Are Tenants Considered Customers?
The Customer Experience for Renters is Improving, but Not Fast Enough
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Are tenants considered customers?
Imagine, for a moment, that you just bought a brand new car. You’ve been waiting for this moment for some time now, saving up, browsing the various available options, before finally taking the leap. Excited, you arrive at the dealership to pick it up. The salesman ushers you over to your new purchase: shiny rubber, sparkling paint, he leaves you to get familiar. Only, as you open the door and step inside, you start to realize there’s something funky going on.
Inside: the car has no seats, no center console, no dashboard, or steering wheel. Obviously, there’s no infotainment system or fancy iPad-style control center, and if there were, it’s clear that it would not be connected to anything because inside the car all you’re looking at is the cold, hard metal of an empty box.
You make wide eyes at the salesman. He sees what you’re thinking and reassures you, “that’s part of the fun! Now you get to install the interior and make it your own! Customize everything to your preferences.” Confused, and disappointed, you start crying uncontrollably and don’t stop for the rest of the day.
Ok, that last part is exaggerated, but I think you get where I’m going with this. What I just described above is the experience that every residential home-builder, apartment owner, or landlord has been delivering to customers for as long as there have been homes for people to live in. And somehow, until recently, I guess renters and homebuyers just accepted that?
First, a little history
Now, I don’t want to be too caustic about residential real estate providers, and especially apartment landlords. Like any other business, they’re doing their best and are handicapped because they simply interact with their customers less frequently. You see your grocer probably weekly or bi-weekly, you probably visit your favorite restaurant at least a few times a month, and even when you buy a physical product (whether it’s attire or anything else) chances are you’ve interacted with that brand or store at a high frequency - these days, obviously, digitally. Your landlord? Do you even know who they are? Chances are you’re interacting with a property management company who works on their behalf. You probably got one or two tours, signed a long lease, and now send them a check once a month. Perhaps you call for a plumber if the toilet is clogged. Therefore, innovation on behalf of the customer happens less frequently because how can landlords innovate for people that they never interact with?
But times change. What’s interesting is that, if we extend the analogy above, there actually was a time when A MAJORITY of cars were built exactly the way I described. They were called coach-built cars, and they were considered to be a luxury. A coachbuilder would build the metal box and an avid customer would revel in their ability to customize the seats, upholstery, dashboard, steering wheel, and everything else to their exact preferences. Then, as cars became more utilitarian, the interiors became standardized. Car manufacturers did this because it made more business sense, as consumer preferences changed, they adapted their business to meet demand. People generally buy and service cars more often than homes. Isn’t it funny, that the largest, most expensive, and arguably most impactful consumer product in your life - a home - is the one that’s often brandless with little to no interaction with the person who provides it to you? Strange. No wonder they have no clue what we want.
Living is a necessity, but the customer still demands a great experience
Residential real estate is a fundamental need, providing shelter and a place to call home for billions of people around the world. However, in today's competitive housing market, and with an increasingly discerning end-consumer, landlords and property managers need to be aware of the rapidly changing preferences that are shaping the way people look for and rent properties. In this context, let's explore some of the key consumer preferences that are driving the residential real estate market today:
Location: Consumers are increasingly looking for properties in walkable neighborhoods that are close to public transportation and amenities like shops, restaurants, and parks.
Amenities: Renters are increasingly looking for properties with a range of amenities, including fitness centers, outdoor spaces, and communal areas.
Flexibility: With the rise of the gig economy and remote work, renters are increasingly looking for flexible lease terms and the ability to work from home.
Sustainability: Consumers are increasingly interested in living in properties that are environmentally friendly and sustainable, with features like energy-efficient appliances, green spaces, and renewable energy sources.
Technology: Renters are looking for properties with smart home technology, such as connected thermostats, security systems, and appliances.
Safety: In light of the COVID-19 pandemic, renters are looking for properties that prioritize safety measures, such as touchless entry systems, cleaning protocols, and outdoor spaces.
For decades, just providing shelter was enough and the traditional “landlord”-tenant relationship (air quotes because “landlord” is a word I assume is derived from the idea that the person who owns the property is some god-like figure who can afford to just sit back and collect checks) was accepted. Today, property owners and managers need to think of their “tenants” as customers, just like every other industry. To meet the needs of modern renters, property owners and managers must keep up with the latest trends and preferences in residential real estate. From walkable neighborhoods and fitness centers to smart home technology and safety measures, consumers are looking for properties that offer the amenities and features that match their lifestyle and values. By staying up to date on these trends, property owners and managers can attract and retain tenants, while providing the comfortable and sustainable living environments that are so essential to modern life.
Business model innovation and technology
A lot of work has been done already to improve the customer experience in residential real estate, and it’s important to take stock of, and appreciate, the progress that’s been made. I break these down into a few categories of business-model innovators and technologists:
Legacy residential providers who just “get it”:
Greystar: The largest owner and operator of multifamily properties in the United States, and a major player globally, has made significant strides in customer experience. Many of its properties feature smart thermostats, lighting controls, and other IoT devices that can be controlled from a mobile app. This technology not only provides convenience and comfort for residents but also helps to reduce energy consumption and lower utility costs. Mesh WiFi in their newer developments connects residents to high-speed internet from the second they move in, and provides connectivity to each resident throughout the building. In addition to these technological advancements, Greystar has also partnered with companies like Zego and Hello Alfred to provide personalized concierge services improve the resident experience.
Equity Residential: One of the key innovations from Equity Residential is their use of smart home technology. They have implemented smart home devices, such as smart thermostats and locks, in their properties to provide residents with greater control and convenience. Another area where Equity Residential has been innovative is in their use of virtual and augmented reality. They have developed virtual and augmented reality tools to help prospective residents better visualize and experience their properties. These tools allow potential residents to take virtual tours of apartments and experience different floor plans, finishes, and amenities before making a decision. This technology has proven to be particularly useful during the COVID-19 pandemic when in-person tours were limited.
Tech-enabled residential platforms:
Airbnb (Monthly Rentals): Airbnb has expanded beyond short-term rentals and now offers monthly rentals in select cities. These rentals come fully furnished with amenities like WiFi, kitchen appliances, and cleaning services. Airbnb's platform also allows renters to easily search for properties that meet their specific needs and preferences.
Common Living: This company focuses on coliving spaces that offer modern amenities, community events, and flexible lease terms. Common also provides shared spaces like kitchens and living rooms, which appeal to renters looking for a more social living environment. More recently, they’ve expanded their business to become a modern 3rd party manager for many apartment owners across the US in traditional buildings that lack the co-living aspect, while still implementing their consumer insights along the way
Startups that are partnering with property owners to improve one aspect of the customer experience
Tumble: Tumble installs on-site laundry rooms with smart laundry machines that are operated using a smartphone app, providing notifications to residents when its time to move or retrieve their clothing from the wash. The experience provided is so convenient that many consumers feel no tangible difference from Tumble and in-unit laundry.
Envoy: Envoy provides electric car sharing services for residents of multifamily properties. Envoy's technology allows residents to reserve and unlock electric vehicles, and track their usage and billing. Envoy's service is designed to provide an eco-friendly transportation option for residents while reducing the need for parking spaces. They also provide charging infrastructure and maintenance support for the vehicles.
Rinse: Rinse is a laundry and dry cleaning service that offers on-demand pickup and delivery for residents of multifamily properties. Rinse's technology allows residents to schedule pickup and delivery times, track their orders, and communicate with the Rinse team.
Amenify: Amenify provides property managers with a range of services and amenities to enhance the resident experience, including fitness classes, dog walking, and cleaning services. Amenify's platform allows property managers to easily add and manage these services, making it easier for residents to access the amenities they need.
Esusu: Esusu is a financial technology company that offers a rent reporting service to help renters build credit. Esusu's platform allows renters to report their rent payments to credit bureaus, which can help improve their credit scores and make it easier for them to secure loans and other financial products.
Bilt: Bilt is a platform that allows renters to earn rewards for paying their rent on time. Bilt partners with property managers to offer rewards like airline miles and cashback to renters who sign up for their service and pay their rent through the platform.
These are just a few examples of companies and instances that are successfully meeting modern renter demand and consumer preferences. By offering amenities, technology, sustainability, and flexibility, these companies are able to attract and retain tenants in a competitive housing market.
A long way to go
In spite of technological advances, the residential real estate industry still has a long way to go to meet the demands of its customers. Traditionally, property owners and managers have simply provided a roof over the heads of their tenants, but the needs and preferences of renters are changing rapidly. Consumers are no longer willing to accept just any property - they are looking for a great experience that offers them location, amenities, flexibility, sustainability, technology, and safety. Today, property owners and managers must think of their tenants as customers, and find creative ways to increase their frequency of touchpoints with these customers so they can better understand and meet their rapidly evolving preferences.