Limit landlord churn
Keeping landlords on your rent roll has never been more important. In recent times we highlighted 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 owners, tenants, and property managers—during the crisis, and after.
How that arrangement looks for the remainder of 2020 is uncertain at this point. What we can safely assume, however, is that tenants will need somewhere to live, and owners will not be in the mood to sell their properties if they can avoid it. That means property management is likely to keep the lights on, even as sales and other revenue streams decline.
The fear of rent roll attrition
This unknown environment has already proven the value of customer loyalty to businesses. And now more than ever its customer loyalty that we count on. Of particular concern right now to property managers is potential landlord churn and attrition.
Yardstick NPS gives you insights into your landlords thinking, early
So what causes your owners or landlords to leave an agency? And why would they want to leave yours? Well, we’ve now built a tool in Console Cloud that will help you find the answers to these questions earlier, so you can put retention plans into action sooner.
The tool in question is a new feature called Yardstick. It’s a net promoter scoring (NPS) tool that real estate agencies can use to understand how healthy their relationships are with their clients by measuring customer sentiment (and satisfaction).
So what is net promoter scoring all about? and why should your agency be using the tool. Let us 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. Think of it as a measure, a leading indicator or rent roll growth or customer churn. It’s customer intelligence you can use.
Simpler than you think, this is how an NPS survey works
NPS surveys ask customers one simple question: on a scale of one to ten how likely would they be to recommend your business or service to someone else. Most organisations that use this survey include an optional follow-up question, which asks customers to give a reason for their rating.
The survey organises your 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 your clients who are considering leaving your business. 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 are a section of your customer base that are generally not 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 be an advocate for your business and the service you provide. They will give you a positive review, refer you to new business or additional properties to manage. But don’t take them for granted or drop your game, their loyalty is just as easily destroyed by poor service as anybody else’s.
The beauty of an NPS is how easy it is to capture and review. It takes something difficult to quantify, such as how customers are feeling, and gives you a concrete rating. With newfound customer insight your business can focus its efforts on making the right business decisions ahead of time, and save your clients before they leave.
In this way, too, your NPS becomes a leading indicator rather than a 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 Console Cloud’s Yardstick to calculate your overall NPS
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 net promoter score 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 raving fans are and who your unhappiest customers are, which gives you a chance to nurture those relationships.
With Yardstick connecting to the rest of your office data, you’ll be able to immediately see who scored your business 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.
Users of Console Cloud 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 clothing or choosing a hair salon or beautician, 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 an owner’s circumstances—which is unlikely to be predicted in an NPS survey—what do you do when you discover your landlords 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 stuffed 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 stuff up, but there is general lack of rapport or understanding between you and the owner
This is a common one. In the same way that not all employees will like each other, so too do property managers and landlords 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 landlord is simply to work with another property manager—preferably within your business.
(3) The client 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. Landlords which 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) Generally your agency customer experience needs some work
This is perhaps one source of churn you have the most control over. Find out where that experience is falling down for landlords and fix it. Are their needs being met? Are you able to demonstrate your value? Are your self-service options usable, or painful? How simple is it for landlords to connect with you? How quick is your turnaround for tasks and information? Do you have any issues with file handovers of information sharing? These things can all impact on how landlords feel about you. Speak to your detractors (everybody, in fact, but start with detractors), get their feedback, and create a plan to improve the customer experience. Need a bit more information understanding what customer experience actually is? We’ve got you covered in this article.
(5) They’re jumping ship to a promised land
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 reviews, and unlock opportunities
On the flip side, 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 to 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 see changes in owner sentiment towards your agency
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 clients’ collective patience and skewing the ratings towards the negative (they get sick of survey overload). 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 Console Cloud’s 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.
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Console are providers of trust accounting software and end-to-end property management solutions, for property managers and agents in Australia and New Zealand.