Adobe Stock

Repeat business is the lifeblood of most industries. Once a customer uses your product, dines in your restaurant, or visits your establishment, you’ve done the hard part. They are now a part of your ecosystem, so it’s just a matter of understanding your customers and offering an experience compelling enough to bring them back.

The same concept holds true for the apartment sector, as the industry often exhibits a disproportionate focus toward attracting new customers. Efforts to understand and retain existing residents are comparably less vigorous.

“For a long time, the renewal process has just been very painful and something of a forgotten moment in the resident life cycle when it comes to tech,” says Holli Beckman, chief marketing officer of WC Smith. “It’s historically difficult to accomplish for both the site teams and the residents, even if you remove pricing philosophies from the picture.”

This disconnect is often a product of poor communication, whether it’s failing to provide timely renewal offers, not following up on those offers, or not gathering insights into why departing residents are moving on. Resident concerns, such as the need for more space or an outstanding maintenance request, are fixable if the property has visibility into their residents’ needs. Ultimately, the lack of timely communication can often make the entire process too off-putting for renters who are on the fence, and they decide to move on.

“Amazon doesn’t win because they have the highest-quality products—they win because they’re easy to do business with,” Beckman says. “I think in property management, we need to be thinking more about finding ways to make the renewal process easier.”

Residents often run into a communication roadblock when attempting to choose a renewal offer term, communicate newfound needs, or schedule a meeting with on-site teams. Frustration follows because residents see this as their lone opportunity to negotiate.

That’s certainly alarming in the modern apartment landscape, where renewals are increasingly crucial and renewing residents sometimes produce higher rents than new leases. Renewing residents provides the clear benefits of stabilized occupancy and reduced turn costs. Properties also can benefit from earlier decisions from those choosing to vacate, as it enables them to market those homes earlier, reduce vacancy loss, and make more informed pricing decisions. But finding a way to optimize the renewal process remains a struggle, even in a data-centric digital age.

“As an industry, we collect a lot of data during the resident life cycle,” says Kevin Murphy, chief operating officer and founder of Renew, which provides software that is exclusively focused on managing the end-of-lease process. “And yet we don’t use that data to personalize the resident experience at the renewal moment. We still send a static PDF in a portal and expect the resident to make a major buying decision quickly. Personalization is key, and all that data you’re collecting should influence and impact the resident experience.”

Fortunately, operators can now lean on technology to help improve the renewal process. Just as it has helped automate many on-site processes, tech can be used to provide more robust communication to residents nearing renewal, gain deeper insights into why departing residents are leaving, and potentially refer departing residents to other communities within a portfolio.

Here is a glance at a few operators that have onboarded renewal technology and the resulting benefits.

Hamilton Point Investments Reduces Concessions, Boosts Renewal Rates

On a broad scale, Tyler Billings agrees that the current approach to renewals in the apartment industry is “suboptimal.” Billings, director of revenue and marketing at Hamilton Point Investments, finds that true even though high retention rates are widely viewed as a primary indicator of success because they equate to reduced turnover costs and stabilized occupancy.

Muddy processes can still happen even if your intentions are in the right place, he says. Renewal strategies and conversion rates had been historically strong at HPI, a private-equity investment company that owns and manages multifamily apartment properties among other forms of real estate. But room for enhancements existed—particularly regarding response rates to offers and renewal rent growth.

“Renewal rent growth is always in the back of people’s minds, but it closely coincides with conversions,” Billings says. “We tried concepts over the years like early-bird specials that were essentially concessions or gift cards, but they never resulted in a consistent solution to boost engagement or entice residents to make quicker decisions.”

Concessions and gift cards, naturally, chip away at potential revenue. HPI never could find a lucrative way to implement these concepts and eventually decided to partner with a renewal software provider. The platform’s capacity to automate much of the follow-up process was very appealing to HPI, as it alleviated the ambiguity of how often already-taxed on-site teams instituted follow-up measures.

The value of the tech addition was further solidified, Billings says, by the platform’s willingness to experiment with dynamic pricing, which prodded residents to make earlier decisions to lock in a better rate. It led to an immediate $3,500 in additional revenue at HPI’s communities piloting the software and soon climbed to $17,000 as the platform was rolled out, which represented more than a 300% boost. Additionally, residents were making decisions an average of 11 days within receiving an offer, which represented a nearly 30% improvement.

“Our on-site teams continue to follow up, but partnering with a renewal platform has been a valuable extension for us,” Billings says. “It gives us additional time to have those conversations and see what we can do to keep them or transfer them to another community that better fits their current needs.”

WC Smith Enhances Communication Components, Receives Decisions 11 Days Quicker

WC Smith, a Washington, D.C.-based operator, also has always immensely valued the concept of renewals. Beckman and members of her team, however, knew the company could take steps to enhance the process.

One of them was eliminating what Beckman terms as “roadblocks” to communication, in which residents could only relay renewal decisions and communications via email or phone call. By enabling communication via text and apps, it gave residents more options and furthered the ability to communicate on their time.

As part of the upgraded resident retention initiatives, WC Smith implemented a renewal platform and is gradually rolling it out at its market-rate properties. Beckman cited “tangible and intangible benefits,” with an example of the latter being the improved cadence and consistency of follow-up initiatives. Tangibly, WC Smith’s speed-to-decision among residents has greatly increased, and renewal decisions are now made an average of 69 days before lease expiration, which represents an 11-day improvement.

“An increase in speed to decision, even if that decision is to leave our property, gives us a competitive edge,” she says. “I know where the exposure is going to be, and I can forecast my marketing spend more accurately and get in front of prospective renters quicker.”

Beckman also believes the industrywide renewal process suffers from lack of visibility into why renters are leaving—and tech helps to provide those insights. She adds that a stigma exists with departing residents, and operators often don’t take the time to learn more about their reasons for vacating.

“These customers that we spent so much time and money acquiring are being written off because they had a life change and needed to move,” Beckman says. “The psychology needs to be completely adjusted because we have the potential to keep them as customers within our brands, even if they have to leave a specific property.”

KETTLER Hastens Decision-Making, Reduces Vacancy Loss

KETTLER, a Virginia-based operator, piloted a renewal software in the latter half of 2022 and is gradually rolling it out throughout its conventional portfolio. While results have been promising across the board, KETTLER's most compelling metrics involve quicker renewal decisions from residents.

At properties utilizing the technology, 45% of residents make a decision within 14 days of receiving their renewal offer. That far surpasses the industry standard of 15%. Departing residents at these properties have provided a notice to vacate an average of 68 days before the lease expires, much sooner than the industry average of 51 days. As such, KETTLER has experienced an average decrease of vacancy loss of five days per unit.

“This allows us to be more proactive in anticipating occupancy trends and adjusting rents to support a healthy balance,” says Kimberly Ramsey, senior vice president, community operations, at KETTLER. “It helps us to achieve our financial goals for ourselves and our clients.”

By using the platform, KETTLER also has gleaned more insights into residents’ decisions not to renew. Equipped with knowledge of why residents are going—whether it’s the need for more space, a job-based relocation, family considerations, or any additional factors—the company can sometimes move these residents to a different home within the property or to a sister community closer to where the resident is relocating. While it’s not applicable in every scenario, of course, these insights help KETTLER to keep some vacating residents within the portfolio.

For departing residents for whom remaining within the portfolio isn’t an option, the software enables KETTLER to provide leads to other operators for a fee.

Renewal procedures in multifamily have always been a bit shaky. The haphazard processes in place have seldom aligned with the underlying importance of renewals. That could change moving forward, however, as tech is providing avenues to revamp and optimize the way the industry approaches resident retention.