Nearly 80% of American consumers are members of at least one loyalty program according to a survey by Lending Tree, an unsurprising fact considering that almost 90% of companies have some type of program in place. These initiatives boost customer retention and engagement, as well as drive growth. Whether it’s the hospitality, airline, or brick & mortar retail industry, reward programs have played a pivotal role in reshaping customer behavior. The same can be true for the multifamily industry.
Reward Programs: Revolutionizing Industries
In the airline industry, flyers earn miles for various activities that can then be cashed in for flights around the world. Not only does this encourage consumers to remain loyal to a single airline, but this also has a major impact on revenue. American Airlines’ AAdvantage loyalty program offers a compelling case study when it comes to the impact of a rewards program on a company’s bottom line. American reported a 52% margin on their AAdvantage program in their 2022 Q2 SEC financial report and it’s been suggested that the loyalty program is worth more than the airline itself. According to a report by Forbes, the AAdvantage program generated a total of over $5.8 billion in cash for the airline in 2018 and 2019, while the airline’s operating income was $5.7 billion for those two years.
When introduced, Starbucks Rewards transformed how customers engage with them. By October 2022, they amassed a remarkable 28.7 million active reward members, as reported by CNN. And with 55% of Starbucks’ total revenue being generated from its reward program, it’s clear that customers love the experience and have remained loyal. But not only is Starbucks incentivizing loyalty, they’re gaining valuable data that allows them to adjust product offerings to better align with demands, making strategic business decisions based on consumer buying habits.
When companies delight customers with elevated experiences or rewards that align with their needs, they not only see a jump in revenue, but an increase in highly impactful word-of-mouth marketing and positive online reviews that bolster reputation. If organizations in other industries are seeing such positive impacts on their bottom line as a result of reward programs, why can’t property management companies?
From Short-Term Renters to Long-Term Residents
Property management companies stand to gain a great deal from introducing a rewards program. Harvard Business Review suggests that attracting a new resident costs anywhere from five to 25 times more than retaining an existing one. Increasing resident retention rates, even just to a small degree, can have a huge impact on NOI for property management companies. Portfolios with 1,000+ units are reportedly spending $2,500 per month on digital advertising on top of the resources and costs associated with showings and the paperwork required for new renters.
Residents seek more than just a roof over their heads and modern amenities; they want experiences, perks, and rewards. In fact, according to an industry study, when residents feel connected, they are significantly more likely to renew their leases. By incentivizing behaviors that foster community and positive behaviors such as referring new residents, posting positive reviews, and participating in community events, there’s potential for PMCs to attract new residents for a fraction of the cost. As the rental market gets more competitive, now is the perfect time for property management companies to offer reward programs for residents.
What’s Next for the Multifamily Industry
Residents want to feel in control of their living situation and have a positive experience with the place they call home. Incorporating reward programs in the multifamily industry isn’t just about retaining residents. It’s about creating communities and offering something tangible in return for their loyalty. Just like how points for flying with the same airline or a free cup of coffee on your birthday became motivating for other industries, the multifamily industry could see similar transformation through resident reward programs.
Domuso is driving digital transformation for the multifamily industry with an advanced platform to manage payments and communication throughout the entire resident lifecycle. Domuso captures 100% of a property’s receivables electronically while giving residents the flexibility to access multiple payment methods from any mobile device.
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