One of the most effective ways multifamily companies can market themselves to prospective renters is to highlight their communities' technology. Today's digitally native renters arrive at our communities with new expectations. Apps and contact-free services have replaced the face-to-face exchange of goods, and we manage an increasing share of our interactions through technology.
Consider, for example, the services your renters might use to run their day-to-day lives: package deliveries, housekeepers, dog walkers, etc., all of whom may need to gain access to the building after being contacted through any of a growing number of apps and programs.
The job of managing access for all of those different services in the traditional environment is challenging; It involves arranging for people to make keys available at particular times. Providing residents the opportunity to control access to their living space through their mobile devices helps them to organize their lives, dramatically enhancing the value your community offers.
Imagine, then, how powerful the touring experience becomes when your smart home technology enables potential renters to enter buildings and living spaces without keys. As leasing agents usher the prospect through common area doors, elevators, and unit doors with a simple swipe of a smartphone or watch, the ease of use and its lifestyle benefits become obvious.
The marketing benefits of the enhanced tour and, ultimately, lifestyle experiences should also be clear. A community that offers this amenity and effectively showcases it to its prospects should be more successful in attracting renters from similar neighboring properties that do not offer the same amenity.
The positive impact of an amenity like smart access, or, increasingly, the disadvantage of not having it looks set to grow as customer expectations change. As the Internet of Things becomes more ubiquitous in residents' lives, their fluid expectations (where a customer experience available in one industry should be available in others) will lead them to expect a tech-enabled living experience.
Add to this the importance of reviews in capturing leads for your property. Word-of-mouth recommendations are powerful, and the online equivalent—reputation scores—are more important still, as the search for a new home usually begins online. Smart home technology helps you build your properties' reputations into powerful assets that make marketing easier. The combination of better reputation scores and a more competitive tour experience should combine to deliver better leasing outcomes. The challenge for operators is, as always, how to quantify it.
In a previous post, we examined the potential impact of a $20 rent increase on the financial performance of a community. The logic that a resident will pay more for an enhanced experience makes sense, particularly where an operator has confidence that the local market will bear the increase. But while better marketing contributes to rent increases, there is a more direct way of quantifying the impact upon leasing.
A good way to frame the potential benefit is to consider the number of additional leases you might get due to out-competing your competitors with these capabilities. The example below is of a 250-unit property whose successful deployment of smart access results in one additional lease for every peak month of the leasing season. To be conservative, we have assumed no change in performance during non-peak months, although, of course, there may well be.
We can estimate the annual revenue impact by adding the accumulated revenue from the additional "peak season" leases across the year. In this example, the entire cost of implementing access control at this community pays for itself in about three years with a five-year internal rate of return of 23 percent. While the investment required to deliver smart access is, of course, considerable, this example shows that the returns are highly attractive and well within reach of most multifamily communities, even based on a relatively conservative ROI estimation.
The example above demonstrates one potential path to marketing benefits, but it does not attempt to quantify some other benefits that are also worth considering. When communities invest in delivering a superior customer experience, it is also normal to expect some increase in the property's renewal rates. However, it is hard to attribute a number to one factor in a decision that is as multifactorial as a resident's decision to renew their lease.
If a property's renewal rate increases by any amount and its conversion rate on new leases also increases, then the property has fewer units to sell. The knock-on effect on marketing costs is clear, as the property has to “buy” fewer leads to fill its vacant units.
The lowering of marketing costs completes a virtuous cycle of better technology, better experience, better reputation leading to better outcomes. More effective use of marketing resources is a point of leverage which, as we have described throughout this blog series, is but one of the many advantages that accrue to multifamily properties that embrace smart building technology.
Smart building technology delivers a wide range of financial benefits for multifamily owners and operators. From cost efficiencies to improved customer experience, a strategic investment in the right technology solution can positively impact both the cost and revenue sides of the ledger.
There are several different ways to estimate how smart communities achieve ROI. Learn more about the four most popular approaches in our easy-to-read guides.
A strategic investment in smart access technology helps save your site team's time and empowers them to focus on more value-adding activities.
Learn more about the potential impact that smart technology has on the cost side of the ledger and how it can positively affect the efficiency of multifamily operations.