The Coming Dichotomy of Multifamily Leasing
by Dom Beveridge | March 02, 2020
Where I come from (the UK), the English language is peppered with curious variations. One of the strangest is the perpetual controversy over the pronunciation of the word "scone." Everybody pronounces the vowel either as "own" or "on." Which side of the divide that people fall on follows no clear regional or socio-economic pattern. People adopt one pronunciation or the other and never change thereafter. And everybody is convinced that people who pronounce it the other way are entirely wrong to do so.
Occasionally we find strongly opposing views on the same issue in the same industry that are more consequential than the pronunciation of names of baked goods. Just such a dichotomy appears to be emerging in the arena of multifamily leasing, based on a series of recent conversations with a few different clients over the last couple of weeks.
A Fork In The Road
Here are the two perspectives. One school of thought sees the untapped potential of high-quality telephone interactions as an important lever in improving leasing performance. The interaction with a well-trained associate who has detailed product knowledge and familiarity with the local market is believed to increase the likelihood of a tour. It is also believed to deliver a quality prospect who is ready for the leasing conversation when the time comes to tour the property.
The opposing view, which is itself relatively new in the industry, is that contact prior to the tour can increasingly be handled by technology, rather than people. With AI leasing agents already handling inbound communication to multifamily properties, a technology-based solution is now clearly within reach. While the technology is still new, there are already multiple portfolios where a robot handles all emails and SMS inquiries and phone calls. Phone calls are usually offered the option of chatting via SMS to avoid the wait time, which (I'm told) most tend to accept.
At its heart, the decision seems to turn on a single question: can we improve revenue outcomes by doing a better job of persuading prospects through sales skills, or are we better off focusing on efficiency? Both have their merits. I am working with a couple of clients who are focusing on contact center strategy and sales metrics, respectively. In each case, the contribution to sales performance of the pre-tour phone conversation is in sharp focus.
At D2, we have always been proponents of improving sales performance by improving the skills of front-line associates. Any time a caller asks a question, the associate on the phone has the opportunity to "teach, tailor and take control" of the conversation (in the style of the excellent Challenger Sale methodology.) The logic that we have heard repeatedly is persuasive: better call-handling means more appointments with better-qualified prospects.
By addressing this phase of the sales conversation through AI, we lose the opportunity to exert this influence on the prospect's decision-making process. AI does a fantastic job of never missing calls, serving up information in real-time, and gathering valuable intelligence from the prospect in the process. Think of the marketing dollars that are no longer wasted as a result of answering every call and the 100% entry of perfectly-detailed guest cards. (Sidebar: think of the improvement to sales metrics if they can no longer be manipulated based on whether or not the associate decided to enter the guest card!)
Beyond simple efficiency, there are customer experience benefits to AI. We hear that prospects often ask if they can meet the person that they have been texting with, such is the rapport that the AI can form with the human asking the questions. But whether or not the AI application can reach the level of empathy and local nuance that a well-trained associate can is a different matter. Imagine trying to discuss your personal dilemma over which school district you want to move to via SMS with a robot, for example.
The Bigger Picture
The question of how to provision sales ultimately boils down to effectiveness and ROI. If the personal touch can deliver the improvements in performance that conventional wisdom expects it to, then it is the right thing to do for some portfolios. There may also be more upside in the level of consistency offered by AI leasing agents and the nature of the service they provide in a world where more and more aspects of life are on-demand and self-serve.
The conversations that led to the insight described above fell at a time when we are putting the finishing touches on our 20 for '20 white paper. I won't steal the thunder of that paper, but for one spoiler alert: in this year's paper we talk about fully-automated leasing a lot. The confluence of smart communities, self-show and AI leasing assistants is changing the multifamily prospect experience and the efficiency of leasing operations. It will be fascinating to see how multifamily sales evolves in this changing environment.