By Best Software—Timberline Office and BuilderMT
Today’s home buyers are becoming increasingly sophisticated and demanding, especially about customizing their homes. That’s why the process for defining and accommodating what the market wants is extremely critical to sales success.
Sandra Kulli, a home marketing consultant in Malibu, Calif., advises builders concerned with managing buyer expectations and desires to streamline the range of options they offer. “Buyers don’t want or need endless options or choices,” she says. “You just need to be savvy about those that are critical to 98 percent of your buyers.”
Kulli recommends that builders thoroughly investigate the market and familiarize themselves with home buyer and general consumer preferences as a “best practice” for properly defining their product. Kulli and other marketing gurus see the Internet emerging as a primary vehicle to gather information about buyer preferences and values, and to reach, inform, and stay connected to prospects and buyers.
Other builder best practices for defining a product include setting measurable goals for the sales team, staying current on consumer trends in the housing industry (and outside it), shopping the competition, and keeping track of options that are selling and those that should be discarded.
Following a set of best practices helps define these and other parameters for new-home development and sales. It also streamlines those parameters into more cost-efficient, effective operational aspects. This results in more productive efforts and less guesswork, better communication and awareness of your product, and a boost in profitability.
Consider the following best practices for improving your new-home marketing processes:
Offer options within options. Offer optional and upgraded features within your existing brand of standard product offerings. These options and upgrades could include a wider range of cabinet door styles or upgraded window performance, for example. Selling options within a single supplier’s catalog allows you to build a relationship with one vendor instead of several. This lets you leverage volume purchases, upsell features for products you know are reliable, and stay on schedule.
Collect progressive feedback. Progressively survey prospects and buyers from the initial sales encounter through move-in to evaluate your sales and marketing methods and continually gauge and improve customer satisfaction. Use each stage of the feedback process to assess your customer’s most recent experience with your company. For example, surveys could gather information about how prospects were treated when they toured the model homes, or how buyers were kept informed during construction.
Consider a rating scale for each question to supplement open-ended comments. Data gathered from rated answers allows you to benchmark results and to show statistical improvement. “The best builders develop processes that not only determine a buyer’s expectations from the start, but also manage and monitor them throughout the entire process,” says Paula Sonkin, executive director of J.D. Power and Associates’ Real Estate Industries Practice.
Measure the team. Establish measurable goals for sales (overall and for options/upgrades) and customer satisfaction. These goals—and the quantifiable data accrued as employees work towards them—allow you to reward your sales team's effectiveness and continually evaluate the options you offer. Associates that perform well—and product upgrades that sell well—provide a solid indication of an effective marketing effort.
Stay current. Assign one or more employees the task of keeping abreast of local, regional, and national new-home trends. Be prepared to quickly and seamlessly integrate into your product the trends most likely to be in demand in your market. Use the Internet, trade associations, research firms and reports, and networking opportunities to mine (and evaluate) the data you need. Kulli advises builders to look outside the housing industry for ideas and trend setters. “Builders need to benchmark their marketing and sales efforts off the best of industry [such as retailers and auto makers], not just their own industry,” she says.
Automate the system. Integrate the sales/selection process with your back-office purchasing, estimating, financing, and accounting functions. This speeds data transfer, reduces input errors through automated processes, and provides instant feedback to buyer demands and needs.
Also, use technology to develop a company-wide system for qualifying, tracking, and following up on sales leads, and tracking the sales and profitability of options and upgrades.
Use the Web. Use online forms and feedback mechanisms to qualify sales leads and promote value-added features such as mortgage financing calculations, lot reservations, plan alterations, and option/upgrade selections that automatically update a prospect's overall price or budget. The information driving those price or budget updates can be integrated into the contract and the production process.
“The Web will never replace walking through a home,” says Kulli, “but it should allow buyers to know everything [about the builder’s product] before they visit the sales center.” Similarly, a builder can gather information entered by prospects on the builder’s Web site to profile prospects’ basic demographics, preferred home building timeframes, and budgets as well as specific preferences and value judgments regarding upgrades or options.
Shop the competition. Visit your primary competition’s Web site, walk their models and lots, and collect their sales literature. Use this information to compare your products to theirs and identify ways to differentiate your offerings. You can promote those differences in your marketing efforts and use them to evaluate your list of standard and optional upgrades.
Look for look for ideas and trends from competitors to include in your marketing efforts and products; don’t just knock-off the competitor’s features and options in your own offerings.
Get a status report. Document the number of communities, models, and standard and upgraded options among your current projects to identify where you can leverage efficiencies and eliminate inefficiencies. For instance, you may find that most of your buyers upgrade their plumbing fixtures. This information may enable you to negotiate a better price—and thus achieve a higher profit margin—for that specification. Or, you may choose to “standardize” that spec as a point of differentiation among your competition and boost your price accordingly without sacrificing sales.
Partner for research. You’re not the only one trying to figure out your market. Local businesses in other, generally non-competitive industries (such as retailers and real estate brokers), ask similar questions about their consumers to set standards for products, performance, and value. Partner with these local businesses to conduct or purchase research at a lower cost to all parties.
Placing a priority on determining the features and products that resonate with prospective buyers demands a best practices approach to maintain efficiency, productivity, and profitability. Knowing what your buyers need and want, and what they are willing to pay for those preferences, ensures a successful approach to new-home design and sales.
This article is adapted for the “Managing Your Workflow” article series developed by Best Software—Timberline Office and Builder Management Technology (BuilderMT). BuilderMT develops integrated solutions for residential builders. The software, which works in tandem with Timberline Office accounting and estimating software, is designed to help organizations reduce costs, increase revenue, and gain complete control of all their business operations. For more information, visit www.timberlineoffice.com and www.buildermt.com.
Additional Resources
This Building Business Brief can be sent to you via e-mail. For more information, contact Jill Tunick at 1-800-368-5242, ext. 8461, or by e-mail: mailto:jtunick@nahb.com. This material may be reprinted in NAHB newsletters and member education materials.