Ellis Shopping Report Multifamily Industry Benchmark 3rd Quarter 2016

Third Quarter 2016 Benchmark Results Executive Summary

Ellis, Partners in Management Solutions is proud to offer our Mystery Shopping and Resident Survey programs as modern and effective tools 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 sales performance and effectiveness. We remain devoted to your growing needs, as together we monitor and evaluate onsite leasing engagement and marketing effectiveness, and compare your team’s performance to others in the industry. From the prospect experience and throughout the resident lifecycle, the 2016 Ellis Benchmark provides valuable insights that will help your team “Think Differently and Take Action”. This quarter we highlight a critical differentiator in the customer experience journey – selling value.

We thank you for joining us each quarter as we convey combined Benchmark results and sales trends, and offer practical improvement ideas via our Ellis Training Video (ETV) series.

Ellis’ Third Quarter 2016 Benchmark: Overall Results

Mystery Shops

Ellis benchmarks mystery shop 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 83% in Third Quarter 2016, representing 10,217 shops. In 2015, the overall average Ellis Customer Experience Benchmark score was 3.5, which remains unchanged for Third Quarter 2016. (Note: No tier or rank is provided if minimum requirements² are not met.)

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 Survey 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 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. The Ellis Loyalty Benchmark score for Third Quarter 2016 is 19%, with a 83% response rate by the onsite staff and an average of 6.6 days for the staff to respond.

CONGRATULATIONS TO ELLIS BENCHMARK TOP PERFORMING COMPANIES Third Quarter 2016

Mystery Shops

Ellis Traditional Benchmark Platinum Level Achievers

Tier 1 (70 or more completed shops)

• CWS Apartment Homes, LLC
• Gables Residential Services
• Western National Property Management

Tier 2 (30 – 69 completed shops)

• Legacy Partners Residential, Inc.

Ellis Customer Experience Benchmark Gold Level Achievers

Tier 1 (70 or more completed shops)

• AMLI Residential
• Bozzuto & Associates
• Gables Residential Services
• Mid-America Apartment Communities
• Monogram Residential Trust
• Post Properties

Tier 2 (30 – 69 completed shops)

• IMT Residential
• Irvine Company Apartment Communities
• Legacy Partners Residential, Inc.
• Matrix Residential

Resident Surveys

Ellis Best in Class Achievers

Tier 1 (1,600 or more units)

• CWS Apartment Homes, LLC
• Lennar Multifamily Communities
• Lincoln Property Company
• Manco Abbott
• Simpson Property Group

Tier 2 (1,599 or fewer units)

• AMLI Residential
• Bluestone Development
• Carlisle Property Management
• Leslie Investment Properties Inc.

*Companies are listed in alphabetical order
**Customer Experience Benchmark gold level achievers are recognized as there were no platinum achievers for this period

ELLIS’ THIRD QUARTER 2016 BENCHMARK: QUESTION/TOUCHPOINT RESULTS

Mystery Shops

How did we do?

Each chart below reflects 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 Third Quarter 2016, as well as the combined overall loyalty score and average accountability performance results.

SELLING VALUE: A CRITICAL DIFFERENTIATOR

Delivering a memorable customer experience, earning customer loyalty, and creating brand advocates is no longer a matter of competing on price, product, services, or features. Starting at lead conversion and throughout the resident lifecycle, leasing consultants are discovering that what they offer to the customer is often being tossed into the same basket as their competitor. The new educated customer comes armed with knowledge and quite frequently sees no defining difference between the presentation of one leasing consultant and another. For the first time, your customers know more about you than you know about them. So, how can a leasing consultant stand-out among the competition? Engage these informed buyers differently. Get to know them. Sell value!

EPMS Data Insight:

• The Third Quarter Ellis Shopping Report and Ellis Resident Survey data speaks piercingly to the need for adjustments when the focus is on value. All Ellis Survey touchpoints related to value came in at 63% while customer service landed at 77% and accommodating needs at 75%. The scores are similar to the same period last year, which means perceived value of the apartment rents are marginal at best. At move-out, the value score plummeted to 44% as residents reflected on their overall experience. It appears residents are placing high emphasis on value at the leasing desk and on basic comforts such as working air conditioning and appliances during their residency. If the basics are not met, the value experience takes a nosedive.

These numbers certainly make it easier for the customer to walk away at renewal time, and the likelihood of them sharing any unique experience with their friends and family is very low. What is happening? Are customers simply comfortable yet unimpressed? Have we become a commodity? Is being friendly and helpful just not enough anymore?

While perceived value seems to be the missing piece, it is also quite subjective. Therefore, it is incumbent upon leasing consultants to find out exactly what the customer values by leading with their ears instead of their guest card or service request. Engaging in conversation, drawing from past customer experiences, and then using that information to create and shape opportunities that will drive change for the customer. This is not a new concept; in fact, it strongly resembles the well-known consultative selling process with a new coat of paint. It is called Insight Selling. As businesses search for new ways to compete and improve the customer’s experience, this model is gaining traction. Adopted by companies such as DHL, Toyota, New Balance, HP, and Oracle, it aids in building customer relationships by helping buyers think for themselves.

Does this approach truly speak to the needs of today’s customer? In a groundbreaking research study, “What Sales Winners Do Differently”, conducted by the Rain Group, customers confirmed that they connected with and trusted sales people who educated them on new ideas or perspectives. This study gives additional credibility to a survey conducted by the Sales Executive Council in Washington, D.C., which revealed that customers want a salesperson who will educate them, help them navigate options, be responsive and creative to their known and unknown needs, challenge their assumptions, and understand their needs better they do.

Top sales leaders are gaining credibility and trust with customers as they teach their teams to be insightful, to collaborate with their customers. Sales teams are asking themselves new questions before the customer arrives and responding with new awareness.

• What have I learned from other customers with similar issues that might help this customer?
• What are my competitors doing? What are their strengths and weaknesses? How can we differentiate?
• What do they like or dislike about their current living experience? What are their concerns?
• How can I improve their current living experience? How can I build trust?
• What insights can I deliver that will create that ‘aha’ experience?

Increasing value perception numbers may not be a matter of selling more effectively but instead teaching leasing consultants how to differentiate and changing how they sell. Customer Experience is the new competitive battlefield according to Gartner Research. Shafiq Jamal, reputation and brand management specialist, summed it up well in his insightful blog post The New Frontier of Customer Engagement: “The new world order on customer engagement entails turning frontline staff into researchers and journalists, enabling staff to become curators of information as well as trusted guides across the omni-channel environment to provide real value to customers.” Selling Value is a critical differentiator in the customer experience.

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 Sell Value differently via the latest Ellis Training Video (ETV).

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

October 31, 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.