It is no secret that the key to success in the multifamily industry is strong resident satisfaction and loyalty. To better understand the true areas of opportunity for improving your resident satisfaction, you need to look beyond the numbers and key into “thick data,” a term referenced by Trisha Wang inferring that the why behind the numbers, the biggest insights that lead to making meaningful, operational changes, were embedded in looking at open-ended feedback. For the multifamily industry, this “thick data” refers to online reviews and survey comments.
To provide standardization to this “thick data,” J Turner Research has developed an artificial intelligence (AI) and machine learning model with 22 categories related to the apartment living experience. Developed specifically for the multifamily industry, the J Turner AI model went through several iterations over a period of three years to achieve the highest accuracy. Our AI model is trained to analyze the independent thoughts in each review, so it is possible for a review to have multiple categorizations. Within this model, we also determine the positive or negative sentiment of the feedback mentioned in a review regardless of the star rating.
Using our AI model, we have analyzed 1.4 million reviews to identify the macro trends of the last 20 years with regard to categories and sentiment. Additionally, we also have analyzed how review sentiment has shifted over the last three years, especially at a time when the apartment market is buoyant and upbeat. Our analysis indicates that while reviews have become more positive over the last 20 years, residents are becoming less patient with the quality of service they are receiving. Since 2019, J Turner’s resident survey data indicates a drop in the resident satisfaction score represented by the Turner Apartment Loyalty Index (TALi). This decline in the TALi score coincides with an increase in negative expressions in online reviews.
Significant Jump in Positive Reviews
When J Turner Research was founded in 2003, 66% of the review commentary was negative (meaning resident or prospect complaints); only 34% of the review commentary was positive (compliments). This aligns clearly with the thoughts of the industry at the time. Professionals in the space used to say, “review sites are just an online forum for residents to vent.” As online reviews started playing a role in the prospect's apartment shopping process and the number of review sites grew, the ORA score was created in 2013 to simplify the industry's understanding of "digital curb appeal.” In line with the growing emphasis on online feedback, management companies worked to also get their happy residents engaged online. By 2014, 50% of the commentary in reviews was negative, and 50% was positive. Now in 2022, we see that the commentary has further shifted to a split of 38% negative and 62% positive.
In positive reviews, we have observed that reviewers are more and more willing to compliment the staff. In 2003, there was a 32% chance that a review taken at random would have something nice to say regarding customer service. That has risen to 46.8% in 2022. Moreover, we have seen that the average reviewer is more than twice as likely to compliment the staff’s communication on site. Other categories that have notably trended up in positive mentions are the condition/availability of the amenities and common areas, maintenance service, and move-in quality.
Reduction in Negative Reviews
Likewise, we have seen that residents and prospects are less likely to criticize the staff. In 2003, there was a 37.9% chance a given review would say something critical about the customer service on site. That number has plummeted down to 12.5% in 2022. Similarly, 22.1% of reviews in 2003 would have featured a complaint about maintenance service, but that number is now 7.8%. Other categories that have followed a similar downward trend within negative mentions are security, condition of the unit, financial, and noise. This has largely contributed to the shift in positive versus negative that we see today in comparison with 2003.
Past Three Years: Increase in Negatively Motivated Reviews and Reduction in Positively Motivated Reviews
Despite these macro trends, the last three years have produced an environment where there is a greater propensity of negatively motivated reviews. The split of negative to positive segments was 36% to 64% in 2020. This has changed to 38% to 62% in 2022. This has largely been driven by growing dissatisfaction among residents with the on-site teams.
While analyzing our ongoing resident surveys, we found that the resident satisfaction scores (TALi) has trended down 13% in 2022 as compared with 2019. This dip in resident satisfaction is not directly correlated with the timeline of the pandemic. The steepest decrease in satisfaction began in September 2021.
After doing a deeper dive of the TALi scores and survey commentary, our conclusion was that residents feel like the on-site team “does not care” as much as they did in the past. Immediately, this led us to forecast that the quality of online reviews would suffer. It doesn’t come as a surprise that negative commentary about how well the property is taken care of has spiked. Complaints in the following categories have all risen substantially since 2020 (in order of biggest rise to lowest rise):
- Condition/availability of the amenities and common areas;
- Maintenance service;General cleanliness;
- Security; and
- Maintenance timeliness.
Similarly, compliments have been harder to come by. Positive commentary mentioning these categories have trended down since 2020 (in order of biggest decline):
- Customer service;
- Condition of the unit;
- Noise;
- General cleanliness; and
- Security.
Conclusion
We are at an interesting time in the apartment industry. Housing is limited, which has led to higher occupancy rates and, in a lot of cases, higher rental rates. While this is great for the industry in the short term, the concern should be what happens moving forward. Satisfaction is clearly trending down, putting occupancy rates in doubt when the market inevitably takes a turn for the worse. Management companies must address this downward trend, specifically tackling the areas where residents are expressing the most displeasure.
