For UDR, Removing Friction from Leasing Process Has Operation Margins Soaring

Its next-gen tech brings it closer to fully autonomous leasing, led by chatbots, self-guided touring and QR codes.
August 9, 2021
News
This story was originally published on Globe Street (www.globest.com) and has been republished here with author's permission.

For UDR, Removing Friction from Leasing Process Has Operation Margins Soaring

Its next-gen tech brings it closer to fully autonomous leasing, led by chatbots, self-guided touring and QR codes.

There was a time when UDR employed a full team of leasing professionals on a busy Saturday afternoon to handle a few dozen renter prospect tours for a single multifamily community.

By adding new technology, the diversified multifamily REIT with approximately 52,600 apartment homes, has been able to increase its tour volume, conducting upwards of 40 self-guided tours per day while employing only a fraction of multi-functional office personnel at a given community. These findings have validated the belief that most prospective residents do not want to be “sold” to, but instead prefer to self-serve on their schedules.
Today, 97% of the company’s tours are self-guided.

Scott Wesson, UDR’s chief digital officer, says that removing artificially imposed obstacles, such as how many leasing people can simultaneously conduct tours, from the leasing process is a top priority⁠—and the steps the company has taken in recent years to do this have boosted its operating efficiencies and margins.
The apartment business is a customer-driven industry, and UDR’s strategy “centers on first listening to our current and potential residents, and then figuring out what works and does not work for them,” Wesson says. “We might think we know what the residents want, but we’re not always right. Observation and consistent interaction are key.”

“When it comes to shopping for apartments⁠—or shopping for anything⁠—we observed that prospective residents prefer privacy so they can either self-compare to other apartments they have previously toured or freely converse with a significant other on pros and cons. This is more challenging when a salesperson is present throughout a tour. The feedback we have received from prospects indicates they like this sort of lower-stress -experience.”

UDR has experimented with a wide range of technologies in its continuous pursuit of even greater automation and virtual leasing techniques. These endeavors have ranged from using Amazon Echo’s, mapping technology, and augmented reality, amongst others. Not all have stuck, but trial-and-error is an important part of the process. UDR believes that building a culture that embraces innovation, whether initially successful or not, has contributed to its success and helps to enable a superior customer experience.
As COVID lockdowns have eased of late, the REIT has reported strong leasing demand which has led to higher physical occupancy.

These focus on the customer, combined with its next gen operating platform, has enabled UDR to drive positive results. The company’s platform, which promotes universal self-service, leverages the latest technologies, to improve the customer experience and allow prospective residents to shop on their schedules.

Information ‘Addiction’

Wesson said that today, too many times, consumers trying to contact a company just want quick answers to their often straight-forward questions, and most businesses are making it overly difficult to get those answers.

Many consumers have moved on-line to efficiently satisfy their informational needs, and “that’s where chatbots can be very impactful⁠—their ability to quickly and accurately serve up information that customers need to make a decision is second to none.”

In recent years, UDR has listened to and analyzed thousands of calls from its call center. Wesson says that 85 percent of the questions were factual, where prospects asked about pricing, availability, and application questions. The other 15% were things like “is the community safe?” or “how’s the neighborhood?”

The latter are questions that challenge even humans to answer, Wesson said, because their answers are often subjective.

To answer the other 85% of questions, UDR evaluated four chatbots during its selection process. Some of its criteria included, “How quickly can it learn?” “What questions can’t it answer?” “Will it remember prospects that come back?” “Can it communicate via text, webchat, and email?”

The chatbots are not perfect, but they do learn quickly given enough data.  For example, colloquialisms within questions such as “How much do these apartments run?” can trip them up. UDR had to teach the bot that this is the same thing as asking, “How much is the rent of this apartment?”

UDR chose LeaseHawk’s virtual leasing assistant, ACE, because it “proved best at being able to answer the greatest number of questions quickly,” Wesson said. “If it cannot answer efficiently, prospects could leave your website, frustrated, and not come back. ACE functions so that it prompts its users to ask more questions, which improves interaction and the prospect’s experience.”

Convincing C-Suite About AI’s Value

”Some who work in the multifamily industry still need convincing that artificial intelligence is not coming for their jobs,” said LeaseHawk CEO Mike Mueller.

Mueller indicated this stems from misunderstanding AI semantics.

“These leaders need to understand AI is about increasing productivity,” he said. “Their customers already understand AI-powered assistants as they interact with them in other facets of their lives. Therefore, customers are comfortable with them. For executives, their response can be “AI lacks the ‘human’ touch. And Siri can be so frustrating. They identify AI as something synonymous with ‘Hal,’ the computer in ‘2001: A Space Odyssey.’”

Additionally, some potential AI adopters have a false mindset that training a bot is an onerous challenge.

“There’s not that much required to train a bot on apartment leasing,” he said. “Like with UDR, prospects typically ask very similar questions.”

Transparency Wins Them Over

One intriguing aspect of chatbot communication is its ability to provide pricing information to prospective residents. Wesson said that consumers today expect websites to list current prices.

“Some sites in our industry still state ‘call us for pricing’ or give a price range or list ‘rents starting at $x,xxx’ that is not in line with customer’s other e-commerce experiences,” he said.

“We want to be as transparent as possible and decided long ago that there’s no valid reason to shield current pricing from a prospective resident. Because of fluctuating demand, prices can go up and down, but we want to give them all the facts we have about the current price and the availability of the product and LeaseHawk’s chatbot allows us to do that quickly and efficiently.”

Price in hand, UDR customers then turn to touring.

“We’ve been doing self-guided tours for three years. We’re a petri dish when it comes to tech…we like to experiment with the process first, then learn from the customer feedback vs. trying to figure it out in a boardroom and investing in technology that will ultimately be scrapped.

“For tech like self-guided tours, we try it out, see how the process goes, learn from it, and then key in on the exact technologies we need to make it successful. For all our technology initiatives, our finished vision is quite different from what we thought it would be when we started out. Currently, 97% of our tours are self-guided, so we think we are on the right track with self-guided tours.”

Given social distancing norms during the pandemic, many apartment companies were scrambling to get virtual self-guided touring up and running during mid-2020. “Thankfully, we were already pretty mature with our process prior to COVID,” Wesson indicated. “We were on Version 3.0 by then for a lot of technology-, virtual- and automation-based experiences.”

Likewise with smart home technology which includes keyless locks, internet-accessible thermostats, and on-line water leak sensors, amongst others. UDR has installed these packages in over 44,000 of its apartment homes and is clearly one of the industry leaders.

Wesson said UDR’s data show that less than 1% of its residents don’t want smart-home tech.

“We provided smart-home tech in our communities for a variety of reasons. First, our residents tell us they like the conveniences they provide, second, we can charge a nominal fee for it, and third, it helps us save time and money on maintenance tasks such as rekeying locks or dealing with lockouts,” he said. UDR is getting a healthy double-digit return from the smart-home packages.

Improving Operating Margins

For REITs, such as UDR, and their shareholders, operating margin is key.

“The technology we use, including LeaseHawk’s chatbot, has made us more cost-efficient and optimized our workforce,” Wesson says. “This improves our operating margin, but it also provides UDR associates with better compensation and career advancement opportunities and allows them to focus more thoroughly on customer service.”

Wesson says that one technology trend he’s been surprised by in the past few years is how quickly today’s consumer, especially younger individuals, have transferred their communications to text from email. It’s a shift, he said, that started several years ago and was identified early on through UDR’s direct communication with prospects.

“Therefore, it was vital that the chatbot we selected could engage in texting and webchat. LeaseHawk does all of this,” he said.

Another key chatbot feature is its ability to schedule tour appointments. He finds that people today are more likely to make appointments, and not just drop-in (though UDR does still get a few of those). By planning the day based on set appointments, it’s easier for UDR’s team to conduct more property tours each day.

In the past, a prospect on an accompanied tour “would get the grand tour and would see everything whether they liked it or not,” Wesson explained. “Tours would take about an hour, on average, some even more than an hour. Our self-guided tours are taking about 23 minutes, on average, with our office associates only spending about 5 minutes of their time on each. Prospects who go on self-guided tours get to see what they want to see at the pace they are comfortable with.”

UDR found that the decision to lease or not was often not based on the length of the tour. It appears that most prospects tour a community to validate information they’ve already seen online, Wesson said.

QR Codes: The Public ‘Gets’ It

UDR indicated that one interesting self-guided tour finding thus far is that it could dial down the technology needed, such as eliminating some digital maps.

“We’ve found that our communities really aren’t that hard for the prospects to navigate,” he said. The UDR team looked at augmented reality a while back but found it “just didn’t add much of anything to the experience that the customer needed to make their choice.”

In 2016, UDR tried placing an Amazon Echo in several apartment units to help answer questions. These days, the company instead has placed signage in an apartment that displays QR codes to answer popular questions—prospects scan them to check pricing, appliance descriptions, smart-home tech, etc.

Unlike pre-COVID, many people now understand how QR codes work and use them because they’ve become more popular during the pandemic at places like restaurants, for example, if you want to peruse a menu.

Centralized Leasing Offices

Using virtual leasing assistants such as ACE is a first step toward centralized leasing offices. It’s also a component of “autonomous leasing.” Bots can handle so many of the questions common throughout a resident’s lifecycle at a community.

If a prospect schedules a tour through a bot, the bot can ask, “How would you rate your tour?” If it’s a 4 or higher on a 5-point scale, the bot can ask, “Would you like me to send you an application?” Or “Can we do a credit check with you?” This is on top of the bot already confirming and reminding office associates about impending appointments.

Winners in the chatbot space are those who are first to market, like LeaseHawk. The “first mover” advantage is critical.

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