Why Poor Maintenance Practices Cause Property Owners to Churn
Your phone rings, and it’s one of your property owners. You are expecting a pleasant call, but it goes south real quick. Your owner is breaking up with you. Their response is vague. “It’s not you; it’s me,” they say. But in reality, more times than not, the way you conduct your maintenance process has something to do with it. Month after month, your owners saw maintenance issues in their owner statements and started having doubts on your ability to properly manage their property. More importantly, they didn’t feel like they were profiting off of your services due to consistent high repair costs.
Oh, but it gets better. Your wallet just took a hit, too. You scramble to find a new owner to make up for the financial loss. But the fact is you just lost thousands of dollars to one owner walking out the door. And simply replacing the owner is not going to fix the financial problem.
Not only is an owner leaving a significant financial disadvantage to your business, it also takes a lot of time and resources to locate and obtain new owners. You may have to pay for advertising or devote your staff resources to reaching out to prospective buyers.
It’s time to get honest about the long-term financial impact maintenance and owner retention have on your business profitability. We will show you how you may be losing money every time an owner churns and how to make a change to prevent them from leaving.
How does owner retention impact your business profitability?
1. The longer an owner stays, the more money you will make.
This concept may seem pretty straightforward. But, have you ever seen the data to prove it? It’s essential to understand Lifetime Value (LTV). LTV is a metric that articulates how much money you will make during the lifetime of that customer.
We will use these below as an example of the power of LTV (Table 1.)
Take a look at the similarities between Company A and Company B in the table below. You will notice that all the variables are the same, except the length of the customer.
The difference in the total profit of the portfolio for Company A is $840,000. That is a significant variance from the lifetime value of a customer from 3 years to 5 years.
2. The longer an owner stays, the likelihood of increased management referrals and continued growth.
You may recognize the value of online reviews from your residents. But have you considered that prospective owners and investors rely on other peer reviews?
If an existing owner writes a raving review of how you manage and maintain their property, your owners just opened the door for new prospects. Word-of-mouth referrals are also an essential piece of the puzzle. When your owners are passionate about your services, they won’t hesitate to recommend you to their peers. This also means that you can obtain new owners without dedicating money or staff bandwidth to do so.
According to industry data, there is a direct correlation between property maintenance and owner retention. In fact 60% of owners say maintenance issues are the main reason they decided to hire a property manager. So it is safe to say maintenance also plays a part in an owner firing a property manager.
So, now that you know the importance of owner and investor retention, the next step is to understand why your owners are leaving. The truth is, there isn’t a lot of clean, fresh data out there to give complete confidence to the reason why. Our mission is to change that, and we have innovative, fresh data to back up our solutions.
Often, we hear that communication is the sole reason owners leave, but we are here to tell you there is a bigger culprit. While the context of the communication is essential, our data showed no correlation between the frequency of communication and the rate at which owners churn.
Our data shows that the top three reasons owners churn are due to a poor maintenance experience. Owners and investors hire property management companies to handle the daily operations of their properties. Undoubtedly, they expect you to maintain their assets while increasing their profit.
Here are the Top Three Reasons Why Your Owner Churns.
[Download our FREE E-Book to check out the data]
How can you improve your owner retention and Lifetime Value?
The goal of a profitable property management company is no longer just managing the property. As the industry becomes more advanced, the shift towards the importance of preventative maintenance on owner retention will be the prevailing mindset of the future.
What’s stopping you? Every day that goes by puts you at higher risk of an owner churning.
It’s time to take control of your owner retention once and for all. Request a demo to learn more about how an efficient maintenance process can improve your owner retention.