How Proptech Helps You Retain Your Tenants
Since the lockdown, increasing numbers of individual and institutional landlords are embracing proptech to decrease their vacancies in the face of the economic downturn .
How Covid-19 Has Affected South African Tenants And Landlords
The economic downturn resulting from the national lockdown has impacted 78% of Flow tenants’ income, according to the first Flow Findings report released in May 2020. Almost a third of tenants had already applied for financial subsidies or unemployment insurance at the time of publishing the report.
Rental affordability — often tenants’ largest monthly expense — has been negatively affected. It is at its lowest recorded level, according to data collected from over 80 000 tenants in May 2020. This has led many tenants to consider more affordable accommodation options to make ends meet after an income reduction.
Download the full FlowFindings report here.
Many previously good-standing tenants — those with the willingness and the affordability to pay rent — have fallen into the high-risk category for defaulting on their payments. This poses a major risk to landlords who always want to avoid high-risk tenants, so as to keep their property portfolio as profitable as possible.
The current economic situation has further affected the already steady deterioration of good-standing tenants from its peak of 85.95% in 2013/4 to 81.52% in the first quarter of 2020, according to the TPN Rental Monitor for Q1 2020. This is a deterioration of 5.43% over six years.
The report illustrates that landlords and agents who offer value to their tenants and remain engaged throughout the lease have a much higher tenant retention rate, which de-risks their property investments long term.
Flow, a South African proptech platform, rewards tenants and keeps them engaged with their landlords, so that their relationship is always on a strong footing, no matter the circumstances.
Flow Rewards = Long-term Tenant Retention
Every landlord knows that vacancies are far more costly than a temporary rent reduction. Finding a new tenant is much more time consuming, and expensive, than retaining a good one. And in a depressed economy, tenant retention is the new market growth, as it ensures that landlords are not going backwards in the face of increasing vacancies.
Flow Findings show that 85% of tenants are likely to pay their rent on time, if they are rewarded for doing so. Through its loyalty app, Flow helps landlords incentivise their tenants with rewards, with the aim of nurturing a positive relationship throughout the rental journey. Flow has partnered with numerous South African companies to offer tenants discounts on groceries, food deliveries, house-cleaning services, electricity and data, when they pay their rent on time. And is launching the Flow Shop in August. It will offer Flow tenants exclusive deals on over 5 000 household goods, such as food and beverages, everyday household items, cleaning products, as well as health and beauty products. By saving money in other ways, rent will be more affordable to tenants who have had their income reduced.
The Flow tenant app is driven by behavioural economics to incentivise specific rental behaviours.
Flow’s Monthly Tenant Check-Ins Increase Engagement
In the middle of each month, Flow tenants are incentivised with in-app points to complete a monthly check-in survey that measures their satisfaction with their landlord and accommodation. Landlords can use this report to gauge their tenants’ satisfaction and long-term loyalty, similar to that of the Net Promoter Score (NPS).
As a proptech platform, Flow is able to bring this data to landlords’ attention much earlier than they would normally become aware of it in a traditional rental relationship. Should the tenant be dissatisfied, the landlord can rectify the situation before it negatively affects the lease renewal.
NPS: How Do You Score As A Landlord?
According to Flow’s Findings, landlords received an average NPS rating of 6.9 out of 10 before lockdown, which decreased by 16.4% to 5.7, by the end of the hard lockdown. Only 29% of tenants said that their landlords were helpful in some way during the hard lockdown. Poor service ratings translate to tenants being less likely to recommend their landlords to others, and may potentially cause them to move out before their lease has ended.
With the rental market under immense pressure, now is the perfect time for landlords to regularly engage with their tenants and improve their service levels. This will allow them to compete for limited demand in what is fast becoming an oversupplied market with growing vacancies.
Flow’s Tenant Retention Campaigns
Flow runs a number of campaigns (pay rent, renew lease, tenant check-in) and competitions throughout the month, via the app, over email and SMS. These campaigns are driven with a clear call-to-action that’s directly linked to the landlord’s objective. Pay rent campaigns, for example, send rich SMSes with embedded secure payment links that increase rent collections and automatically reward tenants when they pay their rent on time.
Target your tenants with actionable campaigns that drive your business objectives.
Landlords may choose between Flow’s integrated campaigns or a bespoke package that’s specifically customised and targeted for their property portfolio and tenants.
These ongoing campaigns aim to increase tenant satisfaction and improve communication between landlords and tenants to facilitate an engaged and mutually beneficial relationship in the long run. They also help landlords drive their specific actions, such as collections, lease renewals and announcements. Tenant satisfaction means retention, and during these difficult times retention has become the new way to grow your investment.