A tenant satisfaction and retention strategy is incredibly important to your bottom line and success. Losing a commercial tenant costs more than just lost revenue from a gap in rent. There are hard costs including updating the space, marketing, and broker fees to find and sign a new tenant. According to JLL, it can take up to two years to fully recover the costs of replacing a commercial tenant. On the bright side, though, satisfied tenants are 3x more likely to re-sign than unsatisfied tenants. According to our research, there are 3 keys to successful tenant satisfaction and retention: be responsive, be accessible and be transparent.
People tend to remember the bad, rather than the good. Professor Roy Baumiester at Florida State University researched this phenomenon in their aptly named article, “Bad is Stronger Than Good.” According to Baumiester, “you are more upset about losing $50 than you are happy about gaining $50.” In context of tenants: the hard work invested into a perfectly operating building might go unnoticed, but day when things go wrong will not. Responding within four hours and communicating clearly about the reported issue are widely held as industry best-practices that reduce the impact of a negative experience.
Beyond prompt responses – it’s always a good idea to create positive interactions with tenants to counteract the inevitable negatives. Regularly scheduled preventive maintenance checks (that are visible to your tenants) can showcase your efforts and create those positive tenant interactions. These checks can both reduce the number of maintenance issues and boost tenant confidence in your operations.
The impact of the information age isn’t lost on tenants. Most expect the same instant gratification and accessibility they’re used to in their everyday life with your operations. Your website is the first place your tenants go to for information. Maintaining accurate and timely information on your site goes a long way in making a great first impression. Additionally, requests and transactions that once required paper trails (for example bill paying, or maintenance requests) can now all be done online. This simplifies record keeping for you, and gives your tenants the feeling of 24/7 access to communicate with your company.
Feedback surveys are also valuable, giving you a simple way of being accessible to your tenants. Surveys provide valuable insight into your tenants’ experience and the opportunity to make adjustments and improvements. Surveys however, come with the expectation of a response or action. Always follow up with responses to make tenants feel understood and heard – and let them know how and when their concerns will be alleviated.
Your tenants are professionals and are used to fast, timely and abundant information. The ease of acquiring and consuming information leads to an expectation of transparency – from governments to everyday utility bills. Tenants expect transparency from you too – especially with their bills and spending. Energy costs and use is one key area that tenants want detailed transparency and that is relatively easy to provide.
Submetering tenants’ energy consumption is the gold-standard of energy transparency. Submetered spaces permit tenants to see and manage their own energy use in your building more effectively. This is increasingly an important point as Energy Star launches their Tenant Star program in 2017 for tenant spaces.
Tenant churn is an incredibly costly affair. Staying ahead of the game by keeping your tenants happier by being more responsive, accessible, and transparent is your best strategy to achieve re-signing.