Are Bots Better at Delivering Bad News?

By Paul Bergeron |

6 minute read

A new report suggests that for leasing teams, virtual leasing assistants might be a better way to deliver rent renewal increases.

As society grows more accustomed to interfacing with artificial intelligence (AI) and chatbots that are potentially driving residents’ decisions to rent an apartment, these technology-driven, machine-learned wonders are beginning to form a personality.

Research published by the Journal of Marketing in February found that if a company is offering a less-than-ideal price on a product or service, consumers tend to respond better in terms of increased purchase likelihood and satisfaction if an artificial-intelligence agent makes the offer, The Wall Street Journal (WSJ) reported.

“But if the price being offered is perceived as being good, consumers will respond better if the offer is presented by a human rather than a robot, because shoppers like getting favorable deals from real people,” according to WSJ, citing the report.

Former apartment executive Donald Davidoff, and now Chief Executive Officer and Co-Founder at business analytics firm REVA, says the study’s results are interesting and “certainly believable.”

When at Archstone years ago at the outset of revenue management, Davidoff says he remembers that moving to online renewals substantially reduced negotiations with no change in the percentage of residents renewing. “That seems analogous to this study,” Davidoff says.

Davidoff said apartment operators that use AI-driven virtual leasing assistants could do a better job of making sure the prospects know if they are communicating with bots or humans.

“As a matter of practicality, I’m not sure how we make it obvious to prospects/residents who they are dealing with because so much of the AI effort is to make it seem more like a human, which would defeat this purpose,” he says. “Maybe you make it obvious to the prospect/resident that they are talking to a bot, or are talking to a human, and that bad news is coming from a bot and good news is coming from a human as much as possible?”

You Can’t Argue with a Machine

Davidoff adds that he’s not sure that he agrees with the study’s depiction of AI as being “greedy.”

“I think it’s more a resignation by consumers that they can’t argue with a machine – that’s certainly how I feel when I get a price for a hotel or air ticket I don’t like. I do agree that the positive news is probably interpreted as human generosity. I would think any of the leading adopters of AI would be willing to experiment with this.”

The researchers studied whether changing the bot’s appearance affects how consumers respond to offers. For example, ride-share customers were presented images of various-looking AI chatbots—ranging from those that looked like real people to robots with no human features. 

It was found that the more humanlike an AI agent appeared, the greater number of study participants would react to offers as if they were coming from a real person. In the study, the researchers say their insights could apply to situations other than just price offers, such as when a company has something positive to communicate—say, an expedited delivery, rebate or upgrade—or something negative, such as an order cancellation, status change or product defect.

Enabling Bots to Be Part of Process

Karen Kossow, Marketing Director, Paradigm Management II, was an early adopter of and proponent of bots since day one, placing them on her company’s community websites.

“It’s probably likely that our bots will progress to a point that they’ll be a part of the process,” she says. “I could see in the future that the bots that we’re using will have functionality where a resident could go into the bot to get their renewal offer, but, as with much that relates to AI and our industry, I think we’re a long way away from people being fully removed from our processes.”

She says that the apartment industry is “obviously different” from those in the study from the standpoint that leasing an apartment is not a “one-time” purchasing event, as was the case in the study.

Kossow says that her communities “have such a diverse group of people living with us, and, at this time, some of them won’t trust AI (meaning, a bot, not the AI that is in place but maybe not recognized).”

For example, Kossow said that her mother (in her 80s) is a renter and has probably about as small of a digital footprint as a person could have today.

“She’s not on the web herself—my sister set up a grocery store account for her so that she can get the coupons and reward—and would never trust AI if she knew that’s what she was dealing with.

“We still have a lot of people in our resident world who fall into that mindset. That’s the flip side of the coin – how many people couldn’t be involved in a study like this because they would never use AI? 

“Paradigm will likely be more and more hybrid (with our technology available) as we look to provide our residents with ways of doing business as they want to.”

To a degree, although maybe not recognized as AI – when you think about it – we pretty much are already using AI when pricing for incoming residents and renewals, Kossow says.

“I would put the revenue management systems in the AI realm. Although this is not the correct way to sell it, we often hear from the onsite team, “the computer sets the pricing” and this has been true for quite a while now for a majority of companies.”

Bot’s Trying to ‘Stick it to Me’

Mike Whaling, President and Founder, 30 Lines, said he believes this study’s results are probably true, “but it’s also one of those areas that is hard for a ‘high touch’ industry like ours to truly accept.

“There’s a human psychology element here ... if a person gives me a good deal, they like me and want me to do well. If the human gives me a bad deal, then they must not like me and they’re trying to stick it to me personally.”

Whaling says he envisions the potential negative social media posts and bad press that an apartment company might receive if they share price increases through a bot. “I would probably advise my clients against doing something like this,” Whaling says. “I think consumers are more accepting of price fluctuations (regardless of how they're delivered) when they know to expect them. 

“Think about industries such as gas, airlines, hotels, etc. People know those prices are going to change daily, they know the prices are determined by a computer or some external factors, and they’re more likely to accept the higher price being delivered by ‘the machine.’ They might gripe about it, but that’s about it.”

With multifamily being a far more fragmented industry, Whaling says that many prospective residents still don’t realize that apartment rents at many companies are set through pricing software and algorithms. 

“And when they think the rents are set by the human across the table (the property manager or leasing agent), they’re much more likely to get upset about it; such as, ‘they're sticking it to me personally.’”

Bots Shielding Staff

Mike Mueller, Founder and CEO, LeaseHawk, says he wonders if this research means virtual leasing assistants can be the bearer of bad news—without the backlash.

“It’s a great feature to shield leasing teams given that our bot is the one to face unhappy renters when communicating things like rent increases or delayed work orders,” Mueller says. 

Leasehawk’s President Larry Gorman, says he likes the idea of its bot being a buffer between the leasing staff and potentially negative prospect interactions upset over increasing rents. 

“I’m not sure it is actually a problem in our world, though. Data could give us a clue – how does the bot compare to humans at converting a conversation into a scheduled tour? This study would suggest that bots would do better than humans in an environment with increasing rent.”

Paul Bergeron is a contributor to units Magazine.