The bottom line effects of Tenant Experience

A hugely important point to make is that you will save money by actively listening to your customers. With a structured and professional tenant dialogue, you will find out what is most important for your customers. That is, you will find out which investments you need to make (to increase the tenant satisfaction), but you will also find out which investments you can avoid.

And what all real estate companies discover when measuring and analyzing their customer input is that the most sought-after improvements often concern softer and less expensive areas and improvement. Service-oriented areas, such as the cleanliness and tidiness of the indoor and outdoor environment, the treatment of the caretaker / property manager, being able to get hold of an employee and receive help when needed, all matters more for customer satisfaction than other more cost-intensive areas. Correctly implemented, a data-driven way of working will help you to reduce costs while improving the overall tenant experience.

The Real Estate industry is in a transition phase and sustainability topics are getting more and more important, ESG plays a crucial role for every real estate company to maintain stable and successful business strategies. 

Banks increasingly demand to see proof of ESG and sustainability initiatives in relation to giving out ‘sustainable loans’, where tenant interaction and involvement are included.

Through tenant feedback systems and customer surveys you can also receive improved GRESB scores. The GRESB Real Estate Assessment is the global standard for ESG benchmarking and reporting for listed property companies, private property funds, developers and investors that invest directly in real estate. The Assessment evaluates performance against three ESG Components - Management, Performance, and Development. The GRESB Score is an overall measure of ESG performance and how well this is integrated into the management and practices of companies and funds.

Are you representing a real estate company that purchases and uses services from external contractors? Do you know how each of them perform? Are you getting value for your money and are they the best contractor for you?

By asking your tenants to evaluate the services they receive, you will get loads of valuable data enabling you to save money, increase quality and see the number of satisfied customers increase. By ensuring quality and costs in all your agreements, you will be in a much stronger position the next time the contract is up for review.

Complaints cost time and money. Satisfied tenants complain less and have a greater understanding for needed investments, and it is also easier to negotiate with a happy customer.

The importance of this cannot be stressed enough. Throughout history and regardless of industry, every professional organization has aimed to get their employees to be more productive. There are naturally many ways to achieve it (some better than others) but few so effective as when the organization truly believes in the work they do. And when the employees feel that the company and its management do the same. Just ask any successful entrepreneur.

There are examples where company leaders have resisted implementing goal setting and performance management tools, based upon the fear of an employee backlash. “Are we allowed to ask our tenants how well our caretakers or facility managers perform?” Administered correctly with the reasons and benefits explained, the employees will thank you for believing in their work and what they get up every morning to do. If there are employees who object, then maybe a service-related field is not the best fit for them.

Satisfied tenants lead to lower tenant turnover. Many real estate companies have low vacancy rates, but a high turnover associated with substantial costs. By reducing turnover with a mere 1-2%, you will experience direct NOI effects. Even though vacancies are not a reality for most companies operating in major cities, balanced markets where you have to fight for your tenants do exist.

And instead of lowering rents, it is better to take good care of the existing customers and make them ambassadors – they will then recommend others to move to area. You will find that ROI calculation easy to make. For commercial Real Estate property adjustments are obviously very cost-intensive and (in most cases) it is more profitable to ensure that you have satisfied tenants who stay.

Regardless of industry, the benefits of having a strong brand are numerous and customer satisfaction is a prerequisite for success. That is, you can get a famous and known brand without having satisfied customers. That will be achieved by pouring enough money into it.

However, to get a strong brand you need to build true value, be known for the right reasons and stand on a solid base of customer satisfaction. The inside (people, service, culture, beliefs, attitudes) must represent the outside (advertising, marketing efforts, design). If successful, a strong brand will obviously help in many ways. Recruiting, negotiations, market allocations, PR/media situations are just some of these.

Less commonly addressed is the value of customer satisfaction in M&A (mergers & acquisitions) situations. There has been a growing demand from different stakeholders in these processes to see the customer satisfaction level or that a customer satisfaction system is in place.

There are several examples where municipal housing companies selling off properties (to private companies) include requirements surrounding customer satisfaction from the potential buyer. 

A growing number of Real Estate and Housing companies have started to offer additional services to tenants through third party collaborations. Examples include delivery companies, insurances, cleaning, groceries etc. These added services are frequently offered via ‘Tenant/Housing apps’ through collaborations with service providers outside the Real Estate and Housing industry. This provides the Housing company with potential new revenue streams besides rent.

Customer satisfaction naturally plays a major role in the success of such added services. The basics need to be in place before you can upsell and expand offers. The tenant dialogue and feedback will also provide you with the important information as to which services your customer base is interested in.