Online reputation management is more crucial than ever in maintaining a successful multifamily operation. In terms of attracting potential residents, building a positive online reputation can be a gamechanger, because a vast majority of consumers search online to find local businesses and services.
Until 2019, regular surveys conducted by SatisFacts—a provider of resident surveys focusing on multifamily retention and reputation management—showed that referrals from family and friends were the most crucial step in the renting process. But in 2019, online reviews took over. Then the pandemic took hold in 2020, pushing the online trend even further.
"Everyone's jumping behind their computers," Smith said, noting that the trend isn't exclusive to the multifamily industry. "You're getting behind the computer and trying to gather as much information as you possibly can, which is what's happening when someone is looking for an apartment."
The four-step apartment search cycle
Let's say you attract new renters online; in the future, they may leave a review about their experience in your community, potentially attracting (or scaring away) prospects. Here's the apartment search cycle breakdown:
- Stimulus: The point at which renters know you exist
In this phase, prospects are using generic search terms to find living arrangements (e.g., apartments in Louisville; two-bedroom apartments in Louisville; apartments in Louisville close to school).
"Very rarely is someone going to get behind their computer and type in a specific community's name.," Smith said.
It's similar to how most of us search for a car, she explained. First, you search for the model you like; then, you find a dealer.
- Zero Moment of Truth (ZMOT): The initial research phase
The options are now narrowed down based on generic search results. Prospects are looking at a specific community's website or apartment listing, Smith said. They're looking at photos, checking out social media pages, and reading online ratings and reviews.
- First Moment of Truth (FMOT): Validating research results
At this point, prospects are now looking to visit specific communities virtually or in-person to verify whether the information they found online is accurate.
"We call this living up to the online hype," Smith said.
When the amenities prospects see during their online search align with what they see in person, "that's when people feel confident to say yes," she noted.
- Second Moment of Truth (SMOT): Sharing the overall experience
In the final stage, the prospect has become a resident. They now have regular interactions with staff and neighbors, for example. They now have something to say about your community, whether it be positive or negative. When they post that experience online, the review directly impacts a prospect's ZMOT phase.
"It all works in a big cycle," Smith said.
Social proof and wisdom of the crowd are vital for reputation
Ratings and reviews serve as social proof during the ZMOT phase. Social proof is like a collective thumbs up or thumbs down.
"It acts like adult peer pressure," Smith said of social proof. "If enough people are talking about it, the social proof pushes someone in a certain direction."
Wisdom of the crowd isn't as broad as social proof; it applies to the actual feedback (what's written in the review) and is more critical during the SMOT phase. A review with a 1-star rating that says a rental application was denied is subjective and doesn't apply to every prospect. The community's social proof might still be overwhelmingly positive.
Wisdom of the crowd doesn't always have the power to sway prospects unless multiple reviews portray the same sentiment.
"If there are resounding echoes, over and over again, that's how you know that it's not just about the star rating," Smith said. "The wisdom of the crowd is saying something else."
When considering a community's reputation, you have to look at social proof and wisdom of the crowd as bookends, Smith added.
Data says review star ratings and legitimacy matter most to prospects
Quantity doesn't mean quality when it comes to reviews. A recent consumer study from BrightLocal found star ratings are the most important factor for consumers when considering a business or service.
You might think a perfect 5-star rating is a driving force behind a positive reputation, but the study found that 88 percent of consumers don't need a 5-star rating to buy from or work with a company. A 5-star rating can come across as insincere to prospects, Smith said. A star rating between 4 and 4.5 "gets the most action in terms of generating leads," she added, citing the BrightLocal study and internal metrics from ApartmentRatings.
Not surprisingly, a star rating below 4 isn't ideal. The BrightLocal study found only 48 percent of consumers would consider a business with fewer than 4 stars—that's half of the potential customers searching online.
Behind star ratings, legitimacy is the most critical factor in a review. Prospects prefer honest, authentic reviews from someone with first-hand knowledge of the property.
"A bunch of dishonest 5-star reviews from employees and management can work against you," Smith said.
More credibility is given to recent reviews. Prospects want to know what residents are thinking about the current state of the community, Smith said.
The BrightLocal study found 86 percent of consumers say they only look at reviews from the past three months, while 73 percent say reviews must be from the last month to influence their choice.
"In this business, there's so much change that happens," Smith said. "The person who wrote review six months ago might not live in the community. You want to capture new content and new reviews."
Review sentiment (a prospect's reading of wisdom of the crowd) is the fourth most important aspect of reviews, followed by quantity, according to the BrightLocal study. Smith advises that communities and management companies focus on soliciting quality, first-hand reviews from current residents rather than getting as many reviews as possible.
Avoid incentivized and deceptive reviews
Incentivized and deceptive reviews can hurt a community's reputation and wallet. The Federal Trade Commission (FTC) is tasked with protecting consumers from shady business practices. Deceptive and fake reviews can lead to consumer complaints and FTC enforcement against a business. If a business is using misleading and fake reviews, the FTC can levy fines, and the agency can place it under close monitoring for up to 20 years, Smith said.
Incentivized reviews are allowed by the FTC (e.g., residents rewarded with prizes, gift cards, rent credits, apartment upgrades, etc.), but the incentive must be disclosed inside the body of the review. For example, if a resident is asked to leave a review in return for $50, they must disclose the compensation they received in the review. According to Smith, the disclosure of an incentive may cause prospects to write off the review as disingenuous.
"Especially if the review is positive," she said. "Because what are the chances someone is going to leave you a 1-star review if they think it's going to jeopardize their opportunity to get a gift card, or reward points, or rent credit?"
If a resident forgets to disclose the incentive, the responsibility falls back on the community or management company to act or risk FTC enforcement. A response must be posted to the review that clarifies that it was published as part of an incentive program.
"But once that's exposed, it's going to negate the credibility of that review," Smith said. "And that review could be 100 percent honest. We recommend no incentives—none whatsoever."
It's not illegal for a property's employee or contractor to leave a review, but they must disclose their relationship to the property, similar to incentivized reviews. If not, it's considered deceptive by regulators.
Another deceptive practice in the eyes of the FTC is review gating, Smith said. An example would be if you leave a 5-star review for a business and you're asked via a follow-up email to leave comments. The positive comments are then automatically posted as an online review on a company site. On the other hand, if you left a 1-star review, you receive the same follow-up email asking for comments. But instead of posting those negative comments as an online review, you're redirected to the company's support team to attempt to fix the issue.
"You're never given a chance to write a negative review," Smith said of review gating. "If negative comments don't immediately get turned into an online review as with the positive, that's review gating, and you want to run away from that. It's a big no-no in the eyes of the FTC."
Suppose a deceptive or improperly incentivized review is found on a company page. In that case, the responsibility falls on the company to remove the review or include a consumer alert that discloses the violation.
Adhering to the Consumer Review Fairness Act
The Consumer Review Fairness Act, signed into law in 2016, bans gag clauses to prevent negative reviews.
"You cannot prevent someone from writing a negative review, and you can't retaliate against someone who writes a negative review," Smith said of the law.
Businesses are not allowed to include standardized provisions that threaten or penalize people for posting honest reviews.
"You can't fine or charge someone for posting a negative review," she added.
The law doesn't mean communities and property managers are powerless in dealing with negative reviews posted out of retaliation. Smith said that retaliatory reviews are reportable. Most review sites provide options to report or flag retaliatory reviews, especially if the same review is posted on multiple websites.
Negative reviews make your positive reviews shine
"Negative reviews, I call them your best friend," Smith said.
Based on her experience, a limited number of negative reviews can actually increase credibility.
"Readers already know why they want to live in a community based on the photos, floor plans, and pricing," Smith explained. "They're reading the negative reviews for the why not."
The "why not" doesn't apply to every prospect; take a reviewer that complains about children making noise. If you have children, that might not be a bad thing. Or, someone complains about landscaping crews working early. For someone who is up early for work, that's not necessarily a problem.
"You can have a couple of negative reviews, and if they're each talking about something different, it's not the wisdom of the crowd necessarily, so this won't impact someone else's decision," Smith said. "If all reviews are positive, it brings about skepticism. Negative reviews make your positive reviews shine."
Always respond to reviews (quickly!)
No matter the review's sentiment, prospects want to see that the business cares: 69 percent of consumers are more likely to use a business that responds to their positive reviews, while 70 percent are more likely to use a business that responds to negative reviews.
"Management companies, teams on-site, they do care about their residents," Smith said. "A majority of us aren't just punching the clock—we don't want to sabotage that by note responding to a review."
If a review is in a different language, always translate the response to that language. If the review is anonymous but based on context, it's clear who the resident is, don't call the resident out.
"That's seen as retaliatory," Smith said. "You never know when it can open the door to a fair housing complaint."
Don't use "corporate speak" in response, such as lease language, she added. In terms of timing, Smith advised responding to positive reviews within 48 hours and negative reviews on the same day (within 24 hours).
Negative review response tips
Show the steps being taken to address the issue(s). Speak to the person reading the review, not the actual review, who has already given their opinion. Based on the response, readers will see that the business cares about customer service, Smith said. Use singular pronouns such as 'I' and 'me' when responding to negative reviews. This provides a personal touch, she added.
Positive review response tips
Demonstrate gratitude for the positive feedback. Respond directly to the reviewer, not the reader (though the reader is still looking at the response). Use plural pronouns such as 'we' or 'us' when responding to positive reviews.
Keep review vendors on brand
Some businesses outsource review responses and monitoring to a third-party vendor. This can be beneficial to communities short on staff and time, but there are some things to watch.
"Make sure you have full oversight of your content," Smith said. "If a violation occurs, the onus is on your company and not on the review vendor."
Avoid vendors that use templates or bots to respond. Review responses should be custom and personalized. Ensure the provider is responding to reviews promptly, Smith said.
The 90-day reputation management plan
Smith provided a 90-day plan that can turn around a community's reputation.
- Search for the community online and see what people are saying. Get a sense of the social proof around the community. Is it positive or negative? Gather feedback from existing residents. Respond to any unanswered reviews.
- Implement new strategies and processes based on the top concerns from residents (e.g., parking, landscaping, rent payment process, etc.). Outline goals and a plan to achieve those goals. Monitor progress and employee performance.
- Cultivate gratitude from residents by asking them to provide feedback. If concerns are being addressed, there will likely be more positive feedback. Look at pain points and what's going well, and plan to minimize the negative while amplifying the positive.
Includes copyrighted material from a company under the HAI Group family, with its permission. This post is for informational purposes only and is not intended to provide legal advice, and shall not be relied on as such. We strongly recommend consulting with legal counsel or an appropriate subject matter expert.