Landlords, what’s at the top of your wish list when it comes to your rental units? We’re betting that two of the items look something like this:
- The ability to fill your vacant units as quickly as possible
- Residents who love where they live and want to stay for a long time
Of course, you realize that the best way to achieve your “wish list” is to work hard at your “to-do list.” So you stay busy, wearing your many hats and handling all the details of a successful residential building.
But what if you could achieve both of those wish-list desires easily, by leveraging assets you already have? A solution that could create a streamlined and profitable system of great residents who attract others just like them? Well, we’ve made it possible, with a simple and user-friendly platform called Cityhive.
Word-of-mouth marketing is every bit as important in today’s digital age as it was when sharing info with neighbors and acquaintances was something that happened in the local diner or over the back fence.
According to global measurement and data analytics company Nielsen, fully 83% of consumers either completely or somewhat trust recommendations from family, friends, and co-workers.
For residential properties, it remains one of the absolute best ways to get the word out that you have vacant units ready, hands down.
But more than simply spreading the word about vacancies, word-of-mouth marketing in the form of resident referrals bring enthusiastic and interested prospects to your properties. Because the people who are making these referrals — your happy residents — have already begun the selling process for you. Think of it as responding to qualified leads, rather than cold calling.
Passive Referrals vs. Active Referrals
First, let’s talk about the two kinds of referrals that can help drive customers to a business, whether that business is a rental property, a hair salon, a cell phone provider, or a food delivery service.
Passive referrals are wonderful. That’s when the customer (in your business, a resident) loves the product (their apartment ) so much that they tell friends, relatives, and coworkers about it. In this digital age, they may also leave positive reviews on Yelp, Angie’s List, Google, Facebook or rental property-specific review sites. They may respond to recommendation requests on social media, or even post unsolicited praise in the form of a tweet, Instagram pic, or YouTube video.
However, it must be acknowledged that this style of referral is relatively rare. After all, research shows that most folks are much quicker to publicly complain about a poor experience or an unsatisfying service than to praise a positive one.
Your best bet for priming the pump when it comes to passive referrals? Provide the best possible properties, be responsive to residents, and cultivate long-term renters through good customer service. In other words, all the stuff you’re already doing as a great landlord!
Now, as for active referrals? They’re a whole ’nother matter, and this is where incentives come into play. Let’s take a closer look.
When a landlord solicits referrals and provides a monetary or otherwise valuable incentive, there are a couple of potential outcomes. First, it greatly increases the odds that residents will recommend your property by spreading the word that it’s a great place to live. However, there’s also the chance that some renters may use the opportunity to take advantage of your generosity by scamming the system. But don’t worry; we’ll talk a little later about how to build in safeguards against this.
What’s So Awesome About Active Referrals?
Active referrals are most effective when they are paired with an incentive of some sort (and yes, we’ll get to that in a little bit, too.) And incentives are invariably going to cost you money. So what are the advantages of an incentive program over other methods of acquiring tenants? Let us count the ways!
Like Attracts Like
The old adage that “opposites attract” might hold true for romance, but for friends and neighbors? Not so much. Your residents are almost certainly going to be choosy about who moves in next door or down the hall, if they have their druthers. That means that whether they are responsible students who eschew partying, quiet professionals who are so focused on their career they’re hardly ever home, or conscientious young families, they would love others like them to live nearby.
A referral system means that prospective tenants are already primed to rent from your company when they approach your rental agent. They know roughly how much rent will be and which utilities and services are included. (By extension, they also know that they can afford it.) Prospective residents recommended by a current resident have heard all about the advantages of living in your property — its proximity to public transportation, what amenities are available, whether or not it is pet-friendly. That translates to less selling on your part, as well as an all-around easier, quicker lease transaction.
What about the argument that financial motivation will override a renter’s good judgement? That’s always a possibility. It’s important that any incentive you offer either has certain conditions baked in — it’s subject to a delay, for example — or is simply proportionate. You’re not going to give away Teslas or a year’s free rent, after all. Could be a cash incentive, a discount on rent, a gift card or another premium, but it’s a perk, not a bribe.
No matter what terms apply, communicate them clearly to your renters.
Incentives Save On Other Costs
How do you usually advertise your rental properties when a resident is moving out? If your only holding is a duplex or a single-family house, it’s probably enough to post on Craigslist or your own social media, put up some flyers at the co-op and the student union, and stick a For Rent sign out in front of the property itself.
These free methods will usually generate sufficient interest. (Although, do bear in mind the time investment of having to field phone calls and emails from whatever looky-loos happen to be driving through the neighborhood.)
But say you own a medium- or large-sized complex, or several multi-unit buildings. Advertising for these apartments likely eats up a not-insignificant chunk of your budget. To attract potential residents, maybe you pay to place listings on reputable websites or in local print publications. You might employ property managers who work on site to handle spur-of-the-moment showings and scheduled open houses, as well as to answer the phone, process applications, and deal with social media.
Naturally, you’ll have to do the math for yourself, taking into consideration the many variables — average rent price, number of properties, turnover costs, and advertising budget — before you can decide whether incentives are even worth it. After that comes the number-crunching necessary to find that sweet spot where the incentives are valuable enough to be effective, but not so spendy that they eat into your profits.
Don’t Underestimate the Importance of Goodwill
Presenting incentives to your current residents is also going to generate some goodwill. Depending on what type of reward you provide, you can really leverage these warm and fuzzy feelings to the advantage of your relationship with renters and your reputation within the community.
It is usually easiest from an administrative aspect to offer one incentive across the board. And a percent-based rent discount is also the fairest way to handle things, from a resident perspective, if you own properties of different values. (And make no mistake; if you hand out $200 for referrals for both a $1,200/month property and a unit that goes for $2K a month, word will get out.)
However, if you’ve got the flexibility, consider customizing the incentives. Maybe a resident would rather have new kitchen appliances? A fresh coat of paint or carpet cleaning? You could give a gratis gym membership, waive the usual pet deposit, or offer a monthly visit from professional housekeepers.
Not many folks will say no to cold hard cash, but such perks are sometimes even more desirable. Why? When they receive a windfall, people often feel obliged to pay off bills or plump up their savings account than spring for something that feels indulgent, like a cleaning service.
Another often overlooked option is that of gift cards, particularly to local merchants. This boosts the local economy, which is a fantastic act in its own right but which is also a super selling point for your property company. Additionally, it’s an opportunity for cross-promotion. Ask the store(s) you’re considering supporting if they will help advertise the incentive deal in their promotional material and social media. You win, the local economy wins, tenants win.
Cityhive Does It All
Using Cityhive’s resident referral platform gives you an intuitive and easy to use program that manages all buildings, units, residents and incentives. Track leads, incentives and vacancies and fill units faster.
A Few Final Thoughts
Have you been reluctant to extend incentive programs for referrals because of the hassle, time expenditure, or expense? Maybe the time is right to reconsider. With Covid turning the rental market upside-down, now more than ever it’s important to focus your marketing efforts on the assets you know will work. By incentivizing your happy residents to make successful referrals, you will be generating solid leads that will lead to units filling faster and residents staying longer. Promoting incentives for active referrals can actually create a cost-savings at the same time it fosters goodwill — and therefore increased loyalty — with current residents. It is more likely than traditional advertising methods to attract and retain the type of reliable, responsible renters you desire. And referrals can make signing the lease agreement easier and faster, since prospective residents come to you already persuaded of your property’s advantages. Most importantly, it helps your current residents build their hive!
Best of all, it doesn’t have to be a logistical nightmare, or keep you up all night ironing out the administrative details, thanks to Cityhive’s easy-to-use platform. Have questions about how it works? Want a sneak peek at our portal? Get in touch today.Back to Blog