INSIDER S GUIDE The 5 Most Powerful Ways to Improve Tenant Satisfaction Today
Tenant satisfaction significantly impacts your bottom line. Overview: The Real Cost of Tenant Dissatisfaction You try hard to keep your tenants happy, but it often seems, to paraphrase the Rolling Stones song, tenants can t get no satisfaction. It s one of the biggest challenges facing commercial property management pros - how do you anticipate tenants needs, compete with new space concepts and options (coworking, shared office space, microspace, etc.), and research and implement new services while trying to put out fires all day long? It s a constant battle for most property managers and building owners. Tenant replacement costs can include things like: Down time caused by vacancy Time to show the property Space marketing costs New tenant build-out expenses Brokerage commissions Concessions Tenant happiness significantly impacts your bottom line. Losing an unhappy tenant has a greater impact than just lost rental income. 2
The likelihood of lease renewal is 3X greater when tenants are satisfied. Jones Lang Lasalle calculated the potential cost of losing a tenant, based on cash flow models used in underwriting, could be: 1 month lost rent for every yearlong term signed (with free rent periods) 2 years to recover revenue 3 months of construction time 9 months of leasing downtime [Jones, Lang, Lasalle 2012, http://www.us.jll.com/united-states/en-us/ news/1782/jones-lang-lasalle-quantifiescost-of-losing-a-tenant] Based on AwareManager s 20 years of experience with over 100 billion assets under management, we ve come up with the five most powerful ways to keep your tenants happy, improve their experience in your space, streamline your internal processes, and improve your bottom line. BONUS: Not only have these recommendations proven to positively impact tenant satisfaction, but they re also surprisingly easy to implement. Or, to put it another way, according to a survey done by real estate business intelligence firm Kingsley Associates, the likelihood of lease renewal is 3X greater when tenants are satisfied with management. [Kingsley Associates, 2011, http://www.irei.com/documents/sponsors/ KingsleyProf_1109.pdf] 3
Without consistent communication with tenants, you ll be left in the dark about the issues. 1. Tenant Communication Is Like a Sales Process, So Start Thinking About It That Way Tenant engagement is like a sales process and like top sales executives, property managers need to know exactly where they stand with each tenant at all times. The best sales execs are in constant contact with their prospective clients. Otherwise, they can easily be blindsided by changes in budgets, expectations, or staff. you could take to improve tenant retention. When these situations are addressed proactively, you can solve problems before they escalate. The same holds true for the tenant/ landlord/owner relationship. Without consistent communication, you ll be left in the dark about the issues that are causing tenant dissatisfaction, or miss new revenue opportunities, or potential actions 4
Flexible office space solutions now account for 8% of all office space and increasing. EXPERT TIP Identify Tenants Who Want the Office of the Future Before They Leave Industry estimates indicate that flexible office space now accounts for up to 8% of all global office space and on the rise, reflecting the trend in companies looking for space that can evolve to meet their needs over time. In addition, these spaces offer the latest in interior design, new services for tenant employees, and a more affordable (and flexible) cost model. A look around the Internet will yield information about the elements that make up the office of the future. In addition, tour coworking and flexible spaces in your area, and incorporate their ideas for services and space design. Start now to identify which of your tenants may find this model attractive and think about how to ensure that those tenants stay put. 5
Management response time to requests is directly correlated to tenant satisfaction. 2. Make It Effortless for Your Building Staff & Vendors to Respond Faster to Tenant Requests Management s response time to tenant requests is directly correlated to tenant satisfaction rates. But facilities staff and vendors can t be chained to a desk all day, so providing easy access to their assigned work and to incoming tenant requests from the field is critical. If your building team is still dependent on paper, and on timewasting trips back and forth to the property management or engineering office, it s high time you considered software to streamline internal processes. By facilitating a means for staff and vendors to automatically receive their assigned work and updates to their assignments wherever they are, you ensure that tenant requests are addressed as they come in, without any delay. Staff and vendors will be able to reprioritize their work based on the most urgent requests, some of which may not have been on their list at the start of the day. 6
send out an immediate email acknowledging that their work request was received. 3. Keep Your Tenants in the Loop Consistently and Frequently Today, patience isn t necessarily a virtue; it s an extremely rare quality. We re all conditioned to get what we want, when we want it. Your tenants are no different. It s critical to update them frequently on the progress of maintenance work and other requests they ve put into your property management office. issue, trusting that you ll take care of it, which eliminates the communication burden on your building staff. Many facility management programs available today can automate this entire process. You can do this easily by sending out an immediate email acknowledging that their work request was received, or with a bit more effort, by sending updates at every checkpoint along the way. Never underestimate the value of a simple one-sentence email. Once they receive affirmation that their request has been heard, tenants are more likely to stop worrying about the 7
Tenants want simple and fast ways to provide their feedback. 4. Give Tenants a Meaningful Forum to Share Their Feedback With You As important as it is to communicate with your tenants regularly, none of that matters if their feedback isn t collected and addressed in a meaningful way, so that they feel heard, and so that you can consistently deliver the excellent service that your tenants deserve. For example, are they unhappy about the cleaning services? Take that information to the cleaning vendor and fix it! Are they happy with the response time to calls about building temperature? If not, communicate that to your staff and make sure they respond more quickly to requests. Tenants want and need simple, fast ways to provide their feedback. Frequent Tenant Satisfaction Surveys are one of the best ways to do this. Surveys allow property managers and tenant coordinators to really listen to what tenants have to say, gather quality data, spot trends proactively, and piece together an overall picture of what is most important to them. 8
How likely are you to recommend this property to a friend or colleague? EXPERT TIP Use Net Promoter Score (NPS) to Identify Unhappy Tenants One of the best ways to survey tenants is to use the Net Promoter Score methodology which provides a simple scale for measuring satisfaction and likelihood of tenant turnover. Companies with higher NPS scores outperform their competitors. Net Promoter Scores are calculated using this question on a 0-10 scale: How likely are you to recommend [brand x] to a friend or colleague? Respondents are then grouped as follows: Detractors (score 0-6) are unhappy customers who can damage your brand and impede growth through negative word-of-mouth. Subtracting the % Detractors from the % Promoters yields the Net Promoter Score, which ranges from a low of -100 (all Detractors) to a high of 100 (all Promoters). Read more at: http://netpromoter.com/why-netpromoter/know Promoters (score 9-10) are loyal enthusiasts who ll keep buying and refer others. Passives (score 7-8) are satisfied but unenthusiastic customers who are vulnerable to competitive offers. 9
Invest more time into creative ways to improve the lives of your tenants. 5. Expand your horizons beyond the four walls of your building At the end of the day, most people spend more time at their workplace than they do at home with their families. It s your job is to keep those employees comfortable and safe, if you want to keep the main tenant contact happy. Invest more time into creative ways to improve the lives of your tenants. Tech giants like Apple, Facebook and Google have redefined what company perks can be. If you re looking for new services to offer tenants, just take a look at their corporate culture webpages or videos. Think beyond the four walls of your building: What local businesses could you partner with? Where do employees like to hang out after work? How do most employees commute to and from work? 10
Tenants are the economic engine of your properties. Conclusion At the end of the day, tenants are the economic engines of your buildings. When they re happy, they stay longer and become advocates, actively recommending your building and property management company to potential clients. As we ve seen, the likelihood of lease renewal is 3X greater when tenants are satisfied with management. But when they are unhappy, you can be sure your tenants are telling friends and colleagues over drinks at their next after-work outing. The five recommendations in this Guide address this problem comprehensively, and can be easily implemented using high-quality facility management software, such as AwareManager. So get started today and be on your way to improved tenant satisfaction! To keep your tenants satisfied, solve the problem of coordination between property management, vendors, facilities and engineering teams, and your tenants, to ensure that no one is left in the dark. 11
Call 617.542.8555 today To learn how easy it is to implement these five recommendations and keep your tenants happy, contact AwareManager today at 617.542.8555 or marketing@awaremanager.com. Together, we ll craft a solution that fits your property and budget. ABOUT AWAREMANAGER AwareManager provides facility management software for the world s most recognized facilities and organizations, including world-class commercial and residential property portfolio management firms, leading corporations, top tier sports organizations and leading hospitals nationwide. AwareManager s industry expertise combined with its proven solutions enable its clients to deliver the best guest, employee and tenant experiences possible. To get started, visit www.awaremanager.com today. 12