Why Multifamilies Need to Join the Experience Era — and What Owner-Operators Can Do About It
– VOL. 18
Take a look at the apps you’ve opened today. We’re guessing there’s a Lyft among them, or possibly a Zoom. Does Seamless stay on your top-rated list? These companies are all part of a monumental shift that has occurred in virtually every industry in the country, and increasingly, worldwide. We’ve entered the Experience Era, a time when a consumer’s experience of using a product is just as, if not more important than, the product itself.
In this new era, companies that excel at providing the best experience to customers win—and that idea extends to the business of multifamily real estate. Read on to learn more about the Experience Era, what makes an industry leader today, and how you can make sure your business is one of them.
What is the “Experience Era?” and Who Are Its Leaders?
Source: Moving APT
Leaders in the Experience Era often offer similar, if not the same product as category competitors. The difference is that using these companies’ products and/or services is easier. More convenient. More enjoyable. Current leaders include the above-mentioned Lyft, along with Netflix, and Peloton, all of which have taken common needs (transportation, in-home entertainment and fitness) and improved the experience of fulfilling those needs.
As more and more companies adapt to this model, the business that provides the best experience endures, in part thanks to satisfied customers who promote the brand, recommending it to friends, family members, and colleagues. (Remember Skype? It’s still around. But guess who made the experience of free video-calling and conferencing better? Zoom.) Customer experience leaders don’t just survive—they thrive. According to a study by Watermark Consulting, from 2017-2019, experience-led companies generated a total return more than one and a half times that of the S&P 500.
There’s an Opportunity for Owner-Operators
There’s one major sector that has yet to be disrupted by an innovator in the same way that Venmo, Instacart, Lemonade, and others have reimagined the customer experience to become category leaders: real estate. This is despite the fact that housing accounts for, on average, 33% of an American renter’s budget.
Property owners haven’t completely missed the memo about the need to improve residents’ experiences; since 2018, they have invested billions in amenities including new tech (maintenance apps, keyless entry, etc.) and improved common spaces (theaters, resident lounges). But these decisions are often informed by little to no data, and costly improvements frequently end up being underutilized by residents. What’s worse: it’s nearly impossible to quantify the return on these investments.
There is one amenity, however, that all property owners already have access to—and every resident is using—that has the potential to dramatically increase NOI if leveraged correctly.
How to Turn Community Into an Amenity
It turns out that when residents are connected not only to the spaces inside of their building, but the local businesses, events, and people already around them—the community—they have a deeper sense of belonging and connection. When compared to costly tech and physical amenity upgrades, the community leveraged as an amenity is not only more affordable, it’s the most effective, having the most impact on demand, retention, and new revenues—all of which are key to increasing NOI.
So how do you tap into the power of the amenity literally right outside your properties’ doors? One example is Venn’s “Blooms & Brews” event held recently at Bushwick’s General Irving in partnership with the management company Duke Properties.
The daytime pop-up market invited local businesses to participate without a fee, and included vintage stores, artists, a popular bar/restaurant, and a yoga studio. Advertised as a Venn-sponsored event on the Venn app, and open to the public, the pop-up offered guests two free drinks and activities for all ages including flower arranging and DIY stress balls.
“It felt hyper-local. People were excited to meet local owners,” says Venn Expert Madi Lamb. “It generated nice buzz.” With more than 100 participants, including residents, local vendors, and walk-ins from the Bushwick neighborhood, the event created a unique opportunity for the property manager Duke Properties to interface with the local community, establishing goodwill and brand recognition everywhere from signage to personal connections.
The idea that connections to and within a neighborhood increase resident retention and renewal is not a theory. It’s a fact: Venn surveyed more than 1,500 renters in cities across the country to learn more about how resident experiences impact their decision-making. In the resulting Venn 2022 Resident Experience Report, Venn identified that when owner-operators take steps to transform the neighborhood into an amenity, they ultimately power demand, retention, and new revenues.
Using Tech to Increase Connections and Revenue
Tech-based messaging has proven both very popular and effective in helping residents build relationships in their communities. And renters who can connect easily with their neighbors via digital platforms—particularly apps—are one-and-a-half times more satisfied with their landlords than those who lack that opportunity.
Beyond fostering community connections and helping to drive renewals, app-based messaging can also support services that create new revenue streams. Currently, owner-operators’ financial relationships with residents start and end with the payment of monthly rent. It doesn’t have to be that way. Renters pay for a lot of other services every month, too, from grocery delivery to dog-walking to cleaning and beyond. And according to a 2021 study from Mint, more often than not, they’re supporting local businesses with their dollars. This presents another opportunity for owner-operators to optimize their residents’ experience and reap the benefits of doing so.
Help them connect more easily with the local service providers they are already using, and further connect with the community by introducing them to new ones. When residents are more connected to the neighborhood, their experience of living in your property is more enjoyable and convenient, and with you as the facilitator, your NOI increases. It’s that simple.
Communities Attract and Retain
The community-as-amenity model is not just a powerful tool to attract residents, it is the X factor in retaining them. The Venn report found that among renters living in equally amenity-rich buildings (high-tech offerings, inviting communal spaces, etc.) the residents that were highly satisfied with their neighborhood were more than twice as likely to renew as the ones not highly satisfied with the neighborhood.
While the industry invests in trendy features like keyless entry, residents shared that it is the human connections, not the technological ones, that ultimately drive retention. When renters were asked to pick the top three factors impacting their decision to renew a lease, nearly 60 percent selected at least one neighborhood factor along with rent; those included connections to people or local businesses and a general sense of belonging in the community.
How to Foster Connection and Community: Easier (And Cheaper) Than You Think
Now you know how to be a leader, but how do you go about creating connections between your residents and each other, the neighborhood, and even with you, the owner-operator?
In-person events are an easy and effective way to build these connections. Together, Venn and its partners Mac Properties recently hosted the inaugural Hyde Park “Dig In Dinner,” borrowing the potluck tradition popular in other Venn communities.
Held in the rooftop resident lounge, the dinner welcomed more than 100 guests. “We were planning for about 40 guests, but because residents brought so much food we were able to feed over 100,” says Bri Dinwiddle, a Venn Senior Community Manager. “We heard from Mac employees that it was the most successful [property manager-led] event ever. The property management and resident services teams came and stayed for the duration of the event, and said they can’t wait for the next one.”
How to Embrace the Resident Experience Era
Now that you have a better understanding of the Experience Era and what it looks like in the multifamily real estate industry, how do you take steps to become a leader in your market?
You already have one of the most important tools you need: a deep knowledge of your existing community. Lean into that, and focus on creating connections within your properties and the community.
For owners who are ready to activate the Experience Era, Venn can help. You don’t need any additional tech investment to partner with Venn, as it easily integrates with existing platforms and operations, including online payment systems already in place.
Your residents want to connect with each other, their neighborhood, and their community. To come out on top in the Experience Era you need to help them do that, and make it as effortless—and enjoyable—as possible. Venn can do that, too. Reach out to us today for a personalized recommendation.
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