With rents rising around the country, you’d think there would be less motivation for owners to offer their residents enticements to stay or refer friends. You’d be wrong. Some multifamily operators still want to find every possible way to attract residents.
“As rents start moving up, people start looking for value,” says Jim Fenwick, president of residential property management at the Miller-Valentine Group, a Dayton, Ohio–based property manager with approximately 11,000 units across the Midwest and East Coast. “Anything that an organization or ownership or management company can do to separate itself from other companies helps.”
As many companies are finding, one way to do just that is by launching a resident rewards program, which can vary from offering discounts and coupons to newly signed residents to a strictly point-based system that mimics airline mileage programs. As such, rewards can take many forms and be doled out for any number of activities, from paying rent to volunteering to help out on site or in the community. But regardless of how they entice residents, apartment owners recognize that there is value in rewarding loyalty, even in a tightening rental climate.
For residents, the rewards for renting can begin before they even move into an apartment. For instance, Santa Monica, Calif.–based Rent.com offers a $100 gift certificate when a renter uses its Internet Listing Service (ILS) to find a place. “When a renter finds a place to live, we incentivize them to come back and tell us that the transaction took place,” says Christina Aragon, director of strategy and insights at Rent.com.
Village Green, an apartment owner and operator with about 40,000 units and based in Farmington Hills, Mich., created its Village Green Select division to handle different types of resident discounts and coupons. With the help of an IT firm out of New York, it developed an online menu of 35,000 different discounts from about 4,000 different merchants.
“You become a resident and get this wonderful package of all these discounts you may not be able to find on your own,” says Andrew Yule, a senior director at Village Green.
Miller-Valentine offers points for renewals or referring a new resident. “We have even moved to conflict resolution,” Fenwick says. “There are times when expectations are not being met. Instead of throwing a $100 gift card their way, [resident points] have a way of making [the resident] feel better about what may have been a bad experience for them.”
Sarasota, Fla.–based Barrington Group, an apartment owner and manager with 2,400 units in Georgia, Indiana, Michigan, Ohio, and Texas, offers residents points for moving in, paying rent on time, referring a friend, renewing a lease, monitoring an on-site kids club, offering resident testimonials, adopting a common area, helping with a resident event, running a social committee, participating in a welcoming committee, and doing community outreach.
“We’re a smaller company, so it’s easier for us to be a little more creative in our offerings,” says Kristy Dingess, the social media marketing manager for Barrington. “If somebody wants to earn points, we’re going to make sure they can.”
Different Deal Types
The types of rewards programs apartment companies offer are just as diverse as the behaviors they want to reward. For instance, Village Green has a Lease Equity Program where it enters all new residents into a program where they can ultimately earn 0.5 percent back on a down payment when they decide to buy a home. The resident receives the reward by going with a licensed real estate brokerage firm that has executed a referral contract with Village Green and pays a referral fee to the company. Village Green also offers a package to residents that includes discounts at online dating sites, Target, Best Buy, and many other companies. “We’re also creating a brand of locally based coupons for a local gym membership, a local pizzeria, and things like that,” Yule says.
Still, setting up a rewards program can be time-consuming as companies go to merchants for discounts. But, Yule says, if an apartment manager or owner can bring enough mass to the table, it’s not very costly. For good rewards programs, the process is continual as apartment owners add new merchants. If you don’t want to do the legwork of setting up your own rewards program, Naperville, Ill.–based ResidentGifts will do it for you. It buys promotional codes in bulk from various sites and provides them to apartment owners to use as an incentive. The company then splits those savings with the owner and also splits the codes that expire without being used, effectively returning a portion of the money to the property’s budget.
Residents can redeem codes at various places, such as Overstock.com, Lands’ End, Cabellas, Bath and Body Works, Sports Authority, Fandango, Restaurants.com, 1-800-Flowers, and Omaha Steaks. “There are a wide variety of redemption options and a wide variety of redemption levels—as little as $10, for example,” says Gerry Wiatrowski, co-founder and chief marketing officer of ResidentGifts. “Instead of getting a basket of cookies or free rent, residents get points. They can either redeem those points immediately or accumulate them over the lease term and get what they want.”
American Fork, Utah–based Purqz provides daily deals for property managers to send to their residents. The company works to get the best discount possible from retailers, restaurants, and entertainment venues. It charges apartment managers a monthly fee to provide these deals. The company charges about 60 cents per door per month.
At Barrington, the rewards are even more creative. The company offers its “Rest and Relax” rewards, which can be redeemed with gift certificates to places such as Starbucks, Target, AMC Theaters, and Barnes & Noble. But it also has a “Get Out of Jail Free” reward, which allows a resident to waive a late fee or insufficient-funds fee. Finally, there’s the “Love Your Home” reward, which offers apartment upgrades such as new cabinets, ceiling fans, stainless steel appliances, new carpeting, and other in-home updates.
“Some people prefer cash in hand,” Dingess says. “Others like their apartment and plan to stay there for a while, so they’ll do an upgrade.”
The Benefits of Rewards
Despite the extra effort incentive programs require to set up, apartment owners and managers who have established them think they help. “Rewards programs alter behavior,” Fenwick says.
What’s more, in a concessionary environment, their value may be even greater. “When you give a concession, it’s lost forever,” Fenwick says. “Six months down the road, they don’t think, ‘Wow, wasn’t it great that we didn’t pay rent for the first month.’ ”
A reward is also cheaper than a concession or a gift card. Fenwick, who uses ResidentGifts, says he can get up to 70 percent off from certain providers (though that’s not necessarily the norm).
“It’s never dollar for dollar,” he says. “If you’re giving a $1,000 concession away, you’re paying $1,000. You’ve lost $1,000 of revenue because of that concession. In the best-case scenario with ResidentGifts, that $1,000 only costs $300.”
Dingess thinks rewards also prompt renewals, which can help. “The communities in our portfolio that perform extremely well are the ones with the greatest sense of community,” she says. “That was part of the idea—bringing a sense of community into each of our properties. This program was a way to do that.”
In fact, Miller-Valentine likes the system so much that it will soon be offering it as an incentive for its employees. “I think [Miller-Valentine associates] will accumulate these points,” Fenwick says. “Now they can save them up and get something bigger than one gift card. It’s a great way to do something different other than give cash.”