Episode 23: Why you need a Resident Lifetime Value metric and how to leverage it
Leveraging your Resident Lifetime Value
Impact of the pandemic on Rentgrata growth and adoption? [4:55]
- PropTech adoption accelerated and jumped ahead 5+ years and showed people that the nice to haves were somewhat need to haves.
- Keynote at OPTECH resonated and made mental gears spinning that “letting your customers speak about your brand is literally the peak of marketing" and that is what Rentgrata does.
What is resident experience? [11:05]
- It isn't a tagline that's on your website. It isn't branding materials and guidelines that are well crafted and paid for. In some ways it is intangible - it’s the full picture.
- You can provide a great experience, but in the end the resident experience is what the residents say it is.
What is Resident Lifetime Value? [13:35]
- Pulled the concept from hospitality where they can gather more info from a traveler that stays at a hotel for 2 days than a resident that may live at your property for 1 or 2 years.
- Lifetime value is pulled from the resident experience data.
- This “lifetime value” is enhanced - and the resident will stay - through community building and understanding your renter.
- Right now at the beginning stages of this concept - more theoretical. As it moves forward, more specific metrics will be identified.
Rentgrata correlation to retention? [17:00]
- Prospects that sign a lease after chatting with a current resident are more likely to renew. There is also higher conversion from prospect to resident.
- Residents that are referring prospects on Rentgrata are more likely to renew.
- Key is to start the community building process before they even become a resident.
- Even properties that have bad Google reviews - there’s a core resident group that wants to be ambassadors. The key is to be able to identify and leverage them.
Why ask the question, “how well is my brand established with residents?” [19:35]
- In multifamily, we’re insular and management thinks they have good brand recognition - and they do in multifamily. But, ask a friend who their management company is and many will not know even after living there for years.
- Companies need to recognize that their brand is, perhaps, not as recognizable on a B2C level.
- Need to ask: How are you going to drive demand to you?
How is an individual, a prospect, going to know that yours is vastly different from the other two or three that they're looking at?
How should you leverage resident lifetime value data? [26:15]
- Comes down to understanding what are selling points of the community that might be hidden gems - and then using them.
- From Rentgrata, you see the sentiment and the key topics that prospects and residents are communicating about. e.g. being this close to XYZ is a big of a selling point for prospects.
- Use the data to impact marketing e.g. dog friendliness is the #1 thing. Then the website main picture should be of the dog park, or encourage people to bring their dog on the tour, or have a cool dog treat bar.
Unexpected benefits by activating more resident connections? [29:50]
- How natural the relationships have felt between prospect and resident. It is not a cold interaction. More like you are texting a friend or family member.
- Seeing and understanding the spark that happens in these conversations takes it to a whole other level.
Zach Sloan is the Chief Sales Influencer and Co-Founder of Rentgrata. Zach’s primary focus is leading the Rentgrata sales team, but he also assists with the team’s marketing and branding efforts.
Only recently joining the multifamily industry, Zach credits much of his success to the Rentgrata team and amazing people within the industry. His competitive spirit and proverbial chip on his shoulder has helped Rentgrata achieve its growth goals since inception. No recognition or fancy awards to speak of, just hard work and dedication to his teammates.
In his free time, Zach enjoys running, Formula 1, coffee and reading.
Webinar: Using Data to Drive Resident Engagement & Retention
In this on-demand webinar, learn what key resident data points and behaviors you should monitor and strategies for staying ahead of resident demands and boosting reputation.
Zach, this has been a much awaited conversation, so thank you so much for coming onto the show.
Well, I appreciate you having me. Thanks a lot.
Awesome. Now, I would typically ask you to share a little bit about yourself with our audience and then dive into the work you do at Rentgrata, but because you come from outside the industry and help to found Rentgrata, let's switch things up a bit. Can you share with our listeners a little bit about your background and what inspired you and your co-founders to start Rentgrata? I'm also curious to know your thoughts on the multifamily industry and how it's been since you started the company.
Yeah, so I guess as many people would probably think first thing when they see me is that I'm a certified public accountant, so CPA, so did undergrad for accounting grad school, got my master's in accounting, and then worked for the big four, Ernst and Young, for a number of years. Not necessarily what my calling was in life, but it was definitely a great place to craft your tools and just understand kind of what's out there. It just so happened that I lived at a large community in downtown Chicago and I had missed a referral reward. Just like on one weekend someone I knew in my network had moved in and then they mentioned seeing me and I was like, "Oh, I wish I could have told you about it. And then also made that money." And then a similar situation happened literally a week later.
And so at the time I just vented to a friend, but it was an intentional vent as he was very entrepreneurial. And so we kind of started talking about this idea of could you have an easier way of referencing people in your network about possibly where you'll sign a lease? He was a friend, but also at Ernst and Young, so since both of us weren't really experienced in real estate, he had called in one of his friends from college who worked in the real estate space. And so this individual was actually in California at the time. And so myself and the other individual, Sam, who is a co-founder of Rentgrata, we were in Chicago. So we were doing just these late night calls when Ben, the third co-founder, would get off work in California and we just kind of kept going. We started to look at how to make a business plan, all the basics.
And about six months into that, Ben quit his job, moved to Chicago, and then we just became that dream of moving in together and having the family room be the home office. And the rest is history as they say.
What a fun story and great inspiration I'd say for starting the company. So what's been your biggest challenge in growing Rentgrata over the past five years or so?
Yeah, it's really been an interesting time. It's like starting a business where you're just starting to get your legs under you and then a pandemic hits is always something that is just right by the storyline, right? It's chapter two. So it was an interesting time as we are starting to get some pretty good deals in and we are going outside of really where people knew us in the Midwest around end of '19, early 2020.
Since 2020, things were originally a little bit of a shock to everybody where it was in student housing, they were telling people to leave the community while they were leasing for the next year and not letting them get their money back for that year. So student housing was a little bit of a challenge. And then in conventional multifamily, it was just a challenge all across the board. And then I think now as we speak today, things are normalizing a bit and as we head into what looks like maybe whoever wants to believe that we're going into recession or not going into recession, it definitely isn't as favorable leasing conditions as it were a couple months ago.
So I think now it is a great spot for companies that are in kind of that marketing space for those management companies to look out and say, "How can we help market the communities?" And this might be really one of the first times they've done this since 2019 where they have the time and the tools necessary to start looking into things and they're not looking at what they need to get done to really survive, like a pandemic, leasing conditions.
Got it. And so obviously the pandemic, I'm sure is a challenge, has been a challenge for almost any major business. From the adoption perspective at Rentgrata, what did it do for adoption of your product? Did it help? Did it present any unexpected roadblocks? And what have you learned since then?
It was very interesting because it went all different ways. So initially I think the knee jerk reaction was, "Wow, our residents aren't happy that they're paying for amenities and not getting to use them." Or, "We can't have them tour so they're not happy about that", and all these different types of things. So the idea was, "I don't know that I'm comfortable letting my residents communicate about the experience here." And our data showed that the resident experience was... I was taken kind of in stride by the residents, like, "Hey, we understand why these things are happening. And not only that, but then going a step further of we will help the prospects understand what it is like to live here under normal conditions because they're not able to understand that right now.
So it was really, I think for the prop tech companies as a whole, it accelerated adoption by five or 10 years. And I don't even know if that's understating it. It could have been a while before we looked at self-guided tours and virtual tours and everything, but the pandemic actually kind of showed people that the nice to haves were somewhat need to haves and we need to get with the times on adopting technology and making the rental process, just as a whole, not even marketing, but the whole process become more tech friendly and we understand what Gen Z and all these kind of younger generations are doing on their cell phones, how they're interacting with one another.
So I think it greatly helped everybody. But for our business, from Rentgrata's perspective, it was helpful in the long run and it will be continued to be because it's like we're embracing a completely virtual experience. And from the second someone might find you, whether it's through Google or on an ILS or just walking by, they should be able to get pretty much 99% of the information that they're looking for without maybe even stepping foot at your community. So how do you get that and how do you get them to sign a lease without even maybe stepping foot on your community? And if you could get to that point where there are some companies out there that it's more of an e-commerce transaction, and when you think about it like that, then you really start to get the gears turning.
I think that there are some others picking up on it. And if we're going to speak about the most recent large conference that we attended was OPTECH and the keynote there was just amazing on the positioning of marketing outside of the industry. And when we had heard that and other, owners and managers sent emails and texts and everything when he was speaking because it was like, "Wow, letting your customers speak about your brand is literally the peak of marketing" and that is what Rentgrata does. So I think we're getting there. It's just continuing to take the right steps to get there and it will take some time.
Absolutely. Yeah, and in learning a little bit more about you, about Rentgrata, I hear you talk a lot about this term resident value. And so before we dive a little bit further into that topic, which I'm excited to do, I'd first like to know how you define two terms, the first one being resident experience, and then the second being resident experience management.
Resident experience to me is if you asked one of your residents, what would that residents say their experience has been like at the community? So a very informal conversation. If you were just to ask a management company or the community manager to any person walking out of the building like, "Hey, what's your experience been?" That's the answer.
I think one of the interesting things is, and this is how it ties into the management of resident experience, is resident experience isn't a tagline that's on your website. It isn't branding materials and guidelines that you have kind of well crafted and paid for. Resident experience and the resident experience management are kind of these intangibles. And it's the full picture that you can't control what residents say about your community. You can provide a great experience and try and lead the horse to water and make them be happy and love what they see every day and how they interact with the community every day, but at the end of the day, the resident experience is what the residents say it is.
And the management of that is you need to listen to the feedback and you need to understand what's happening and try your best to solve it. There are things that are unsolvable for sure, but how can you help mitigate what's going on that might be something that's a little bit more challenging? And then get ahead of it when it comes to online reputation or all of those types of things where if you have a 2.7, 3.2, whatever it is on Google's reviews, well could you have got in front of that issue and been a bit more proactive and understood the problem, listened to the feedback, and then been like, "Great. Now we've actually addressed this."
So a lot to do on the management side to I think recognize the experience isn't necessarily on the B2B side. It's like the C of the B2C side.
Right. Right. Yeah, thanks for answering that. I'm always curious what people say. They are two such really broad terms and everybody has their own definition, and I really like how you talked about how it was in some sense very intangible.
So turning to the topic of today's show, I saw a LinkedIn post a few months back where you discussed this concept of customer lifetime value and linked it to a term you're now coining as resident lifetime value. So can you tell our listeners what you mean by resident lifetime value and how you calculate that metric?
Yeah. This states back to a conference RETCON in New York, which was my first time attending. It was great. I can't wait to go back next year. One of the conversations I had was with a gentleman that came from the hospitality industry and he was mentioning in two days of having someone stay at one of their branded hotels, they would have more information on that traveler than we do in our industry on a resident that might be there for a year or two years. And it just started to snowball in this conversation and really far away from the goal was to talk about what we were doing, but then it was like, "Whoa, what can you extract from the information that you have in the hospitality space and what aren't we extracting in our space?"
When we look at what we're doing now and you think about the resident experience and you talk about how we define resident experience, well, if we understand what that experience is like and how we can continue to make it something that is desirable, then that will kind of lead itself into having someone want to renew, having someone tell their friends or tell people in their network on why they should come live there. And then we all know those stats that point to the more individuals that within your community, the more likely you are to renew. And then when you add all these things up, you start to understand that the lifetime value of one of your residents is increased and enhanced by building this community and understanding more about your renter. Like if you are getting someone that's living there gets a promotion and it's announced on LinkedIn or something, that's an opportunity to let the resident know like, "Congratulations from the community." There are different ways that I think we can engage them instead of providing.
Resident events are great, don't get me wrong, but providing wine and cheese on some random Thursday that's attended by 15 people, can we shift that focus to say, "Hey, I recognize you and the milestones and your dog and all these different types of things."? When you're looking to leave or you get a renewal notice and says you're going up for rent, it's tough to leave somewhere that you love. That is something that people should be feeling when they're looking to lease somewhere else, where maybe the concession next door isn't really worth it to them because of where they live.
So getting to the actual definition and why you asked the question, if we could start to identify the resident lifetime value and see what actually improves that lifetime value, then NOI, ROI, all these different types of things that we're measuring with real dollars and cents actually are actionable in a sense where right now I think we're just a little bit more talking about them at a high level and not being able to point to identifiable metrics.
Got it. I guess as more and more property managers begin to explore this concept of resident lifetime value, how are you seeing Rentgrata's customers defining the residents with the highest lifetime value, those top residents? Do you find there are any commonalities across property types or locations?
So what we're noticing from our data is that the prospects that sign leases after using the Rentgrata experience, so chatting with a resident, are more likely to renew when their renewals up a year or whatever their lease term was. And on the flip side, the residents that are referring prospects on Rentgrata are more likely to renew, right? So those numbers are out there. So what we're finding is that if you could start that community building process sooner. And the commonality is there are residents that across all communities, we have communities that have those negative reviews, we have communities that have very few negative reviews, but there's always that commonality of a quality core of residents that want to be ambassadors and they'll go out of their way to do something for the community. Right now it feels as if we're not identifying them well enough. If we can identify those individuals and give them some sort of platform to speak as somewhat of a "representative" of the community, that can be one of your stronger marketing avenues. It is being untapped to a degree at this point.
When we go and we speak about conferences and all these things about user generated content and all these people are on TikTok and the leasing teams are doing dances, like yes, that's all great, but we're not really using the most... If you think about a community as 300 units, you have 400, 450 individuals in there that you're not tapping into, potential user generated content. And if you can get that information and extract it, that actually might be your most valuable asset. And that's where we're kind of seeing things fall a little bit short. And if you find that balance and our customers are doing that, they see the benefit of improved conversion rates and increased retention.
Well said. Well, in that same LinkedIn post that I just mentioned, you listed out some questions that operators should be asking themselves in order to gauge or improve their resident lifetime value. One of them was all about how well is your brand established with residents We recently had some multifamily marketers on our show who discussed the importance of brand credibility at their properties. But can you expand on what in particular you're looking for when you ask operators that question?
This is such a timely question that we're talking about this now where very recent to this podcast, Airbnb just announced that they're kind of making a splash a little bit more so into the multi-family space. And then a little bit earlier, there was a hotel brand that also did that. Actually one of my comments on the hotel brand that on the individual that posted it, I said, "I think that they'll be the most recognizable brand in the whole multifamily space once they create their first apartment community." And sadly, a lot of people didn't agree.
I think when we really talk about the brand, in our industry we're somewhat in our own kind of sphere when we think about what brands mean. Like I and individuals that might listen to this understand what it means when we mention an NMHC top 50 management company. But when you ask someone on the street, or literally I challenge you, ask a friend in a group chat and be like, "Hey, who's your management company?" I have friends that live at apartment communities that write checks to them and don't know who their management company is. It's like on one hand, from our perspective, we know that management company very well, they're very established. And on the other hand, you have renters that have been there for perhaps years that can't even mention the name of it because they don't know what the name of it is.
So really trying to understand that our brand is perhaps not as recognizable on a B2C level as an Airbnb is when it's B2C. So I think there's an opportunity. There are companies, especially on the short term space, that recognize they need to do more of that as I've had similar conversations to this of saying like, "How are you going to drive demand to you?" And the interesting thing is, especially on an ILS or something, you have such limited space to get your brand message across, right? If you have an Airbnb community that takes up 1/4 of the right or left side of the community of the ILS search, and then you have three others, two or three others that are on that, how is an individual, a prospect going to know that yours is vastly different than the other two or three that they're looking at? In their short attention span that they have where they're actually checking out your community, potentially, we have two seconds to get that brand message across.
So it is very important for us to understand different ways to get the brand across to prospects outside of maybe just that initial blip where they see a picture and really understand like, "Oh, wow, you have a legitimate coworking space in your community that I don't need to get an office at WeWork because of this." However, I feel like that isn't being portrayed to prospective runners. And so the community is just missing a golden opportunity to set itself apart from another community that has just a more eye catching picture and doesn't have the value prop the prospect is actually looking for.
Right. Yep. So brand credibility, brand affinity, totally agree with you. Probably one of the top areas to focus. What are some other areas you'd say operators should evaluate if they're looking to increase their resident lifetime value or decrease cost release?
The resident experience is just harping on that word in just that idea, the general concept of resident experience. It is something that is continuing to change and it's not a one-size-fits all, whether it's portfolio size or literally just community by community. Especially within maybe a certain market where if you live in one side of town at the same management company as another side of town, there could be completely different resident events and things that could really engage the resident base. But there are ways that can kind of reshape the way that the residents are engaging with one another and communicating with one another and if you can start to hone in on finding, listening to what renters like and what they would like to see and understanding that this event or this concept or doing something this way will actually drive people to want to attend or want to do something.
I don't know that that's happening enough. I've been apartment renting for, well, probably well over a decade now and I don't know that my opinion really has been solicited by the management company nor have anybody else of like, "Why aren't you attending these things and what can we do to get you there?" knowing that there's so much of an impact. We don't throw events or try and get people to meet one another for no reason.
So how can we start listening, whether it's like a resident council? I understand that there might be other sides of the equation for something like that, but it might make the residents feel like they have a voice, even if that voice is just being heard internally. But they're going to have a voice regardless, I guess, is the point. Whether it be on Google or being internal about cool events that they tell their friends to come to like, "Hey, we're having an awesome event and we get a plus one. You need to come." Tell me that's not a great marketing idea. Those are different ways to just shake it up a bit.
Got it. And you kind of just touched on this a little bit in your answer just now, just this concept of taking action, right? So I want to expand on that a little bit more. I mean, once an operator has a handle on their resident lifetime value and what could impact it, how can they effectively use that knowledge to make meaningful changes at their properties that can actually have an impact? And have you seen any of your own companies do this?
Totally. I think it's really just understanding what are some selling points of the community that might be hidden gems. So for example, on Rentgrata, we are able to see the sentiment and the key topics that prospects and residents are communicating about and understand when a prospect asks about the neighborhood or coffee shops, what is that resident saying? And then how can the community understand like, "I had no clue that being this close to XYZ was that big of a selling point for prospects"? And then hearing that, understanding it, maybe they changed the way that their website looks.
Maybe if dog friendliness is by far the number one thing, maybe you have a couple pictures of dogs and you talk about right on the homepage maybe this is so crazy to people to think that the dog would be the main picture or the dog park is the number one thing that shows up. But if anyone is familiar with today's society, pretty much the dog's lifestyle is more important probably than the owners to most dog owners. So it's like when you think about those types of things in factor them into your marketing, that changes everything. Or, I'm literally just throwing this out there, bring your dog on the tour kind of thing. See how your dog likes touring this community and have a specialized dog tour. And all of a sudden you're different, right? Instead of having a glass of water for the person or a cool fridge for the people, have a really cool dog little treat bar that they're able to have some snacks at.
That experience is starting to change and you're hearing the residents and understanding what are the cool things that they're offering. And then you've really started to tap into it. It's simple changes. Like yes, they might be a little bit bigger changes because of the scale and the scope of some of these companies, but if we really start to hone in on, a minor change can make a major impact if it's just the right one. I think you need to start listening to the renter to understand that as opposed to have it be more of an umbrella decision from an individual that might not... I mean, let's face it, the people that might make some of these decisions aren't apartment renters and maybe haven't been for a little bit of time. Perhaps that is making decisions that aren't necessarily going to speak to today's renter. And so it's a great way to have best of both worlds of listening to the people that are living it, but also having the decisions from the right decision makers.
I like that. And so turning back to Rentgrata, there's clearly this very obvious intentional premise on which you guys founded the company. I'm curious about the unexpected things. Do you have any customers who've seen any unexpected benefits by activating more resident connections at their communities?
Oh, great question. I would say some of the most unexpected are just how natural the relationships have felt between prospect and resident. So a lot of people out there might think like, "Hey, this isn't a referral program. These are two strangers that are communicating with one another." And it might be very cold, right? Like, "Get me the information. Thank you, I'm done." But where it gets a little lost is the prospect and the resident, if they elect to do text messaging, which is private numbers, it's never their real information, but it's still a text. So as you're texting one another, it literally feels like you're texting a friend or a family member or whomever. And it gets a little lost on you that maybe this is someone that you literally didn't know an hour ago, two days ago, five days ago, 15 days ago, but then you're starting to really build this friendship. And maybe if you end up moving into the community, you have a friend.
I think that that was like something that we knew could happen and so did our clients, but seeing it and actually understanding the spark that happens in these conversations is a whole nother level. We have some Kansas City communities when the Chiefs were in the Super Bowl. Like identifiable conversations like, "Hey, having a Super Bowl party for this whole group. You should join if you want." I mean, that is like how much more community building can you get than something like that? And do you think that prospect is looking at any other communities and thinking like, "This is the one that is actually a home"? If they're not using rent, do you think any cold email that's going out to them is really catering to them? Or is this resident saying, "Hey, we're getting together as a group, please join us. This will be a great opportunity for you"? So I think that that was an expected unexpected, but it was unexpectedly overwhelming in how positive it was.
Right. I can imagine. And looking into the future, although it's almost here, 2023 is almost here.
I'm curious, do you have any roadmap plans you can discuss for 2023 for the next year? What's on the horizon for you? What's on the horizon for Rentgrata?
Yeah, we have a couple really exciting features and partnerships. So the first one I'll start off with is a feature we're calling the Neighbor Nurture. So essentially, if you think about what Rentgrata is doing, predominantly we're relying on prospects to chat with a resident on the community's homepage. But that homepage is only getting a fraction of the prospects. What about someone that just submits a lead through an iOS or maybe goes on the website and doesn't chat with a resident at that time? What we're developing is the ability for a prospect to receive a message from a resident, but the resident doesn't actually have to send that message off the bat.
So if I'm a resident in a community, I would say, "Hey, I'm Zach. I live at Tides at Lake Shore East. What questions can I answer for you?" And then the prospect is like, "Whoa, this is great. I get to ask a resident a question." So we're going to have that technology in front of all prospects at the community and the management company can turn off or on which sources that would be sent out to. So if you want it on only this IOS's leads or that IOS's leads, we're able to do that. So really, we're taking the concept of Rentgrata and making it more of this concierge of the resident being able to help you with any questions at any time. So that's Neighbor Nurture, really pumped up about that.
And then we do have a great partnership with an ILS that will be announced very soon. So that will just allow Rentgrata's whole premise to get higher up in the funnel, which ultimately will help boost conversion rates through this ILS and then allow the management companies to look at cutting advertising spend elsewhere potentially. So I'd say those are probably our two exciting focuses, is just removing the reliance on the website and then finding very cool ways to get in front of prospects where they want to find us.
I love that, that concept of the Neighbor Nurture. How creative. And I'm sure it'll be a success.
Thank you. Yeah, it's a big one for us. Really we created that by listening to our clients and understanding where they think the prospects and the residents are the best connected.
Yeah, I want to check in with you next year and hear how it goes. Neat, neat concept, for sure.
So my final question for this podcast is always a recommendation because we've found and we know that good people know other great people. And so my last question to you is, is there anybody you would recommend us to have on the show for a future episode?
Okay, so true story. Today, I just posted on LinkedIn, "My 2022 Spotify essentially travel wrapped," and it only limited me to nine pictures, right? Nine pictures is a lot. I can't tell you the amount of text that I received saying, "How did you leave out a picture of us?" So I can't, in my right mind, recommend anybody because I just know that at the end of this, when I recommend someone, I will receive people like, Hey, how did you not think of me?" So what I'll do is once this is posted, I will do a group recommendation and have this just amazing list of people that have just an equal opportunity of nominations where I'm not calling one person out right now because I know that I would just feel the pain later on.
I like it. You'll create a community of recommended podcast guests.
100%. That could be the title of the next one, and be like, "Wow, this is a community driven thing."
All right. All right. Well, Zach, I so enjoyed this conversation with you. And thank you so much for taking the time to chat with me today. I can't wait for listeners to enjoy this episode and learn more about you and Rentgrata.
Thanks for having me again. Appreciate it.