Resident Retention in Action: A Multi-Housing World Recap

Resident Retention in Action:  A Multi-Housing World Recap
By Monique Guion-Kimball

The Annual Multi Housing World Convention was held in New Orleans on the last few days of April (which also happened to be the opening weekend of the world famous New Orleans Jazz and Heritage Festival… so if you missed it, you reallymissed out!).  Those of you who were lucky enough to attend know that a tremendous amount of talent and experience was shared in the seminars presented.  Though it’s beyond the scope of any article to fully capture the essence of these information-packed seminars, I’d like to share some of the significant successes and strategies that were offered.

Of special note was the session on Successful Resident Retention Strategies, which included presentations by Tom Wilkes, Senior Vice President of Management for Columbia Realty Trust, and President of Columbus Management Services; and Kathleen McKenna-Harmon, President of McKenna Management Associates, and currently Senior Vice President of the ARM Division of the Institute of Real Estate Management.

Columbia Realty Trust – Strategic Success

Tom Wilkes began the presentation with the story of Columbia Realty Trust, formed as a primarily merchant builder in 1983.  They began in the late 80’s to focus more on holding their many properties, with a view toward long term management.  Since then, they have continued to focus on the American Renter-by-choice.  Columbia came to the realization early-on that satisfying this demanding consumer group would be key to their success.  Now listed and successfully traded on the New York Stock Exchange, Columbia owns and successfully manages approximately 4,500 apartment homes, with 1,000 more in construction, and 900 in fee management.  He described the threefold Resident Retention Strategy that has earned and helped to ensure their success:

1.  Listen to the customer.

2.  Respond to what they are saying with targeted services and products.  Tom says “This is a zero sum game.  A dollar spent on a service or product they don’t want or care about is gone… if they don’t want it, they won’t stay.”

3.  Prevent the unnecessary move.  Tom observed that we all know the cost of turnover, and that for every one complaint we actually receive from our residents, there are ten more that we may never hear.  Tom challenged our often unquestioning acceptance of high turnover, and offers that the answer is an obvious one:  “… we’re not providing them something.”

This was not an easy paradigm shift for Columbia, as exemplified by Tom’s recollection of a Capital Expenditures meeting in June of last year to discuss a property they’d just bought.  They were discussing a $90,000 gate installation. When it came time to present the status of the gate installation, the report was that the gates were coming along great… the only people upset about them were the residents!  It was clear that they had to change their approach, and a clear roadmap was needed.   

In studying other companies that had achieved success through customer-driven service philosophies, they found one common thread.  The companies who achieved the most significant success did so by opening the lines of communication from the front lines to the corporate offices.  Columbia quickly realized that the number one conduit between management and residents is the on-site staff, who participate in community life on a day-to-day basis, and many times match-up demographically with the resident profile of the community.  They took this revelation to heart, and went to work.  The work paid off tremendously, as evidenced by some of the innovative programs that Columbia has put into action, including:

A highly successful Community Relations Program – A special liaison is paid to manage cultural, social, educational, and athletic events for all residents.  Ties are created within the resident base, and among neighboring institutions.  Staff members mingle with the residents, and listen to what they say.  Columbia successfully creates active synergy between residents and staff, and uses the information and feedback that this interaction generates to better serve their residents.

Professional Surveys – Their four-page survey includes approximately 50 questions on a variety of subjects and issues that help them gauge the quality of their products and services, and eliminate some of the “guess work” in determining resident satisfaction.  The survey measures both tangible and intangible qualities of the things they build into a property, from whether residents prefer hardwood floors to how important it is to them to feel a sense of community, and how safe they feel walking from their car to their door. 

Mail-in Assessment Cards – The bottom-half of Columbia’s Service Request form includes a tear-off card with  four simple questions that determine whether the service was performed within 24 hours, whether the maintenance team cleaned up after themselves, whether it was fixed right the first time, and the resident’s overall opinion of the maintenance service provided at their community.  The same philosophy is employed at the move-in stage when Residents are given cards with five or six simple questions intended to gauge their satisfaction at move-in.   These cards are postage-paid, and self-addressed to Columbia’s Corporate Office, where they are received and gathered for the duration of the quarter.   All feedback received is analyzed to determine what went right or wrong, and charted for display in the corporate offices.  Copies are sent to both regional offices and to the properties themselves so that specific issues can be addressed appropriately. 

Resident Advisory Panels, or RAPs.  Those of us who are familiar with home-owners associations will have a hard time imagining a management organization masochistic enough to form one themselves, but that’s just what Columbia did! Imagine actually paying a group to get together over pizza with their regional managers and representatives from development and construction.  Resident members are asked to offer feedback on everything from existing policies to paint and carpet colors.  The minutes are published — even the critical ones. Accountability is not taken lightly.

Employee Empowerment – Columbia recognizes that one of the most successful ways to satisfy residents is to empower the people who know them best.  The on-site manager is empowered to offer as much as a month’s rent concession to atone for an error.  The leasing staff is also a part of the development team, to the point of reviewing and approving floorplans.

Pre-Employment Assessment – Tom cautions “Before you empower, you want to make sure you’ve got the right people.”  A  professionally-administered pre-employment exam tests the applicant’s cognitive and reasoning abilities, as well as their “service art” — the ability to react creatively, innovatively, and appropriately; not only by experience, but very nearly by instinct.  Columbia subscribes to Disney’s philosophy not to motivate people, but to hire motivated people and give them the right environment in which to serve the customer. 

Special Incentives and Awards – Columbia’s employee incentive awards specifically target those who share significant insight, demonstrate initiative, and go the extra mile to exceed the customer’s expectations.  Quarterly awards of plaques, stock, and cash reward outstanding performance.

We would all do well to follow Columbia’s formula for success as summarized by Tom at the conclusion of his presentation:  “Create the conduit, listen with sincerity, respond with action, and honor the champions.”

Kathleen McKenna-Harmon – Transitioning to a Customer-Driven Organization

Kathleen is an industry veteran, who has authored two timely books on apartment management, including The Resident Retention Revolution, and is soon to publish her third.  She’s devoted the past five years to transitioning her own company from a traditionally-managed organizational structure to a Customer-Driven one; and shared many of the lessons that she’s learned along the way, including:

Pay attention to the customers rhythm. – Be there when your customers need you, not just when it’s convenient for you.  It may not be practical to reorganize your organization’s working schedule right away, but consider filling the next available opening for a service technician or office staffer with someone whose working hours best correspond to the needs of your residents.

Get rid of the rules. – Kathleen says to separate the Red Rules (those that are essential for the protection of the property and the people that live there) from the Blue Rules (those that we’ve made up for our own convenience).  Question the need for each and every rule, in light of the fact that nearly every conceivable problem is already covered by Landlord / Tenant law, as supported by the lease agreement.  You’ll likely realize that you don’t need the rules after all.

Become familiar with the concept of “internal customers.” – Even our employees are customers in some fashion.  Their satisfaction is important to the quality of service that they provide your residents.  There must be an active culture at work inside the company, that doesn’t merely require compliance with a policy, but commitment to provide superior service to each other as well as your residents.  Start by thanking each other for the jobs that get done well.

Recognize the importance of time. – Our perception of time has changed dramatically over the last several years, and continues to change.  Technology and process reengineering have brought us to the point that what used to take days, can now be done in minutes or even seconds.  Our perception of “quick and responsive” has changed, and so has our Residents’.  We must learn to do business accordingly.

Develop a relationship with your Residents, and nurture it. – This calls for a huge change in corporate culture, where we have traditionally only managed properties and collected rents.  We must learn to view the resident as an on-going customer, not merely to be seduced into renting at our communities and then forgotten until renewal time. 

Teach your employees to be part of the new corporate culture. – Teach them to deal with people… not just policies and processes.  Her mission statement begins with “McKenna Management is Customer passionate.”  Build it into the job interview, because not everyone wants to work in an organization where power is in the hands of the customer rather than the bureaucracy.  You want and need people who do.

Hire differently — hire nice people. – Kathleen quoted Hal Rosenbluth, owner of a “marvelous customer-driven company”, Rosenbluth Travel.  He says “Tenet number one:  hire nice people.  Too often a person’s job description carries more weight than his or her human values.  What’s inside someone’s heart can’t be discovered in a resume.”  Teach your people to accept responsibility – even to the point of apologizing when it’s not necessarily their fault, and always when it is.

Rethink your idea of leadership. – In a customer-driven company, traditional top-management leadership is important, but is no longer the sole driving force.  It often becomes more important to empower the front-line to make decisions that satisfy the customer.

Kathleen summarized her presentation with a reminder that this is not an easy transition to make.  Realize that people’s perceptions will be changing throughout the process and “you can’t dictate how people are going to feel… but you can look back after a couple of years and say have I made any progress?  And you can say, yes I have, and take great joy in that.”

About the Presenters:

Tom Wilkes, CPM, RAM, currently serves as Senior Vice President of Management for Columbia Realty Trust, a self-administered and self-managed real estate trust now listed and successfully traded on the New York Stock Exchange.  He is also President of Columbus Management Services, with approximately 4,500 apartment homes, approximately 1,000 more under construction, and 900 units in fee management.

Kathleen McKenna-Harmon, CPM, is the President of McKenna Management Associates of Minneapolis, Minnesota.  Kathy has written two timely books on apartment management, the most recent of which is resident retention related, and is soon to publish her third.  She presents several innovative management seminars nationwide, and manages property throughout the United States herself.  She is currently Senior Vice President of the ARM Division for the Institute of Real Estate Management.

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Monique Guion-Kimball currently serves as Special Projects Manager for The Sales & Marketing Magic Companies, Inc.