ABC

Managements Tenant Satisfaction

Program

Business Case




Maureen Hannan, Digital Marketing Consultant
Digital Scribes, LLC, 109 S. King St., Suite 109, Leesburg, VA 20175
Phone: 571.918.1499 Email: maureen@digitalscribes.co















Contents


Contents ......................................................................................................................................... 2
Executive Summary ........................................................................................................................ 4
Nature of the Learning Challenge .................................................................................................. 4
Introduction ............................................................................................................................... 4
Current State .............................................................................................................................. 5
Changes in the Market and the Competition ......................................................................... 5
The Initial Discovery Process .................................................................................................. 5
Online Reputation Becomes a Problem ................................................................................. 6
The Crisis Becomes Evident .................................................................................................... 6
Business Case Purpose: .......................................................................................................... 7
Causes of Problem ...................................................................................................................... 7
Confusion Regarding Tenant Responsibilities ........................................................................ 7
Lack of Account Transparency and Online Access to Documents .......................................... 8
Cumbersome, Outdated Lease Application Process .............................................................. 8
Perception of Staff as Unhelpful ............................................................................................ 8
Summary ................................................................................................................................ 9
Alternatives to Consider ................................................................................................................. 9
Alternative 1: Combined Tenant Education with Feedback and Dedicated Portal .................. 10
A Short Online Tenant Education Module ............................................................................ 10
Quarterly Tenant Feedback Surveys ..................................................................................... 10
A Document-Rich Tenant Portal ........................................................................................... 10
Alternative 2: Doing Nothing .................................................................................................... 10
Assumptions and Risks ................................................................................................................. 11
Assumptions ............................................................................................................................. 11
Risks .......................................................................................................................................... 11
Online Tenant Education Module ........................................................................................ 11
Document-Rich Tenant Portal .............................................................................................. 11
Quarterly Tenant Feedback Surveys ..................................................................................... 12
Doing Nothing ...................................................................................................................... 12
Financial Metrics and Measures ................................................................................................... 12
The Business Cost of Tenant Dissatisfaction ............................................................................ 12
Client Lifetime Value ............................................................................................................ 13
Annualized Value of Lost Business ....................................................................................... 13
Replacing Lost Accounts: Cost Per Acquisition ..................................................................... 13
Lost Business Attributable to Tenant Dissatisfaction and Negative Online Reviews ........... 13
Cost of Full Implementation of the Three-Part Intervention Strategy ..................................... 14
Cost of Doing Nothing .............................................................................................................. 15
Business Impact of Each Alternative ............................................................................................ 16
Conclusions and Recommendations ............................................................................................ 17
High-Level Implementation Plan .................................................................................................. 19
 Full Implementation ................................................................................................................. 19
Do Nothing ............................................................................................................................... 20
Evaluation Plan ............................................................................................................................. 20
Appendices ................................................................................................................................... 21
Appendix A: Key Analytics Findings .......................................................................................... 21
Appendix B: Real Estate Agent Survey Feedback ..................................................................... 22
Appendix C: Sampling of Tenant Online Reviews, 2013-2015 .................................................. 23
Appendix D: Notes from Staff Interviews ................................................................................. 25
Appendix E: Gantt Chart Depicting Tenant Portal Development to Date ................................ 26
Appendix F: Proposed Tenant Education Module .................................................................... 27
Appendix G: Proposed Quarterly Tenant Survey Topics .......................................................... 30

Executive Summary

ABC Management is a regional Washington-area property management firm known for
outstanding, comprehensive management service for foreign-service and military homeowners
stationed overseas. ABCs management place a high priority on protecting, maintaining, and
collecting on the residences of over 400 landlord-homeowner clients.

Due to ABCs success in serving these communities, it has enjoyed high levels of client loyalty
over the years, as well as steady referrals from homeowners and area Realtors. The tide began
to turn in early 2014, however. Whereas ABCs portfolio had been growing at a rate of about
eight percent each year, 2014 marked the beginning of a three-year period of unprecedented
churn and stagnation. During 2015 and 2016, the business lost valuable longtime clients
representing four percent of the businesss portfolio. Furthermore, a growing percentage of
that lost business comprised luxury homes that have historically leased in a competitive market
to highly desirable tenants. These trends have become a cause of great concern to ABCs
owners and management.

Following a performance analysis to determine the causes and impact of the lost business, it
was determined that rising levels of tenant dissatisfactionand concomitant online reputation
damagehave played a significant role in the steady stream of lost business. Three
interventions are proposed in this business case to increase tenant satisfaction. The suggested
interventions include: 1) Provide (and incentivize) a brief online tenant education module to
establish appropriate expectations and policy knowledge. 2) Administer quarterly, anonymous
tenant feedback surveys to monitor and accommodate tenant needs, and 3) Complete and
deploy a document-rich tenant portal to support tenant self-advocacy and access to records
and covenants.

By carrying out these interventions, ABC will be able to achieve its goal of returning to a state of
near-zero portfolio churn and steady, word-of-mouth growth.

Nature of the Learning Challenge

Introduction

Founded in 1985 by two real estate agent-investment partners, ABC Management in Northern
Virginia is a property management firm that provides a full menu of residential management
services to absentee landlords. Many of these are foreign service officers or military personnel
stationed overseas for years at a time. ABC built its reputation as a champion for absentee
homeowners, providing them with both peace of mind and a smooth re-entry when they return
to live in their homes after leasing them. This strong support for the homeowner has earned
the firm excellent word-of-mouth referrals from within the communities they have served
and that referral network was enough to sustain and grow ABC into a portfolio of 450 Northern
Virginia homes by 2013. While legal and contractual responsibilities to tenants were taken
seriously, serving and advocating for the homeowner client has always taken top priority in
both the firms policies and organizational culture.

Throughout most of the 32 years ABC has been in business, the Washington, D.C., metropolitan
area has been a landlords market. As a result, tenant applicants were abundant, and it was a
fairly simple matter to screen for the cream of the crop tenants. Additionally, if a tenant had
a complaint, little handling was required. Either the staff either addressed it (according to the
terms of the lease), or they informed the tenant their complaint fell outside the landlords or
property managers scope of responsibility. The common refrain was, Read your lease! Most
tenants accepted this matter-of-fact, non-advocating style: It was fairly typical of management
firms, and besides, most tenants did not want the headache of seeking (and competing for)
new housing.


Current State
Changes in the Market and the Competition

With the entrance of new competitors to the market (some of whom enjoyed better
connections to the U.S. Department of State network), ABC was, by 2014, seeing its portfolio
begin to shrink. Furthermore, residential rentals like single family homes and townhouses
began to see stiffer rental market competition from urban apartment complexes offering free-
rent incentives and sought-after lifestyle amenities. The firms managing partner realized he
could no longer grow the business based on word of mouth referrals; nor could he keep his
rents at a premium without top-tier tenants. He decided to become more systematic about
digital marketing methods. To that end, he retained Digital Scribes, a sole proprietorship search
and content marketing consultancy, to do the following:
Improve ABCs organic rankings in Google search.
Generate and close more leads through the firms website.
Introduce pay-per-click (PPC) search marketing campaigns.
Reach area real estate agents with incentives to show ABC properties to their clients
seeking rental management.

The Initial Discovery Process

Immediately after Digital Scribes was retained by ABC Management in December, 2014, I
conducted a discovery process involving both a website/analytics audit and an external review
of online reputation and links to the website. I realized the client had a healthy web presence
(including an A+ grade from the Fairfax Better Business Bureau) but a slew of negative reviews
on Yelp and Google. The one- and two-star reviews came almost entirely from angry tenants
who felt the firm did not look out for their interests. Website analytics revealed that while
organic traffic from area prospective clients was growing, first-time visitors were returning 30
percent less frequently than first-time visitors one to two years earlier. (See Appendix A.)
Surveys of real estate agents who had worked historically with the firm revealed some agents
were alarmed by the firms poor Yelp and Google reviews. (See Appendix B.) While no agent
said they discouraged a client from using the firm, it appears likely that agents communicated
their reputation concerns to clients.

Online Reputation Becomes a Problem

My initial online reputation campaign, which lasted between mid-2015 and mid-2016, included
soliciting regular positive reviews from both owners and tenants who had had recent positive
interactions with ABC Management.

While these efforts helped raise the aggregate review scores and online profile of the firm,
negative reviews continued to trickle in, undermining the positive ones. (See Appendix C for a
representative sampling of the firms online reviews.) Throughout 2016, ABCs owner reported
he was having increasing difficulty attracting the top-tier tenants he wanted to place in the
managed properties, and many owners were expressing dissatisfaction over their houses sitting
vacant or the lower-than-expected quality of lease applicant pool. While my search marketing
efforts did increase the number of website visitors and leads, it was often a struggle for the
owner and operations director to close those leads. According to research the client did (using
rental data from the MRIS local multiple listings service), one-third of the prospective clients
who had requested contracts were signing with rival management firms at that last-minute
stage. By the end of 2016, ABC was no longer shrinking, but it was not growing, either.

The Crisis Becomes Evident

In December, 2016, and early January, 2017, a succession of tenants gave extremely negative
reviews online, repeating complaints often made by tenant reviewers over the past several
years. (Most complaints relate to not getting full refunds of security deposits.) Aggregate
ratings dropped from 3.8 to 2.4 stars on Yelp and 4 to 3.4 stars on Google Business. In the
month that followed, we observed the same relationship between lower ratings and reduced
returning-visitor website traffic. In late January, the business owner acknowledged that there is
a clear relationship between tenant reviews online and the overall health of his business.
Further, he requested help in fully identifying and addressing the causes of the now-established
pattern of reviews left by angry tenants.



Business Case Purpose:

The purpose of this business case is to further analyze the causes and impacts of tenant
dissatisfaction and develop potential interventions to improve tenants experience, from lease-
application stage through final checkout and disposition of the security deposit. While the
most urgent business concern at present is to improve ratings on Yelp and Google (and thus
keep and attract more owner clients), it is the business owners hope that improving tenant
satisfaction will strengthen the overall health of the business.


Causes of Problem

In order to better understand the causes and the impact of the low tenant reviews, a
performance analysis was conducted which began with interviews of six key employees (the
principal broker, the operations director, the property inspector, the leasing director, and two
administrative staff members), regarding their interactions with tenants. I gathered their
observations on a range of interactions, from application/leasing, to residency, to end-of-lease
events. (Representative sound bites from these interviews can be found in Appendix D.) The
performance analysis also included review of all tenant-submitted maintenance and feedback
forms from the past two years, responses from an emailed survey of current tenants, and a
thorough review of all online commentaries accompanying ratings (including the ones removed
by Yelp for violations of terms of service). While some causes of tenant dissatisfaction related
to very specific issues with a property (and appeared to have been fully resolved by repairs),
most fell into one of the following four categories.

Confusion Regarding Tenant Responsibilities

This is by far the most common grievance mentioned by past tenants in negative reviews.
Strictly speaking, ABC Management has meticulously observed legal and contractual obligations
to tenants when it came to handling of security deposits, escrow, and other rental financial
matters. However, tenants, due to their unfamiliarity with the fine print of their leases,
perceived that ABC was unjustly taking their money. It seemed unfair to many tenants that they
could have a relatively problem-free tenancy for one to two yearsand then suddenly learn
that a substantial portion of their security deposit would not be refunded because of failure to
perform cleaning and other check-out responsibilities as stipulated by their lease. Furthermore,
these kinds of surprises came at exactly the time the tenants most needed their money.
Financial surprises of this nature lead to enormous angerespecially when a complaint is met
with the typical response of, You should have read your lease.

While deductions from security deposits are the most important cause of past tenant
dissatisfaction, current and past tenants complain of a lack of clarity about such matters as the
following:
 Responsibilities following HOA violation reports,
Responsibilities relating to gutter-cleaning, landscaping, and furnace filter and lightbulb
replacements.
Responsibility to make the property available for showings to future tenants.

One additional note related to lease policies is that ABC tenants are, increasingly, young
professionals in their 20s. (Until about 2012, the average tenant age for townhouses and single
family homes was 30. Currently, the average tenant age is 26.) For many tenants, this is their
first post-university experience with a lease. For others, its their first experience with a
managed single-family home, which tends to have more items to take care of than an
apartment. The combination of high ($2,000-plus) security deposits over and multiple
responsibilities means theres plenty of room for inexperienced tenants to make costly errors.

Lack of Account Transparency and Online Access to Documents

Related to the first problem is a lack of tenant access to electronic document files. Tenants are
expected to keep paper copies of their lease after signingunlike homeowners, who have a
dedicated secure online portal. So, when staff says to a tenant, You should read your lease,
its not always instantly available for reference. Its evident from a glance at the website that
owners have a portal, whereas tenants do not. Here again, tenants conclude they are second-
class citizens. The lack of a secure tenant portal area has been a concern that ABC dedicated
substantial resources to address in 2014. A developer they hired simply never finished the
custom portal, and the disappearance of the developer (who left no documentation behind)
had a paralyzing effect on the owner. He felt stuckand reluctant to pay more money for the
work. At my urging, a freelance WordPress developer was budgeted for and hiredand the
portal awaits final-stage development, review, and approval. (See Appendix E for Gantt chart of
portal development process and current phase.)

Cumbersome, Outdated Lease Application Process

Some tenants complain that their very first impression of ABC, beginning with the lease
application process, led them to consider the firm somewhat outdated in their practices, as well
as unconcerned about tenant convenience. Tenants are asked to submit social security and
other sensitive information using a print-sign-scan-email process rather than a secure
document processing app such as DocuSign.

Perception of Staff as Unhelpful

Both feedback from existing tenants and text of online reviews cite unhelpful (or even rude)
treatment by ABC staff. The employees say they are often approached rudely or in an
unreasonably demanding or entitled way by tenantsand that they (the employees) push
back because they should not have to put up with that. Some of the tenants who left the
most negative reviews, it turned out, had had increasingly hostile interactions with staff over a
period of several months.

Summary

ABC Management is failing to grow, in part, because of dissatisfied tenants who use online
review sites to register their complaints. The reasons for tenant dissatisfaction relate in large
part to a lack of understanding of their contractual responsibilities (resulting in anger over lost
security deposit funds); as well as a sense that their needs (security, account visibility, staff
advocacy) are not taken seriously by the firm. Challenges include
1. While owners have a dedicated account portal for ease of document access, tenants do
not.
2. Outside of the lease fine print, no tenant education takes place to ensure tenants have
control over their security deposit refund. For many tenants, the deposit is critical to
their ability to move to their next rental or to make a down payment on a home.
3. Staff members sometimes communicate to tenants (especially when tenants approach
them in an angry or demanding way) that tenant concerns take a lower priority than
homeowner concerns.
4. First impressions during the lease application process are that tenant convenience and
online security are unimportant.

The business case will outline three suggested interventions that address the first two
challenges. The implementation of the interventions will make up the Tenants Are Clients Too!
(TACT) customer service improvement program, and it is hoped that management will consider
addressing the third and fourth challenges listed here after results from the first quarterly
tenant survey have been compiled and prepared in a report.

Alternatives to Consider

The first alternative enumerates three interventions, in order of priority, that can be considered
the essential introduction to ABCs TACT program. The second alternative is to continue on
doing business as usual, without any interventions. My recommendation would be to
implement the three-pronged intervention package, so as to quickly and inexpensively
address some of the primary causes of tenant dissatisfaction, as well as provide a means of
adapting online training and tenant portal according to ongoing feedback. In my role as a digital
marketing consultant, I am able to fully support all three of these proposed interventions.



Alternative 1: Combined Tenant Education with Feedback and Dedicated Portal

A Short Online Tenant Education Module

The objective of the e-learning module is to provide tenants with a convenient primer on
what their rights are, how to request service, how/when to take care of things in the property,
and how to get a full refund of their security deposit. Tenants would be incentivized to take the
course through an offer of a $100 first months rent discount for successful completion.
Questions would guide tenants through avoidable problems and costs associated with common
tenant oversights. (For proposed online tenant education module content, see Appendix F.)

Quarterly Tenant Feedback Surveys

Currently, tenant satisfaction surveys are not undertaken on any regular basis. While a
feedback form is always available on the website, it is rarely ever used by tenants. Tenants
should have opportunities to register problems and requests for service improvements or
changes several times during a one-year lease period. The survey would be emailed to all
tenants on ABCs email list. It would also be advertised through a splash page message when
tenants access their rent payment portal. Through emailed feedback surveys, difficulties with
particular employees might also be identified and addressed. (For proposed tenant feedback
survey, see Appendix G)

A Document-Rich Tenant Portal

This intervention is actually already near completion. In January, the owner managed to obtain
enough information and documentation from the previous developer to allow me to create an
RFP for development of a new, easy-to-manage WordPress gated site. The new site, due for
mid-May release, will combine owner and tenant functions into a single, secure account-access
portal. Tenants will be able to access digital versions of their signed leases, as well as account
statements, HOA notices, and quarterly home inspection reports. (Note: The online tenant
module will demonstrate for tenants how to use the tenant portal and what documents are
available to them there.)


Alternative 2: Doing Nothing

Another alternative is to do nothing and to allow the status quo of low tenant satisfaction to
continue. Tenants would continue to experience lack of clarity about their responsibilities and
the terms of their leases. They would continue to pay rent online but have no account
management portal or web access to their documents. Finally, they would continue to
experience outrage over not getting full security deposit refundsand would thus continue to
leave one- and two-star ratings on major review sites.

Over time, its likely that ABC would have a harder and harder time attracting qualified
tenantsand would thus continue to lose homeowner clients to their competition. Worsened
online ratings profiles over time would lead to higher marketing costs.

Assumptions and Risks

This section outlines the assumptions and potential risks involved with implementation of each
intervention.

Assumptions
The assumptions to implement the plan are as follows:

ABC Management will agree to implement all three of the proposed interventions.
The developer who has done 75 percent of the tenant portal will complete the portal to
specs, within the agreed-upon timeframe.
ABC Management will dedicate the resources needed to create the training.
ABC Management will get/maintain a subscription to SurveyMonkey and administer
quarterly tenant surveys, so that tenant satisfaction can be gauged, online training be
modified if necessary, and staff training interventions considered at a later date.
Senior Management will model an attitude for staff that demonstrates regard for
tenants as valued clients.
Employees will be included in the process and will be given opportunities to offer ideas
and feedback on successfully addressing common tenant complaints and knowledge
deficits.


Risks
Online Tenant Education Module

There is little risk associated with this intervention. Development cost for a short (20-minute)
module is low (under $1,200), and tenant incentives are likely to cost less than $3,000 per year.
Its possible a module would be developed but not sold by staffor that tenants might not
consider the monetary incentives offered worth their time.

Document-Rich Tenant Portal

The financial risk for this intervention is small and lies mainly in the remaining development
costapproximately $1,800. (A total of $3,200 has already been spent on development of a
WordPress-based secure portal, as well as a specialized script for regularly updating its
database with the tenant documents staff scans in daily.) Tenants have long requested a
dedicated portal, and most are digital natives comfortable with accessing documents online, so
its unlikely the portal will go unused. If staff do not do the job of regularly scanning and
uploading the documents, tenants might experience frustration in having a portal that does not
contain their files. However, staff are already used to performing these tasks for owners, so the
risk of their failing to process tenant documents is low.

There is also a risk that tenants would not use the portal due to lack of knowledge of its
existence. That risk would be addressed in the proposed tenant education online module.

Quarterly Tenant Feedback Surveys

The cost of the proposed SurveyMonkey plan is minimal--$300 for the year. By using surveys,
ABC saves timebut they might run the risk of not getting high response rates. If surveys fail to
yield a healthy sampling of responses, ABC could seek additional means of obtaining tenant
feedback, such as social media outreach and personal emails from the owner. The risk of these
means of outreach would be in terms of owner and staff time rather than money.

Doing Nothing

The risk of doing nothing is continuing to stagnate or possibly to begin to steadily lose business.
Negative tenant reviews have accelerated over the past year, and there are no signs the
onslaught of one- and two-star reviews will stop on their own. Eventually, there will be too
many to counteract through the occasional positive reviews, and competitors with shinier
online profiles will beat ABC in the online lead game. Its also possible that some tenants will
take their complaints from Yelp to the Better Business Bureau, which could lead the business to
lose the A+ BBB rating that has helped them get business since 1985.

Financial Metrics and Measures

The Business Cost of Tenant Dissatisfaction

Below, I have presented in narrative form how I have arrived at the relevant figures to allow
measurement of financial costs of both alternatives: 1) implementing the proposed
intervention, or 2) pursuing business as usual. Following the discussion, I have summarized
my cost findings in the form of tables.

Client Lifetime Value

The average lifetime value of a residential homeowner client is, according to ABCs owner and
principal broker, $13,000. However, its worth noting that 20 percent of clients own homes that
rent for more than 2x the average area rent. For those clients, lifetime value may be as high as
$30,000.

Annualized Value of Lost Business

Since a typical homeowner is a client for 36 months, average client value can be annualized as
$4,333. For those in the high-rent group, average annual value can be annualized as $10,000.
During 2015 and 2016, ABC lost a total of 17 clients: 7 in 2015 (with one in the high-rent group)
and 10 in 2016 (with two in the high-rent group. This constitutes losses of $35,500 and $62,500
respectivelyand a total of $98,500 across the two years. The financial value of lost business
has thus averaging out to approximately $50,000 per year over the past two years.

Replacing Lost Accounts: Cost Per Acquisition

The average cost per acquisition (CPA) of a new client has historically been close to zero,
because word-of-mouth referrals, plus organic search engine rankings, brought most of the
new business. However, during 2015 and 2016, the average CPA rose substantially, mainly due
to the necessity of mounting pay-per-click (PPC) Google Adwords campaigns in addition to
targeted SEO campaigns. Therefore, the cost of replacing lost clients in 2015 and 2016 was
approximately $6,000 per year.

The total, annualized costs of lost client accounts and replacement of those accounts is thus
$56,000. But how much of that could be said to be directly attributable to tenant
dissatisfaction and negative tenant reviews?

Lost Business Attributable to Tenant Dissatisfaction and Negative Online Reviews

When a homeowner decides not to renew their annual contract, the principal broker calls them
to try to learn the reasons. During 2015 and 2016, 14 of the 17 lost clients (82 percent) cited
vacancy problems relating to difficulties finding qualified tenant applicants. Three of the lost
clients simply no longer needed property management services. All of the higher-rent clients
were in the group that cited vacancy problems as their main reason for seeking another
management company. Thus, a conservative estimate of the annual financial costs due to a
decreased tenant pool is 82 percent: or $41,000.

According to ABCs leasing manager, many prospective tenants report they chose not to apply
due to negative reviews on Yelp and Googleand that they were troubled by both the low
 ratings well as the large number of reports of lost security deposits. When I asked the leasing
manager for a percentage (based on the ones who give a reason), she said three out of four.
Assuming 75 percent of the reason for the decreased tenant pool is negative online reviews,
the annual cost of dissatisfied tenants to ABCs business is $34,720. Based on the two-year
trajectory, it appears this figure may continue (as a conservative estimate) to rise by 20-35
percent per year, if no interventions are made and negative reviews continue to depress the
average ratings.

Annual Lost Business Impacts of Tenant Dissatisfaction Actual Costs of Tenant
Cost (Averaged from Dissatisfaction
2015/2016 data)

1. Lost accounts: Extended vacancies caused by decreased
tenant pool (responsible for 82 percent
(.62 * 56,000)
$50,000
of lost business costs).
2016 Cost:
$34,720
2. Increased marketing Low online ratings responsible for 75
costs (to replace lost percent of extended vacancies.

accounts): (2017 Projected Cost:
$6,000 $41,620)

3. Total Cost of Total impact of tenant
Lost Business: dissatisfaction:
4. 56,000 (.75 * .82) = 61.5
62 percent

As the analysis below shows, full implementation strategy costs listed below are well below the
costs to the company of maintaining business as usual. Whereas the annual cost of dissatisfied
tenants has been determined to be at least $34,720 per year (growing by a minimum of $6,900
per year), the annual cost of the package of three interventions is $13,500. (Following the first
year of implementation, the cost of maintaining these interventions is projected to be
approximately $2,000 less, due to the decreased development costs.)


Cost of Full Implementation of the Three-Part Intervention Strategy

This scenario captures the costs of implementing interventions across just an initial 12-month
period: from June, 2017, to May, 2018.


Course of Action Cost Items Total Cost

1. Labor for 20-minute tenant module: 1. $1,200

5. Development of (and $60 per minute of instruction (at a
Incentives for) Online discounted, fixed-price rate offered 2. $10,000
Tenant Education in exchange for student portfolio-
Module building experience).
2. $100 rent rebate for each successful
completion of training by a new
tenant at lease signing. Total = $11,200
(Approximately 90 new tenants sign
leases each year, but client is
budgeting for 100.)
3. Remaining fees paid to developer. 7. 3. $1,200
6. Completion of Tenant
Portal

Total = $1,200
Administration of 10.
quarterly tenant 4. $300
surveys. 4. SurveyMonkey subscription
5. $400
8. 5. Copywriting/setup labor (approx. 4
6. $400
hours at $100/hour).

9. 6. Data compilation and reporting labor
(approx. 4 hours at $100/hour)
Total = $1,100

Total (First-Year) Cost for Full

Implementation $13,500


Cost of Doing Nothing

By deciding to maintain the status quo and do nothing, ABC is expected to continue to lose
clients at the current rate (or at an increased rate). Marketing expenses would be expected to
rise, as lead conversion rates continue to worsen and cost per acquisition (CPA) rises.

Course of Action Cost Items Total Cost

1. Loss of client accounts (due to 1. $34,720

11. Do Nothing/Status Quo
tenant dissatisfaction and negative
online reviews)assuming costs

similar to 2015-2016 figures.
2. $6,900
2. Additional 20 percent rate of lost
client accounts, to reflect
 conservative estimate based on two-
year trajectory.
3. Higher PPC ad bids and improved 3. $6,000
12. Increase Existing PPC
placement of ads (Current rates of
Marketing Efforts
$500/month would increase by
$500. Total = $47,400

Total (First-Year) Cost of Doing Nothing $47,400

Business Impact of Each Alternative

The following table reveals the impacts that will occur based on the implementation of this
business case.

Three-Pronged Implementation Plan:
Educate Tenants, Provide Dedicated Tenant Portal, and Gather Quarterly Tenant
Feedback
Impact Who Is Impacted

Tenants
Online Module: Clearer, more interactive Operations Director
presentation of covenants and
Administrative Staff
responsibilities mean lease tenure will run
Property Inspection Staff
more smoothly, with fewer
misunderstandings.

Online Module Completion: Partial rent Tenants
refund, after successful completion of
training module, means tenant-manager
relationship begins with tenant receiving
financial assistance and direct advocacy
from property manager.
Tenants
Online Module & Tenant Portal: Clearer
communication of tenant move-out
responsibilities means less likelihood that
tenants will misunderstand or forget what
they must do to get security deposit fully
refunded.
Tenants
Online Module & Tenant Portal: Clearer
communication of tenant move-out
responsibilities means lower likelihood of
lost security deposits.
 ABC Management/Owner
Online Module & Tenant Portal: Reduced Administrative staff (who
losses for tenants mean lower likelihood of sometimes get called out by
angry Yelp and Google reviews. name in the online reviews)

Homeowner Clients
All Interventions: Ability to attract higher- ABC Management/Owner
quality tenants
Leasing Agent

ABC Management
All Interventions: Ability to grow the All ABC employees
business, not simply replace lost business
Homeowner Clients

Tenants
Quarterly Tenant Survey: Ability to evaluate
and modify tenant education and portal
affordances according to tenant needs.
ABC Management/Owner
Quarterly Tenant Survey: Ability to respond All ABC Employees
to problems before negative reviews are left
and business reputation is permanently
damaged.
ABC Management
Quarterly Tenant Survey: Feedback All ABC Employees
mechanism allows management to
determine staff customer service training
needs on an ongoing basis.

Conclusions and Recommendations

The recommended course of action of this business case is to adopt the Full Implementation
Plan:

Develop, deploy, and incentivize short, self-paced tenant education module.

Complete and promote the secure tenant document portal.

Conduct, compile, and report to management on quarterly tenant surveys.

This course of action would significantly contribute to the achievement of ABCs aims of
improving its online reputation, attracting top tenants, keeping its current client base, reducing
churn, and growing the business. The current loss of homeowner clients, which amounts to
approximately $50,000/year, will be greatly reduced. Employees ability to do their jobs without
recurring tenant conflicts, will be improvedas will employees ability to work without fear of
damaged individual reputations. While this implementation plan does not include a formal
employee performance improvement program, the quarterly tenant feedback component does
allow for a natural development of coaching and training at a later date. Homeowner clients
will have a greater security in continuing to do business with ABC, knowing that the firm
attracts a qualified pool of tenants and that they need not fear the income loss due to
prolonged vacancy.

In short, full implementation addresses the challenges discussed throughout the business case:

Tenants improved access to knowledge--and the documents that outline their

contractual responsibilities--will help stop unexpected loss of security deposits.
Tenants improved experience and confidence in ABC will allow for greater tenant
satisfaction.
ABCs loss of accounts and related revenues will be reduced due to improved tenant
satisfaction and a reduction of damaging online reviews.
Existing clients and prospective clients can have confidence that ABC is a reputable
business that attracts good tenants.
Managers and staff will have the ability to determine ongoing tenant education and
tenant service priorities, based on regular feedback from tenants. They can thus
establish tenant support goals on a quarterly basis.

 High-Level Implementation Plan

Full Implementation

Step Description Timeframe

13. Tenant Document ABC approves, and portal launches, with May 24 May 31, 2017
Portal Final Review and email and registration info sent to all
Approval tenants.

May 24 May 31, 2017

14. Survey Copy Digital Scribes produced survey draft,
Development and owner reviews and requests changes,
Review and revised survey draft is submitted to
owner.

June 1 June 7, 2017

15. Survey Copy ABC approves copy, and Digital Scribes
Finalization sets up survey in SurveyMonkey and
creates associated email copy.

16. Tenant Education ABC reviews and approves detailed June 7 June 14, 2017
Module Content content outline and storyboard.
Outline Review
Development of Tenant
17. Digital Scribes creates online training 18. June 15 June 30, 2017
Education Module prototype using Articulate (to be
published on website)
Refinement, 19. ABC reviews prototype and submits 20. July 1 July 15, 2017
Finalization, and requested changes. Digital Scribes
Launch of Tenant incorporates changes, obtains final
Education Module
approval, launches module, and notifies
leasing agent.
Broadcast Q2 Survey 21. Digital Scribes sends email survey and 22. July 1 July 15, 2017
and Collect Data follow-up broadcasts to all tenants. Data
collection begins.
Report and Make 23. Digital Scribes interpets tenant feedback 24. July 16 July 31, 2017
Recommendations survey responses and prepares/submits
from Q2 Tenant Survey report to ABC. Results may lead to
additions to intervention plan.



Do Nothing

By deciding to maintain the status quo and not remediate tenant satisfaction problems, ABC
will have to put a break-even business acquisition plan into effect. While the management
would have to meet to agree on the best course of action, the plan would necessarily rely on
marketing tactics to increase overall number of homeowner leadsand would assume lead
conversion rates similar to the current 5 percent closed leads from rental market analysis form
submission. The following represent the kinds of actions that would be logical:
Aggressive PPC marketing campaigns to targeted localities that have high numbers of
rentals and a large military population.
Appeals to satisfied homeowner clients to leave positive reviews online.

Evaluation Plan

In order to evaluate the success of the business interventions being implemented, ABC will
develop and monitor a set of metrics related to tenant satisfaction measurement.
ABCs annual rate of clients lost to other management companies will decrease from the
current 3 percent (12 properties) to 1.5 percent (6 properties) in FY 2017, and to .5
percent (0-2 properties) in FY 2018.
Within one year of the interventions being implemented, lease application rates for
vacant rentals will increase by 25 percent. Within two years of implementation, lease
application rates will increase by 50 percent.
Within one year of the interventions being implemented, negative tenant reviews (3
stars or less) on Yelp! And Google will decrease by 50 percent. Within two years of
implementation, negative tenant reviews will decrease by 90 percent.
Within one year of gathering quarterly survey feedback from tenants, aggregate
satisfaction ratings will improve by 20 percent (i.e., from an average of 3/5 to an
average of 4/5).
Within 15 months of the interventions being implemented, at least three satisfied
tenants will agree to leave positive reviews on Yelp! and/or Google.

Appendices

Appendix A: Key Analytics Findings

Appendix Table 1: Notice that even as visits to business acquisition website pages go up (2015), return visits are going down.

Appendix B: Real Estate Agent Survey Feedback

Appendix Table 2: Area agents were surveyed after they entered a drawing sponsored by the property management firm. A total
of 40 survey responses were collected. Many left the comments area blank. This table represents a sampling of those who
explained why they would or would not be willing to recommend the firm to homeowner clients looking for management
services.

Appendix C: Sampling of Tenant Online Reviews, 2013-2015

Appendix D: Notes from Staff Interviews

The following sound bites from staff interviews represent some key takeaways from that
discovery process: Staff were asked different questions, depending on their rolebut each one
was asked about common tenant problems or questions they encounter.

Admin 1: When they tell me somethings unfair, I tell them they should have read the lease!

Admin 2: Tenants can be downright abusive. After one used my first and last name in an
online review, I dont even tell them my name over the phone anymore.

Leasing Agent: Sometimes, in a group of tenants, one of them will read the lease, but
everyone else in the group just comes in at odd times to give their part of the security deposit,
and Im pretty sure they never took the time to even read over the lease.

Property Inspector: Tenants always say they didnt cause the damage, but I take lots of
pictures. Believe me, the damage was never there when they moved in. I tell them they should
have planned ahead to get if fixed before check-out, but they just argue with me. Its no use at
that point. Theyre angry.

When it comes to HOA violations, sometimes the tenants just dont even respond. Then
theyre surprised when they get charged for the fixes..

Operations Director: I do my best to make sure the maintenance issues get addressed right
away, but sometimes I swear these people leave reviews that complain about things I never
even got a request about.

Principal Broker: Why dont these people just read their lease? Its right in there that they are
supposed to get the gutters and chimney cleaned by an approved vendor. I dont understand
how they could run down our reputation online when its really their fault for not reading their
lease.






Appendix E: Gantt Chart Depicting Tenant Portal Development to Date

Appendix Table 3: Portal is close to deployment. Only one developer payment remains. The WordPress framework will make it
easy to manage and modify, to make for a smooth user experience.

Appendix F: Proposed Tenant Education Module

(The following content outline would guide development of a 20-minute module developed in
Articulate Storyline and deployed on the clients website.)

Tenant Education Module: ABC Management
Content Outline

Introduction: Three quick opening scenarios are presentedlearners will probably see
themselves in at least one of these, and each will present similar circumstances in
which tenant(s) felt they were doing their best and were honoring their leasebut then
were shocked to learn they would only receive a partial refund of their security deposit.

Joes story. A group of tenants (not related to one another) sharing a place
together. Joe had paid the security deposit, but then the two other housemates
left early, and Joe was left holding the bag to clean up everything. That bothered
him, but after a weekend of doing a full cleaning, he felt sure that the immaculate
house she was leaving behind would merit a full refund of his deposit. (The
problem: Joe left a clean house, but he never called a chimney sweep or a gutter
cleaner from the approved vendor list. As a result, he had charges totaling $400
deducted from his deposit.)

Shannons story. A single parent. Shannon has her hands full with a full-time
government job, a commute to downtown DC each day, and a toddler to take
care of. When the time comes to move out of her rental, she hires a professional
cleaner to make sure a thorough job is done. She also arranges for approved
vendors to come service the fireplace and clean the gutters. She has installed
baby gates throughout the house and has also hung lots of shelving to organize
toys and clothes. When she takes down the gates and fixtures, shes in a hurry.
She doesnt give much thought to all the holes and dents in the wallsand she
notices some light bulbs in the basement that are burned out. But she figures
since she never really used that room much, she shouldnt have to replace those
expensive floodlight bulbs. Later, when she realizes $275 has been deducted
from her security deposit, she is bewildered. Why so much money for a little
drywall patching and screwing in a few light bulbs???

Kevin and Glorias story. A young couple. Kevin and Gloria are planning to use
the returned security deposit toward the down payment on their first home. Its a
big deal. Theyve taken great care of their rental and are proud of that fact.
Theyre busy professionals who tend to get home later in the evenings. They
havent spent time in the backyard in months, and they were so busy making
sure the house was ready for checkout that they failed to notice the tall grass and
overgrown weeds in the backyard. Later, when they get all but $350 of their
security deposit back. They wonder why it cost so much to do a little mowing and
trimming? Was the property management firm profiting from their deposit?

Section 1: Security Deposit Basics: How the security deposit works, what laws
govern it, and ABC want you to get it all back!
Legal nature of the escrowed deposit.
o We'll address both
Virginia Landlord Tenant law and
The reason for the deposits existence. (As a strictly regulated,
escrowed account, it's not a profit center. It exists to protect the
owner.)
o The seriousness of any property manager profiting from a tenants
security deposit. (A managers real estate license is at stake.)
The firm never profits from security deposits, it is only custodian
of them.
In an effort to steer clear of these kinds of profit incentives, ABC
has a policy of receiving no referral commissions or cuts from
vendors we send to service the property.
Why charges are made at checkout:
o If checkout isn't done properly, vendors perform those services--and
charge for their time, as well as their service call minimums!
o If items must be replaced, the property management firm must charge
for those items (and for the time of the vendor who will go to install
them).
Section 1 Assessment:
o Quiz on how security deposits work (T/F and Multiple Choice)
o Link to feedback form to ask a question about the firms security deposit
policies.

Section 2: Top 6 Tips to Protect Your Deposit: What to do to make sure you get your
full security deposit back (dealing with the biggest reasons for tenants losing part or all
of their deposit.)
Final cleaning, according to checklist
Replacing light bulbs and furnace filters,
Final yard cleanup (mowing, trimming, weeding, pruning).
Cleaning gutters through an approved vendor
Cleaning fireplaces with an approved vendor
Top off oil tank if the property has oil heat.
Section concludes with a short quiz


Section 3: Know Your Obligations, Avoid Headaches and Fees
The following are not all tied to the security deposit refund, but they all cause significant
consternation (and sometimes charges) for tenants who arent familiar with their lease
and covenants.
Tenants are obligated to provide access to the premises at lease end. (Provide a
telephone number for Realtors to call before showing.)
Making electronic payments. Once logged into Paylease, tenants are no longer
 on the ABC website. Any issues with payments (e.g., website timeout) must be
addressed with Paylease, ABC has no control over them.
As Is items. Tenants must be aware of which items are listed as is in their
lease and must also be aware of the definition of as is as noted in the Tenant
Handbook.
(These three are the ones I know about right now. This list might grow a bit.)

Section concludes with a short quiz.

Concluding Section:
Invitation to reach out directly with a question or a concern about any of this
material.
Evaluation of module (short, 5-question survey)
Opportunity to print a certificate after all sections/quizzes have been completed.

Figure 1: Sample screen and layout from storyboard.
 Appendix G: Proposed Quarterly Tenant Survey Topics

How was your leasing experience?

Ease/convenience of the leasing process

Helpfulness of staff in explaining lease terms and conditions
Secure handling of personal information and financial transactions

How is the property, outside and inside?

Appearance/condition of the property

Common areas
Safety
Amenities
Community features
Parking

How is the management and maintenance staff?

Availability
Responsiveness
Problem resolution
Communication
Friendliness

How is the maintenance process?

Ease of submitting work orders

Handling of maintenance requests and timeliness of responses.