Customer Churn in Coliving
How Do You “Fight” Customer Churn as a Coliving Operator?
Two days ago (on Tuesday 12), we finally had enough move-ins at Casa Mia Coliving to get back to the number of members that we had at the end of last month. It’s the 12th of March, so we basically worked the first 12 days just to get back even. Call it our “Black Tuesday” if you like. LOL!!
The problem with slow months, such as March-April, is that they are not necessarily slow in terms of departures, they are just slow in terms of new customers coming in and so sometimes “Black Tuesday” instead of being in the first or second week or so ends up being in the third or even fourth week of the month. Your Sales team is basically working the whole month just to get back to where they started.
At Casa Mia we have an average length of stay of almost 14 months, which means that every month about 4-5% of our members leave (it would be 7% if we were flat, but we are growing, so what was 7% 14 months ago is approx 4-5% today). For 400 rooms that’s about 15-20 members leaving every month. Given our growth rate, we want to add about twice that many members every month (and add in total about 50 members, before churn).
If the average length of stay of our members were to be six months instead of 14, at the same size, the number of departures would be 40-50 members per month, and to get to the same growth rate, we would need to add a total of about 80 new members before churn, or 60% more than we currently need to add. You would need 60% more leads, 60% more viewings, 60% more sales bandwidth… a lot more resources for the same result!
How Do You “Fight” Churn?
Clearly churn is bad in terms of the Sales resources needed to counter it. Additionally, it can also have a bad impact on your community building and other aspects of the coliving business, turning into more than just a sale issue.
How do you fight churn then, or in other words, how to you increase the average length of stay of your customers? We have one of the longest length of stay in coliving in Singapore and we achieved this by focusing on five levers:
Right price (and adjust prices down, not only up, quickly!)
Casa Mia Coliving members are mostly young professionals in their first or second job out of school. Affordability is important to them, perhaps more so than for other segments. If the price is not right, as much as they like the convenience, they will be forced to look at other options and eventually leave. This is true when they move in and also months later, so it’s not just the initial price that needs to be right, but it also needs to be adjusted to the market situation quickly (for example, that’s what we have been doing in the last six months, since the rental prices in Singapore have peaked).
Because of the space reconfiguration that we do in all of our homes, renting a room with us costs about the same as it would cost them to rent a home and share that with friends, but it does not come with any of the risks (such as a friend leaving), and it has all the convenience and flexibility of coliving, plus the community.
Staying longer is a no brainer!
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Prices based on the length of stay
Not only prices should be adjusted with the market, but also for the length of stay. There are many reasons for this, from the fact that short term stays in Singapore are expensive (have you checked a serviced apartment?) to the much higher component of convenience built into a short term stay vs. a long term one. Even though every founder I speak to seems to agree with this, many coliving operators fail to implement variable pricing, as they do not have they systems to properly manage them.
At Casa Mia Coliving, prospects can see directly on the website how a room price changes based on their length of stay.
Month-to-month
Last price-related lever: make it easy for people to continue to stay beyond their initial commitment period! Once the commitment period is over, the contract rolls on a month-to-month basis automatically, no need to do anything. It’s more convenient for the customers and it’s less work for the operator. Another no-brainer feature, which again many operators (at least in Singapore) do not offer since traditionally rentals always have an end date.
Engaged community
Besides optimizing prices, at Casa Mia Coliving the community has the biggest impact on the length of stay. Many of our members (that’s right, “members” instead of “customers”, precisely because it’s a community!) join us and are new to the city, lacking a social network and connections. Casa Mia Coliving helps them to quickly find new friends—see here how: https://www.casamia.co/blog/all-about-our-coliving-community
Listen to your customers
Finally, listen to your customers. Another item that every coliving founder agrees with, but them most of them do not do it. At Casa Mia Coliving we have a members’ semi-annual survey and a feedback system, which we implemented using the NetPromoter System methodology). For example, here is the latest round of our survey: https://www.casamia.co/blog/how-happy-are-our-coliving-members-semi-annual-survey---february-2024 As you can see it’s not just the “score” but also the feedback and a bit on the improvement initiatives that we are taking and we share more about the initiatives directly with our members).
(originally posted on https://coliv.substack.com/p/customer-churn-in-coliving )
Social entrepreneur. With my business for Digital Nomads, we enhance working well-being by 25%, reducing burnout and stress by 40%, and helping rural entrepreneurs improve their business and design
7 个月Thank you for sharing this article Eugenio. Really important for us in the Coliving sector. It is a big challenge to control the churn as we are addressed to Digital Nomads that are constantly moving out. For me the key is the community build. If they are happy with the type of people and activities offered, they will keep recommending our spaces.
A fantastic read, thank you for sharing your insights to the world of co-living in Singapore.