Ellis Shopping Report Multifamily Industry Benchmark 1st Quarter 2016

First Quarter 2016 Benchmark Results Executive Summary

Ellis, Partners in Management Solutions is your source for an integrated solution to your sales, marketing, resident retention and business process improvement needs. For 32 years, we have been helping apartment management companies and owners evaluate employee performance and effectiveness, and we remain committed to the growing needs of our customers. We strive to deliver the most modern and effective tools to help you monitor and evaluate onsite leasing engagement and marketing effectiveness, as well as compare your team’s performance to others in the industry from the prospect experience throughout the resident lifecycle, via our Mystery Shopping and Resident Survey programs.

Our theme for the 2016 Ellis Benchmark is “Think Differently and Take Action”. This year we will be highlighting four selling areas that speak to both potential customers and existing residents: Lead Conversion, First Impressions, Selling Value, and Closing. We will share customer feedback data from Ellis Shopping Reports and Ellis Resident Surveys conducted for the calendar quarter to present a complete picture of the customer experience inside and out.

At Ellis, we believe that ACTION changes everything, so we are paving the way with the release of our combined Benchmark results. To this end, we will also employ the help of ‘Anna Leaser’ and ‘Franc Buyer’, who will share practical ideas that your team can implement via our Ellis Training Video (ETV) series. We hope you will join us each quarter as we convey Benchmark results for mystery shops and resident surveys and offer performance improvement ideas designed to inspire and ignite your team to action.

Ellis’ First Quarter 2016 Benchmark:  Overall Results

Mystery Shops

Since 2000, the Ellis Shopping Report Multifamily Industry Benchmark quarterly ranking and comparison has been our way of identifying and recognizing the leasing performance for the prospect experience. For mystery shops, Ellis benchmarks performance on the 10 key Benchmark questions and the Customer Experience. Companies can qualify for platinum, gold, silver, or bronze level based on their company’s overall Benchmark score for the quarter.

In 2015, the overall average Ellis Traditional Multifamily Industry Benchmark score across Ellis’ entire database of eligible shops¹ was 86%, representing 41,342 shops, compared to 85% in First Quarter 2016. In 2015, the overall average Ellis Customer Experience Benchmark score was 3.5, versus 3.6 for First Quarter 2016, representing 11,127 shops. (Note: No tier or rank is provided if minimum requirements² are not met.)

* Tier 1 = 70 or more shops

** Tier 2 = 30-69 shops

Resident Surveys

In 2015, the Ellis Loyalty Benchmark was introduced as a way of identifying and recognizing the customer experience performance of companies subscribed to the Ellis Resident Surveys Program. The basic premise is evaluating performance on 5 key touch points (lead conversion, move in, maintenance, renewal, move out) of the prospect and resident journey. Ellis also measures the percentage of surveys responded to by the onsite staff and the average number of days it took for the staff to respond, as these two factors impact the customer relationship and overall loyalty. Utilizing customer loyalty as a metric, customer-centric companies are able to forecast c three specific customer behaviors: likelihood to convert/renew, willingness to pay more, and likelihood to recommend.

The customer loyalty scale ranges from -100% to 100% (see chart below):

The overall average Ellis Loyalty Benchmark score in 2015 was 17.5%. For 2016, Ellis Benchmark data will be based on Ellis’ entire database of eligible surveys¹ that are conducted for the calendar quarter. (Note: No tier is provided if minimum requirements² are not met.) The Ellis Loyalty Benchmark First Quarter 2016 is 16%, with a 67% response rate by the onsite staff and an average of 10.1 days for the staff to respond.

Congratulations TO ELLIS Benchmark Top performing companies First Quarter 2016

Mystery Shops

Ellis Traditional Benchmark Platinum Level AchieversTier 1 (70 or more completed shops)

• Gables Residential Services
• Post Properties
• Western National Property Management

Tier 2 (30 – 69 completed shops)

• Legacy Partners Residential, Inc.

Ellis Customer Experience Benchmark Gold Level AchieversTier 1 (70 or more completed shops)

• AMLI Residential
• Bozzuto & Associates
• Gables Residential Services
• Monogram Residential Trust
• Wood Partners

Tier 2 (30 – 69 completed shops)

• Legacy Partners Residential, Inc.
• Matrix Residential
• Mid-America Apartment Communities
• Mill Creek Residential Trust
• Windsor Property Management Co / GID

Resident Surveys

Ellis Best in Class AchieversTier 1 (1,600 or more units)

• CWS Apartment Homes, LLC
• Lennar Multifamily Communities
• Richmark Properties
• Simpson Property Group

Tier 2 (1,599 or fewer units)

• Greystar Management Services
• Leslie Investment Properties Inc.

*Companies are listed in alphabetical order 

ELLIS’ FIRST QUARTER 2016 BENCHMARK:  QUESTION/TOUCHPOINT RESULTS

Mystery Shops

HOW DID WE DO?

The charts below reflect the average score of Ellis’ entire database of eligible shops¹ for each of the 10 key benchmark questions and the Customer Experience by category, as well as the combined overall Benchmark scores.

Resident Surveys

HOW DID WE DO?

The chart below reflects the average scores across all Ellis Resident Survey companies for each survey touch point for First Quarter 2016, as well as the combined overall loyalty score and average accountability performance results.

THINK DIFFERENTLY AND TAKE ACTION (LEAD CONVERSION)

Where do customers come from? It is not a trick question. When you convert a new customer into a resident, their starting point is in a location other than your community. When you convert an existing resident to a two-term resident, their starting point is in your community. Which one is closer? Obviously, the one who lives with you – correct? No matter where they start, their relationship with the leasing consultant greatly impacts their decision making process to convert as a new customer or renew their lease. Both perspectives help us to understand the complete journey of the customer.

During the First Quarter 2016, the following data insights were derived from the feedback received from the Ellis Shopping Report and the Ellis Resident Survey.

• Traffic Sources: The top source drivers were the internet (33%) and drive-by traffic (30%). When it comes to the Internet, “Content is king!” When was the last time you conducted a spring cleaning on your own website; updated your pictures; conducted your own search online and navigated through your pages; or compared your website to your competitors? Your customers are wading through hundreds of pages as they search for their new home, so it is crucial that you not only meet the basics but also stand out as different. Seth Godin calls this the “Purple Cow” mentality, “standing out so that people are forced to talk about you.” Take your “good” and make it remarkable! According to Gartner Summits, “By 2020, the customer will manage 85% of its relationship with an enterprise without interacting with a human.” These same ideas can be applied to increasing your drive-by traffic. How can you improve your curb appeal? When was the last time you updated your signage? Do your entry flowers match your neighbors? Pay attention to the smallest of details because your customers do. (source: Ellis Resident Survey)

• Why People Are Moving: Customers are moving for work (26%) and personal reasons (17%), but it might surprise you to know that one of the top three reasons for relocation was dissatisfaction with their current living conditions (16%). This response could be tied to physical living conditions or experience with the management team. Regardless, the need to satisfy customers’ needs and deliver an amazing customer experience cannot be overstated. According to Walker, a customer intelligence consulting firm, “By 2020, customer experience will overtake price and product as the key brand differentiator.” When probed, all three of these reasons for moving will evoke an emotional response from the customer. Truly understanding the needs of customers and engaging them in meaningful conversations will not only help them to achieve their goals but also result in a stronger relationship. If you do not get this right, it will not matter that your product is awesome. (source: Ellis Resident Survey)

• When People Are Moving: This question paints an internal and external picture – when does the new customer need to move and when are your residents considering a move? The good news is that 85% of the customers who completed the lead conversion survey are seriously interested in renting. Such knowledge can help you attract new customers and improve retention simultaneously. Our results show that 48% of interested customers who completed the lead conversion survey want to move in the next 30 days, while 31% want to move in the next 30-90 days. It appears that residents are waiting until the very last minute to conduct their search for a new home. Year after year and quarter over quarter, we are seeing a higher percentage of customers wanting to move in the next 30 days. Could there be a correlation between this data and the current market conditions which tell us that renters are choosing to remain in place longer? (source: Ellis Resident Survey)

• Telephone Calls: Does the length of the customer call really matter? We dissected excellent shop performance and determined that 7 minutes just might be the sweet spot. The Ellis Shopping Report data revealed that identifying needs, presenting solutions, and defining unique property attributes covered 57% of the call time, while nearly 43% was dedicated to ensuring a memorable introduction and sincere invitation to visit. This is awesome because the goal of the call is to set the appointment and encourage the customer to visit. The best leasing consultants shine in that 43%! (source: Ellis Shopping Report)

• Internet Leads: When it comes to performance, how do Internet inquiries stack up against the telephone? The data is pretty shocking! A whopping 57% of high performers responded to Internet leads within 2 hours or less, while only 19% of bottom performers did the same. Additionally, the quality of information and ability to answer the customer’s questions ranged from 74% for high performers and 22% for the bottom tier. Out of 100 leads, 42% were converted by high performers and only 4% by poor performers. This means that your weak performers need at least 10x more leads than your top performers to convert Internet leads to calls/visits. (source: Ellis Shopping Report)

ELLIS TRAINING VIDEO (ETV)

Now it is time to go online and join ‘Anna Leaser’ and ‘Franc Buyer’ as they share some practical ways to improve Lead Conversion performance via the latest Ellis Training Video (ETV).  “Think Differently and Take Action.”

We thank you for your ongoing participation and feedback, which help make this report informative, fresh, and a reliable resource. We hope you will find Ellis Partners in Management Solutions, a feedback company and multifamily partner since 1984, to be not only the finest source for mystery shopping and resident surveys but also a training resource for your organization. Additional support and information can be found under Training and Articles on our website.

Prepared by Joanna Ellis, Chief Executive Officer and Francis Chow, Chief Strategic Officer

April 30, 2016

Footnotes:

1 See Ellis website for Benchmark eligibility, tier level, and recognition requirements for mystery shops and resident surveys.

2 No tier or rank is provided when minimum requirements are not met.