When it comes to a renewing resident, nobody would want that person out shopping the competition, learning about all the great bells and whistles that they offer and putting them in the hands of our competitor's trained sales force.  So in that sense, although it may sound callous, your biggest advantage in renewing that resident is their ignorance of what else is out there!  Unfortunately, in our business, we often increase rents, which ends up driving our residents to do just that.  And once they start shopping around, they enter the dreaded Buying Cycle.

What is the Buying Cycle?  I'm sure many of you have gone through the phenomenon where you never really notice car commercials, billboards, etc until you finally decide you are ready to buy a car, and then suddenly they are everywhere!  Of course, that's a silly thought - it's not as if a billboard was suddenly thrown up because you decided you wanted a car - the reality is that they were always there, but you just didn't notice because you were not in the Buying Cycle. 

Once you start shopping, however, then suddenly you are inundated with information about potential car purchases - models, reviews, prices, you name it.  And even more importantly, once you enter the Buying Cycle, it almost always wins.  In other words, once someone has started that process, seeing all the other shiny, new options, their current car/home/etc always seems lackluster in comparison.  You have probably heard plenty of stories about how someone had absolutely no intention of moving, but one day they decided to check out an open house as they were driving by - and then suddenly they had bought a new house a month later!  They went from not even looking to suddenly in a new home because once that process started, it often does not stop. 

So let's bring this back to multifamily…   We have a resident who has a renewal coming up.  What are the elements that make up their decision to renew or leave?  Here are the primary factors:

• What they love about the community
• What they dislike/hate about the community
• The cost and pain of having to move
• The renewal increase
• Life changes

Although that isn’t all-inclusive, it’s a pretty short list, centering mainly on their own experience with their community, and most of them involve factors the community itself can control in some way.  They haven’t entered into any sort of Buying Cycle because most people will stay where they are comfortable.  If they were reasonably content in their home and the rental rate was the same, they would probably stay, just so they didn’t have to deal with moving.  Even if the rent increase was nominal, they still would probably stay.  But there is some point where that rental price increase forces them to reevaluate, and that is suddenly when they get thrust into the Buying Cycle. 

Once they start shopping the competition, let’s examine how the elements that impact their decision suddenly dramatically increase.

• What they love about the community
• What they dislike/hate about the community
• The cost and pain of having to move
• The renewal increase
• Life changes
• How they will lounge at the gorgeous pool down the street
• How they will finally start getting in shape when they start using the incredible fitness center at another community
• The fancy tanning bed and lounge
• The excitement of a new community that does not have any of the annoyances of their existing community.   (Note:  Those things still exist, but they are always hidden until they move in.  Until that point, everything is rosy.)
• The charismatic leasing consultant who is using all their sales training to move them in
• The rental rate at the new community

By entering the Buying Cycle, suddenly they have significantly more information about their options, and since they are in the “honeymoon phase”, everything looks sparkly and perfect.  In that way, the knowledge they get isn’t accurate – it’s skewed in an overly positive way towards your competitors.  They don’t know all the annoying quirks of the new community.  They don’t realize that they will never actually use the pool, just like they never used the pool in their current community.  They probably won’t use the fitness center after the first week, and they will never try the tanning bed because it is never open when they are home.  But that doesn’t really matter because the pool, gym, and tanning bed all served their purpose as a sales and closing tool.  In this way, the Buying Cycle inserts variables that are completely out of control to the current community, and of which many are conspiring to swipe that resident away. 

This doesn’t mean we shouldn’t raise rents over fears of them shopping the competition!  I just want to point out that there is a fundamental difference in the profile of a resident before and after they have entered the Buying Cycle.  The latter has dramatically more information about their options, and there are dramatically more variables that impact their decision.  This means, at the very least, from a sales perspective, we should be creating much different strategies for each of these two scenarios! 

If you want to see my next blog on stopping the Buying Cycle, hit the subscribe link below!  I will be discussing opportunities to identify if and when someone has entered the Buying Cycle, and how to possibly stop it in its tracks.