Rewards
Incentivizing On-Time Payments: A Paradigm Shift in Collection Strategies
Occupancy rates are ideal and residents are content, but there is still one problem–a number of residents perpetually fall behind on their rent payments.
Occupancy rates are ideal and residents are content, but there is still one problem–a number of residents perpetually fall behind on their rent payments.
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Occupancy rates are ideal and residents are content, but there is still one problem–a number of residents perpetually fall behind on their rent payments.
Occupancy rates are ideal and residents are content, but there is still one problem–a number of residents perpetually fall behind on their rent payments.
Terri Nicholson, SVP of Strategic Accounts & Partnerships at Domuso, shared her industry knowledge and expertise in a recent article on The Multifamily Journal:
Occupancy rates are ideal and residents are content, but there is still one problem – a number of residents perpetually fall behind on their rent payments each month. An October 2023 Census Household Pulse survey found that nearly 4.9 million households are behind on rent. This is an issue that has burdened the industry since its inception, leading to a unified goal of the multifamily sector – improve the rent collection process to reduce delinquencies and increase revenue.
People still struggle to pay rent. More than 12 million residents are substantially cost burdened, spending over 50% of their income on housing and utilities. Traditionally, enforcing the collection of rent from delinquent residents has consisted of repeated reminders, late fees and in extreme cases, the threat of eviction. However, those strategies tend to result in strained resident-associate relationships and, in many instances, failure to produce the desired outcome.
Taking a new approach, most notably offering resident rewards with cash-back incentives, could be the motivating factor to improving payment practices.
Reward programs have yielded positive results for a multitude of industries. From shoe stores to coffee shops, consumers are looking for reasons to remain loyal to a business, and the most successful companies have found that offering a rewards-based loyalty program solidifies those relationships.
A survey commissioned by Wildfire found that due to rising prices, 90% of consumers are more interested in receiving discounts and earning cash-back rewards when shopping. Additionally, when you consider that 84% of consumers are more likely to stick with a brand that offers a loyalty program, and 60% of customers enrolled in a rewards program say they have better experiences with those businesses, the concept of rewards in multifamily becomes increasingly appealing. By harnessing the power of rewards, including cash back, operators are incentivizing positive renter behaviors–such as paying rent on time–and creating an enhanced living experience for residents.
Tech-savvy residents have made it clear they want to do business digitally in all facets of their lives, and that includes paying rent. Forward-thinking operators have already started to implement smart home technology, more robust wifi solutions and more resident communication channels. By aligning operations with the expectations of modern residents’ through digital means supported by positive reinforcement, such as offering cash back rewards, operators are laying the foundation for an enhanced living experience that produces higher ROI.
The multifamily industry has undergone numerous transformations over the years, but none have been as significant as the shift towards digital transactions. Embracing digital payment platforms and resident reward programs are viable ways to effectively incentivize on-time payments and increase revenue.
As technology evolves, so will the various strategies operators employ to mitigate late or absent payments at their communities. However, one thing is for certain – just as we’ve seen in nearly every other industry, loyalty programs are proving to be fruitful and are undoubtedly here to stay.
What specific types of rewards or cash-back incentives have been most effective in improving on-time rent payments?
The most effective incentives for on-time rent payments include direct discounts on rent, cash-back rewards, and loyalty program points.
Are there any studies or data showing the long-term effects of these incentive programs on resident payment behavior?
Long-term data on incentive programs indicates they lead to sustained improvements in on-time payments and reduced late payment incidents.
How do property managers implement these incentive programs without significantly increasing operational costs?
Property managers can implement these programs cost-effectively by integrating them into their existing payment platforms and leveraging digital payment solutions to minimize additional.
Domuso is driving digital transformation for the multifamily industry with an advanced platform to reward positive renter behaviors and manage rent payments. Domuso captures 100% of a property’s receivables electronically while giving residents the flexibility to access multiple payment methods from any mobile device.
