - Fencing
16 Apartment - Condition
7.3%
7.1%
6.8%
6.5%
5.0%
4.9%
4.7%
4.3%
4.0%
3.6%
3.1%
3.0%
2.8%
2.4%
5
4
2
8
9
7
11
13
12
10
14
3
15
N/R
17 Community - Laundry
18 Community - Lighting
19 Community - Fitness Center
20 Apartment - Carpeting
2.4%
2.1%
2.1%
2.0%
N/R
N/R
18
17
2.0%
2.2%
Planning for Success
Our findings clearly confirm the STRONG correlation between the basics and renewals. To maximize performance, sound Resident Relationship
Management™ plans should be crafted, implemented and regularly monitored at the property, regional and corporate levels. The foundation for these plans should be researching the issues impacting satisfaction and renewals. First and foremost, plans must address the staff related, asset related, and performance related issues identified. And for each issue identified, the plan should include focused, cost effective, actionable options, as well as costs, an evaluation, recommendations, deadlines and responsibilities.
Take Control, Focus on the Drivers of Satisfaction
Clearly the majority of turnover is controllable. Residents will reward a focus on the basics. The priority for funds should be on the staff, staffing, education and operation systems that will permit the property team to effectively and efficiently deliver prompt, professional and dependable service. Until the true key drivers of satisfaction are well under control, consider shifting dollars budgeted for “bells and whistles” (social activities, move-in gifts, newsletters and other “soft” marketing programs) towards investments that will permit the staff to better take care of real resident needs!
6.2%
6.5%
7.2%
4.2%
4.1%
4.3%
3.4%
2.8%
3.2%
3.4%
2.6%
7.0%
2.5%

In summary, resident satisfaction is driven by “basics” such as: a courteous, capable, dependable and responsive staff; proper handling of work orders; parking; clean, well-maintained buildings, common areas, laundry facilities/washers-dryers; an apartment and community that are proud to call “home”; facilities and amenities that are well maintained; good neighbors/residents; a sense of safety; and, to see the value for the rent they pay.
Allen and Rocks, Inc., a Virginia-based owner/manager, has a portfolio of approximately 2,500 units. While they do not have the unlimited financial resources a REIT or large national player might have, Allen and Rocks continues to accomplish some amazing things. For 2002 and 2003, they have won our national award for clients with portfolios of less than 5,000 units. And for both years, one of their properties has won our national award for the highest score for a property with over 100 units. When I asked Dave Thomas, VP & Director of Property Management, what he attributed their success to, his answer came down to attitude and focus.
More specifically, he said there is a company-wide commitment to their mission. The mission is basic, and simply stated, “We put our hearts into your home.” Their residents sure see the difference, and certainly reward
Allen and Rocks with referrals and renewals!
Article originally appeared in the June 2004 issue of the National Apartment
Association’s UNITS magazine.
Doug Miller, President of SatisFacts Research, has nearly 20 years experience in multifamily marketing, research and training, and has worked with nearly a thousand communities nationwide. Chris Pulket, Director of
Operations for SatisFacts, was the contributing writer. Copyright© 2004,
Doug Miller and Chris Pulket. All rights reserved. For addition information, contact the Frog Pond at 800.704.FROG(3764) or email susie@frogpond.com
; http://www.frogpond.com.