Part Three: Encouraging Good Referrals
This is the third part in a four part series on referrals. If you haven’t already, read part one here where I explain the importance and benefits of referrals and part two here where I show how to identify the sources of good referrals. Here, I’ll cover how to encourage good referrals from the sources you identified.
Really there are two types of referrals, which I will classify as passive and active.
Passive referrals are unsolicited. Basically, you’ve provided a home and treated the tenant in a way that he or she tells anyone who who might need to rent to call you first. These require no additional action on your part, you just receive a call and treat the applicant like anyone else. If you ask where they found out about the property from they’ll mention their friend, but otherwise you may never even know they were referred to you.
Active referrals are those that you solicit from your tenants. Most, if not all, of the time you’ll be offering some sort of benefit to the originator of any accepted applicant. This requires more work, as you’ll need to create a program and keep track of any criteria, but it has the potential to drive a lot more referrals your way if you have lots of rentals or tenants who are less enthusiastic. However, actives referrals are unlikely to work unless you also display the characteristics required of encouraging passive referrals. Thus, I’ll break down how to encourage passive referrals first.
8 ways to encourage passive referrals
To encourage these, like with any product or service, you’ll need to go above and beyond. That’s obvious to most, but some landlords may have a hard time anticipating what tenants want. Let’s look at some specific areas you can target — keeping in mind that the more of these you can excel at, the more likely you are to encourage passive referrals.
I’m putting these in the general order of most to least important. The first five deal mainly with your role as a service provider, and the last three focus more on the product.
No. 1 – Can they easily get in touch with you?
So, what’s the most important thing you look for when someone is providing a service? That’s right, actually being able to get in contact with someone. You can’t begin to get good service if no one is serving you. Likewise, it doesn’t matter if they have an emergency or just a question, if you’re not reachable your tenants are going to be frustrated. At the least, this means they have office and emergency numbers for you. But, as we’ll see in the next point, I’d recommend they have a mailing and email address for you as well.
No. 2 – Are you communicating enough and in the right form for the tenants?
Even if you are reachable, it does no good if you don’t communicate with your tenants effectively. In fact, when you think “communicate” and your tenants, I want you to instead think “over-communicate”. Obviously, you don’t need or want to be overbearing or annoying, but most people will appreciate having all the information they might need (and in more than one place) more than having to ask you for clarification.
What might this look like? Well, if you make an appointment with, or an exception for, a tenant on the phone, also send them an email or letter restating what the two of you agreed on. If you send out a notice to you tenants, you may want to call the ones it affects the most. Make sure they got it and ask if they have any questions. The fact that you “sent a notice in the mail” about the water being shut-off to the property for 8 hours means nothing to the tenant who never got the notice. “Over-communicate” and you won’t be the bad guy when communication still inevitably fails.
No. 3 – Promptly get back to your tenants
Of course, you can’t always answer your phone. You definitely need to have some time to yourself where you aren’t working. However, it’s important to get back to your tenants as soon as you can. It may be easier for you to ignore a message for a day. But during that time the anxiety of your tenant is rising. It’s also important to be on-time for any appointments you make. It shows you’re a professional. It tells the tenant you value their time as much as your own. If something comes up and you are running late, let them know. If you really want to make an impression, apologize and give them the option of rescheduling at their earliest convenience. The important this is to treat them like they want to be treated — as an equal.
No. 4 – Do what you say you will do
Here’s another one that’s obvious but needs to be said anyway. If you say you’re going to do something for a tenant (send paperwork, fix something, etc.), do it without delay. This is where over-communicating comes back into play. You never want the tenant to have to make a second call about the same issue. You need to be the one to initiate all further communication. Let the tenant know when each step is completed and if you require anything of them. If there is a delay that’s out of your control, let them know as soon as you know. Keep the process transparent. They will respect how you’ve dealt with things and understand when something happens outside of your control.
No. 5 – Follow up
Your tenants are going to expect a lot of the above. Few will actually expect you to follow-up with them after something is completed. Doing so is truly “above and beyond” and will make quite the impression. This means calling the tenant to make sure everything has been finished to their satisfaction. If it hasn’t, apologize and offer to try again to make sure that the outcome is favorable.
You may also notice I specify for you to “call” your tenant. Sure, you could email them. Some tenants may prefer that and you should honor their preferences. However calling is more intimate and allows them to bring up anything else on their mind. “But, I don’t want to give them an opportunity to bring up something else that needs my time and attention,” I hear you say. I get that. But it’s also kind of the difference between going above and beyond and doing just the bare minimum. You should want to know about all of your tenants’ concerns about your property, as they’re likely your concerns as well.
No. 6 – Allow the tenants to chose some changes to the property
There is certainly a trade-off here. Allowing your tenants to customize the property will probably set you apart from any other landlord they’re ever had. There are two ways to do this. First, you could allow them to come to you when they want to do something and say “yes” if it’s appropriate. However, that only gains you favor with the tenants that come to you with a request. And really only the ones you say “yes” to.
The way that gains you favor with all your tenants is to consider consulting them whenever you think about changing something on the property. Of course, you won’t choose to consult them about everything, but you should be able to give them a choice amongst acceptable items/colors/etc. that you’ve already picked when it comes to some things. For example, one of the easiest times to do this is right before the tenant moves in and you choose to replace the carpet or paint. Read the end of an article about painting I wrote previously for more detail, but allowing longer lease tenants to choose the carpet and paint colors can gain you a lot of goodwill.
No. 7 – Provide amenities when you can
This is probably something that you’ll need to identify on a case-by-case basis. Keep an eye out for ways to meet your tenants’ needs when it comes to amenities. Basically, if a tenant wants something for the property, think about its longevity and what sort of value it provides for the current and future tenants.
For example, perhaps you have a nice outdoor area at the property and you notice that the tenant doesn’t have a grill setup outside during prime grilling months. You may decide that buying a competent, yet inexpensive, grill would be a nice selling point for future tenants. Instead of waiting until then, however, ask your current tenant if they would like it if you provided a grill they could use while they lived there (not a gift they can take with them). If they say “yes”, provide it immediately and without any conditions except they treat it like any other appliance they’re responsible for. I can almost guarantee you their previous landlords never did that. There is a continuous reminder of your generosity (or a selling point for a future tenant) there for the life of the grill.
No. 8 – Gifts for tenants around the holidays
Price is indeed the least important aspect of encouraging passive referrals. All of the points above are providing added value to the property. People will pay more for better service. Just as they will pay more for more square footage or newer appliances. However, there are things you can do with the cost of your rental to make a big impression. Instead of lowering rent (unless you’re above the high-end of your market), consider passing along some savings you encounter. Sure, you can use the money to provide a new appliance or something else for the unit. But consider a cash rebate when it might be needed the most. Passing on the money saved from a lower tax rate to your tenants around November could really make a difference in their holidays.
The joy they see in their child’s face every time he or she plays with the toy they bought him, the one they could only afford thanks to your unexpected gift, will make them an unstoppable champion for you as a landlord. Of course, there are caveats here as well. Be sure to explain the uniqueness of the gift and what happened that allowed you to give it to them. You probably don’t want to set a precedent where they expect a monetary gift every year around the holidays.
Basically, they need to understand that you’re taking the unexpected savings on a cost that determines their rent and passing it on to them. They’ll understand you didn’t have to do that. And they will respect you for making such a selfless decision. They’ll also probably never negotiate with you again when it comes time to raise their rent, since they know you deal with them fairly.
As you can see, great service and a great product are the basis for obtaining great referrals. While the tips above may help you begin to increase the number of referrals you receive, there is more you can do to obtain referrals from your tenants. Come back for the last part in this series, where I cover active referrals and how to best solicit them.