On the surface, it might seem like the most effective way to grow your vacation rental business is to acquire owners as quickly as possible – we’ve all seen the biggest players in our industry deploy this method. Acquiring new homeowners definitely has a place in your short-term rental business strategy (especially with the recent significant increase in inventory across so many markets), but keeping your owners happy and on your roster is the key to your continued success.
It’s no doubt that adding a new property to your business delivers value, but focusing solely on acquisition may end up costing your business greatly in the long run. Consider these facts:
- The average cost to acquire a customer (CAC) in our industry ranges from $750 – $5,000.
- A 5% increase in customer retention can increase company revenue by 25-95%.
Considering these two facts alone, investing in happy homeowners who will continue to partner with you is well worth your time and resources. Retention is all about protecting the revenue you already have, increasing ROI, boosting loyalty, and even bringing in new customers.
To help perfect your retention strategy, we have gathered a few tried and true tips that you can start using right away. These tips can be easily integrated into your current strategy – or give a great starting point.
#1 Create an FAQ doc about your pricing strategy.
Chances are, many of your owners ask the same questions when it comes to pricing. What is dynamic pricing? What is your pricing strategy? Why not have flat, predictable rates? They may have been used to a different way of pricing at their previous property management company, or they may be completely new to the process.
Common questions like these usually have similar answers, so creating an FAQ doc will save you time. It will answer any questions they might have and will help start your relationship on the right note.
#2 Get clear on owner expectations for occupancy & pricing with a survey.
We’ve heard from our customers that managing owners’ expectations of their properties’ performances can be a tricky, but necessary task to get right. Open and frequent communication with your property owners is essential to the survival of your business as a property manager.
A simple way to understand your owners’ expectations is to send out a survey. Surveys are easy to put together and gathers all responses and feedback in one place.
Below are a few sample multiple-choice questions you can ask:
- What best describes your pricing and occupancy expectations?
- What is the lowest length of stay you'd allow guests to stay in your home for if the alternative was to have it sit empty?
- Yes or No? I have a nightly price in mind that I would never like my home to go below. (If yes, please specify your preferred minimum nightly rate.)
- If your market is seasonal, what is your preferred minimum nightly price for the high season vs. your preferred minimum nightly price for the low season?
#3 Instill confidence in your skills & expertise by sharing data.
As a property manager, you know that using data-driven, intuitive tools to inform pricing decisions are paramount to driving bookings and maximizing revenue. So, we encourage you to show your owners how dynamic pricing responds to market changes and adjusts prices automatically.
Share examples of your market data, highlighting occupancy information, and explain how you are adjusting pricing strategies. This will quickly help you build confidence and trust with your owners, and give you a chance to show off your expertise.
With Insights from Beyond, you can easily share this information. Show your owners how their listings are performing compared to others in the area and even compare them to last year.
#4 Ensure that owners are a good fit for your business from the beginning.
When it does come time to bring on a new owner, confirm that they are aligned with and match up to your business and revenue goals from the get-go. This will set your partnership up for success and longevity – and ensure that your time and dollars spent to acquire them were not wasted.
For example, Patrick Tice, founder and owner of VacayAZ, ensures that all of his owners are like-minded to his business before bringing them on. VacayAZ caters to luxury travelers, and the homeowners who partner with Patrick need to be aligned and similar-minded to be successful.
“I’m very particular about who I take on as an owner. We want owners who are business-minded and trust us to manage their homes so that they can go enjoy their life,” Patrick said.
When considering bringing on a new owner, ask yourself a few questions to get an idea of what working with them looks like. These questions can help you determine if they are worth bringing on:
- Have you established a brand and does the home fit that brand?
- Is the owner likely to allow for updates/renovations when necessary?
- Might the owner set unrealistic and limiting minimum prices?
- Does the owner intend to use the property a large portion of your peak season?
- Does the owner want to maintain their own listings on OTAs and hinder your ability to maintain accurate calendar availability?
Getting your retention strategy perfected will take time and effort, but it’s clearly worth it. Using Beyond to help show market data, demand trends, and the other tactics you are implementing will go a long way in increasing retention rate.
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