Remember when student housing was just a step up from a run down tenement? I personally remember a ton of painted concrete, lots of stairs and not having air conditioning. I guess it was a motivator to go home for the summer.
Today, things are different. Very different. Student housing has evolved into Ritz-Carlton-esque suites with high-end amenities everywhere, from valet trash service to pet walking to cleaning services. It’s redefining how students live and certainly redefining their expectations. In four years at school, they become accustomed to the amenities of student housing.
But, what happens after that? How do they sustain that lifestyle? And what if they can’t afford to? How do you, as a property manager or developer, create something that is attractive to them?
Jamie Matusek, president of Catalyst, a marketing firm for student and multifamily housing, says that most students do not have to pay for housing. She says that when they do have to start paying, they are understanding that they cannot afford some of the same amenities that were paid for by mom and dad.
But that doesn’t mean it will be an easy transition. Even though students may understand that they can’t afford certain luxuries on their own, they may struggle with enjoying where they live, which could mean they break leases, don’t treat the property well and are generally bad tenants.
Matusek talks about the most successful ways to attract the right tenants and to keep them happy with the property.
First, let’s talk about where millennials are and how to reach them.
Matusek says that you should have an integrated approach, however, an SEO campaign and Google ad campaign have the highest return on investment. She suggests also upgrading to a graphic campaign instead of just text because imagery will drive better results.
If you don’t know what the spend should be, Matusek suggest that you should target a monthly investment of about $1,200 to $1,500 and an SEO campaign of about $700 per month. She even narrows it down to say, if you had to choose just one service, it should be Google Search and Display Select, one of Google’s types of ad placement.
Catalyst sells monthly packages that feature fully integrated campaigns driven to a unique landing page. The campaigns can include Google search, re-targeting, and search with display ads, social media advertising, social toolkits with video vignettes, and email. Other monthly offerings include SEO and reputation management by responding to positive or negative reviews and providing operational feedback to a site team. These monthly services average $2,500 per month.
With all these dollars going to marketing, what can you expect for a return on investment? Catalyst suggests that it’s not about optimal ROI across the board, because ROI is different across service and asset types. Christy McFerren, a senior director at Catalyst, says the key is to project the expected gain on the investment for a service type over time based on the average cost of that service and the average number of leads you can expect it to yield. Asset managers view every marketing dollar spent as a $12 risk of value to the asset if the dollars don’t provide adequate return, so it’s important to achieve positive ROI on every spend.
For example, a developer takes over a property as a core asset and plans to invest money to build a website and hire someone to create and execute an SEO strategy for a year. Imagine that the property has 350 units, the average rent is $995, the leasing team closure rate is 30%, and the developer is going to spend $14,950 on a new website and SEO for a full year. With those factors, the approximate ROI on this purchase is 1700%.
This factors in the $12 to $1 ratio mentioned earlier, and the fact that 60-80% of real estate leads come through organic search. Average cost per lead in this scenario is $7.29.
If the property is a development asset and all other factors are the same in the previous scenario, but the developer instead chooses to do a branding and reveal party, the average cost per lead is $163 with an ROI of 48.7%.
Estimating the ROI boils down to the type of asset, the type of service, and a few property-local factors, like the rents, leasing team closure rates, and unit count to formulate a wise investment decision.
Matusek warns that the campaigns will only get you so far. The next step is preparing staff to increase the closing percentage. Matusek says, “they need to be trained as a sales person and be compensated for the new leases they close. That contributes huge to the marketing spend.”
Purchasing a campaign is one thing, but you have to understand where and how to reach your target renter. Matusek says that it's key to understand demographics and psychographics. For instance, explore why they shop where they shop; what social media platforms they are on; what they do with their free time. Millennial residents are very interested in authenticity from the communities that they live in, so she suggests to focus on being “real.”
Jamie Gorski, chief marketing officer at The Bozzuto Group, says Millennials rely on others to make purchase decisions; they depend on reading reviews. They may not interact with social media but they definitely read it and it influences their habits. She says that millennials are a group of highly engaged, highly vocal and highly visual people, so creating great content is super important to reaching them and promoting your product.
“They are on technology devices all the time, yet they want to have a community,” Matusek says. “Property managers should not only show an amenity set, but they should also focus on the differentiators that they are bringing forth for the millennials. Like community events, what are they giving back to that the residents can join in on and feel like they are serving their communities. What social ties? How are they creating opportunities for connection? Not just BBQs and pool parties, but fitness, health and wellness, professional development, classes, pet events. You should create an opportunity for connection instead of just putting amenities out.”
She also says that you should put messages out in a very strategic and consistent way, using what they call at Catalyst an integrated marketing campaign. This type of campaign will use the same theme, the same creative and the same offer to drive to a specific landing page where data can be captured and sent to the leasing team.
That consistency should hit the complete mixture of channels that they are using. Matusek says, “We cannot expect residents to come to us. We have to be where they are. They are on their mobile devices. Your web site in many cases is the front door. If there isn’t the right content and if there isn’t life and personality, it doesn’t hit the mark. They want to see a blog and showcased events and imagery through Instagram. If someone is versed in Snapchat, I encourage you to embrace that because it’s on the rise.”
Another thing she points out that works really well is a campaign or event that gets a message out in a unique way that makes a property stand out. For instance, Matusek remembers a social campaign with short video vignettes that “showed off” the property’s 5-star maintenance team that performed really well.
McFerren pays attention to the metrics behind the campaigns to track what is really working and leverage it, improve it or ditch it. Her research shows that simple messages provide the most bang for the buck—even to the tune of driving on average 2.2 leads to 68.6 leads with the same campaign! She says, “we do a monthly review of all our reporting to see if our performance is going well against our benchmarks. The ones that are outperforming have a simple message that is easy to read and quick to understand. The more effective it is, the simpler it is. Clearness of the message.”
Focusing a market campaign on Millennials is great, but can a property manager target and find the ones who will stay? Matusek says it’s all about the customer experience, which is a direct result of staff responses when things do go wrong.
“The biggest impact here is the staff and the customer service experience,” Matusek says. “Most broken leases or renewal decisions are made around what their experience is at the property – how you handle cleanliness, maintenance, all other situations. Maintenance is a big part of the customer experience in a property and you can shift someone’s mindset based on how you as a property manager respond when something goes wrong.”
Matusek breaks it down into this example. If someone puts in an emergency maintenance request and it takes more than three hours to address the issue, the resident is going to end up angry and put out. What should happen at that point is a reactive approach that leaves the resident happy and comfortable. She suggests sending maintenance to fix the issue and immediately clean up the damage, plus, leave a hand-written note, apologize and ask if there is anything additional they can do. In her experience, Matusek says that will result in a resident who is sincerely grateful.
She suggests to think beyond that to leverage the opportunity to create a happy resident by sending a leasing manager in after that with a coupon or gift card to make sure that the issue is solved. A follow up like that could shift a horrible experience, and potential bad online review, to a good experience.
So, bottom line is that there are many different ways to appeal to the millennials who have been living in the lap of luxury student housing and now transitioning to paying for their own housing. Property managers need to highlight the differences in their property, and can even offer things that are not part of the rent, but just a partnership with a local service provider, which can be a very affordable way to offer something unique and custom to the renter.
Alex Eyssen, vice president, student housing at Bainbridge, says that purpose-built student housing focuses on an abundance of amenities, security, health and fitness and responsive on-site management. He believes those are the things that these residents will want as they transition from student housing to other properties.
Gorski agrees with this approach. She says that The Bozzuto Group focuses on experiences for the residents and facilitating social activities. Plus providing the right amenities with a focus on wellness.
“We allow customers to socialize and get excited about the community that they live in—inside and outside the community,” says Gorski. “We use things like cooking classes and programming in the community and create great experiences in the local area.”
Gorski says that Millennials love the local aspect so much that they created a campaign around it. The Bozzuto Group ‘Experience Local’ campaign tapped into local, authentic experiences that highlights the people, art, food and history that make each community special. The campaign had special features every month for both residents and prospects.
Eyssen also says you have to have the right people in place at the property—people with a hospitality mentality who don’t feel like the residents are over-entitled or demanding.
Eyssen says, “Student housing residents have become savvy consumers. They do a lot of research, read online reviews. You really need to manage community’s online reputation. They aren’t using social media; they are using the internet. You can learn a lot from a property by reading Google reviews.”
He believes that Bainbridge’s best lesson learned is that silence is not always the best option. He recommends that management teams respond to everything, and says if you aren’t doing anything it will become very apparent.
Catalyst has seen groups offer valet trash as an add on, package delivery and dry cleaning pick up. McFerren said that where she lives, her managers contracted with a local painter to paint custom colors and charged tenants $50 per wall, which didn’t cost the property anything, but the tenants were happier.
Matusek says, “Millennials are willing to pay for the conveniences. You just have to create the set of amenities that is an option, but not an expense.”
What does the future hold? Will student housing change or keep delivering at a higher and higher level? Eyssen says that student housing will change to keep up with the habits of residents.
“It’s about creating a lifestyle and not showcasing a property,” he says. “They have to develop authenticity because that’s what residents are looking for. Showcasing a pool doesn’t develop a community, but showcasing events is a community.”
