Social Media Referrals: We’re Fans
Chicago’s Waterton
Residential realizes 324 percent ROI through its online
resident-referral program.
BY VIRGINIA LOVE AND ED
SPIEGEL
Many property management
companies wonder whether investments in social media provide a
tangible return, and especially whether those efforts
can convert into real dollars. Property management firm Waterton
Residential’s year-long, social media-driven
resident referral program shows that apartment providers can
harness the power of social networks to fill
apartments, save money and staff time, and improve
a community’s
NOI.
With social media tools, resident
referral campaigns have come a long way from the days when
community managers designed resident referral
fliers, printed them and hung them on every door. The online tools
Waterton used turned this physical process into a
campaign that is virtual and trackable by allowing residents to
post referral messages to their newsfeeds in social
networking sites.
Apartment communities have always
had resident referral programs because they work. In a 2009 Nielsen
Online survey, “Recommendations from
people I know” scored highest in effectiveness among all
forms of marketing communications, both traditional and online.
Capturing resident referrals through social media can add legs to a
marketing plan without adding budget
dollars.
The Social
Sell
Waterton, a Chicago-based firm
with 15,000 apartments in 12 states, found substantial return on
investment (ROI) in its oneyear test of the social
media-based resident referral program. The company sent five
e-mails to each of 7,000 residents for whom they had a
valid e-mail address.Through social media, the
campaign reached 87,072 of those residents’ online friends,
family and acquaintances.
To use the tool, property
management team members access a Web portal and create a customized
e-mail campaign to residents. The e-mail describes
the company’s resident referral program and encourages
residents to click on an embedded link within the email to
spread the word to their Facebook, MySpace and Twitter contact. Or,
if residents prefer, they can forward it via
e-mail.
With a click, residents post a
message (also customizable by the property manager) to their
newsfeed, promoting the community to their online
friends. Interested friends can click on the feed to visit the
community’s website, where they can learn more and contact a
leasing agent. It’s a low-pressure, soft-touch sell among
friends, and it reaches a
wide audience because the average social media user has more than
200 Facebook friends and Twitter followers.
Referral
ROI
Tracked against a list of all
referral bonuses paid across the 21 Waterton communities taking
advantage of the social media-based resident
referral program, the company reported 446
closed resident referrals. Since referrals are somewhat
organic, not all of those leases can
be attributed to the program. However, 22 percent of the
residents who successfully closed referral leases clicked on the
link in the RentMine-Online referral program campaign.
Further, 12 percent (or 54) of all Waterton’s resident
referral leases in the past year were converted by residents
who participated fully through the social media-based online
referral process (open, click, sign-in and
refer/endorse online).
Assuming that signed leases
prevent about two months of vacancy, the revenue generated by 54
leases at an average monthly rent of $900 yields
$97,200 in revenue generated. The campaign cost an average of
$1,500 per community for a total cost of $30,000, indicating
an ROI of 324 percent.
Waterton also witnessed increased
resident referral rates from using the social media-based
online referral program. The referral rate for the program was 6
percent, two and a
half times higher than the company’s standard 2.4 percent
referral rate. The company’s largest community,
the 2,340-unit Presidential Towers,
had an even more significant ROI. The community closed 19 referral
leases through the program, generating $34,200
in revenue from filling vacant apartments while spending
$2,000.
Positive
Buzz
Direct referrals weren’t
the only benefit Waterton realized through its social media
referral campaign. With many communities still learning how to
live in the world of online rants and criticism, Waterton sees
using social media as a cost-effective and search
engine-friendly way to generate positive buzz that spreads rapidly
in cyberspace. Resident recommendations, though
incentivized, are credible to those residents’ online
contacts.
Further, the tracking and
reporting available with social media provides valuable data to
better understand the communication preferences of
residents. The online tool used by Waterton allowed the company to
precisely track resident referral activity and
offer early participants a small incentive to increase
overall participation
rates.
With the tracking capability,
companies can know exactly who contacted whom and whether they used
Facebook, Twitter, MySpace or e-mail. This in-depth
information allows companies to track which residents are top
referrers, while the program enables those top
referrers to easily reach their friends, co-workers and
beyond.
Virginia Love is Vice President,
Training and Marketing, Waterton Residential. Ed Spiegel is
CEO, Rentmineonline.com.
