HOMEBUILDERS – “WHAT WE’VE GOT HERE IS A FAILURE TO COMMUNICATE!”

cool_hand_luke movie posterCool Hand Luke is a truly great movie. For those of my readers who are too young to have seen it when issued in 1967, I would recommend renting it one night or downloading it from “on demand”. The film earned Paul Newman one of his ten Academy Award nominations and won George Kennedy the Academy Award for Best Supporting Actor. It is included in the American Film Institute’s “100 Years…100 Heroes and Villains” (number 30 greatest hero) and “100 Years…100 Cheers – America’s Most Inspiring Movies (number 71) and was placed in the Smithsonian’s United States National Film Registry in 2005. It is classic Paul Newman at his best playing the role of an anti-hero with an indomitable spirit. And the tag line captioned above is outstanding, applicable to almost every aspect of life these days but, perhaps, especially relevant to the homebuilding industry.

Lack of proper communication seems to be pandemic these days. At a restaurant last week I had ordered a salad in lieu of side dishes and was unpleasantly surprised when it was served with my entrée. When I mentioned my dissatisfaction to the server she replied rather haughtily “well, you should have specified that you wanted it first.” Without thinking, and slightly taken aback by the attitude, I responded “that is true or you could have been proactive and asked if I wanted it first.” This was an instance of failure to communicate with both parties sharing the blame and both parties suffering for the error. I did not eat my salad; the server received a less than generous gratuity. Not an earth-shaking consequence for either party, just annoying and, more important, unnecessary.

I wrote an article a couple of years ago for Sales and Marketing Ideas, reprinted In Nations Building News, titled “WORDS TO THE WISE”. I suggested that “the power of words is truly amazing. For nations, words can mean the difference between war and peace. For a married couple, the wrong words can lead to divorce. In the new home sales arena the choice of words can often mean the difference between life and death (of the sale). Yet most of us seldom take the time to be certain in advance that the words we choose to use will have the desired effect.” If you would like a copy of that article, please send me an email and I will be happy to forward it to you.

During my career I have had the opportunity to shop thousands of new home sales people and brokers around the country. And the majority of time the sales person will inadvertently say something that could create a negative impression, either about the home, the community or the builder, and thereby destroy the sales “moment”. In this case, failure to properly communicate will have serious repercussions both for the salesperson and the builder.

perception and interferenceCommunication is a bi-directional process and what is said is often not what is heard. As we teach in the CSP course, there is tremendous “interference” in the communication process as each of the parties exists in his or her reality based on experiential factors and personality. And it is not just communication that often is deficient but also perception and these deficiencies are not limited to the sales process but, instead, permeate throughout the entire homebuilding operation and process.

I had an assignment several years ago to analyze a builder’s operation and recommend opportunities for improvement. When commencing the assignment I sent the builder a questionnaire requesting that among other items he detail his market position. He responded that he built a superior home with exceptional value and his advertising and marketing materials strongly promoted this “value” position.

After reviewing the sales and traffic reports and completing my field inspection in which I had visited all of the builder’s communities as well as many of the competitor’s operations, the builder’s self-proclaimed value position was not evident to me so I asked him to elaborate. He responded “it is obvious in the kitchens and baths of my homes as I hand-build all of my cabinets. In fact, this is costing me well over $1,500 extra per home”. As I did not remember anything special about the cabinets, I returned to one of his models and found primarily 30” base cabinets with flat panel wood doors (lacking automatic closures), uneven and streaked dark stain, inexpensive hinges and hardware, no inserts or dividers in the drawers for silverware, and none of the special features such as lazy Susans or tri-fold doors in the corners that I had come to expect to find in this mid-priced range of homes. This builder perceived quality; I perceived something less and I am convinced the market shared my perception.

In interviews with the builder’s sales staff, many of the sales people told me that they and the market shared my belief about the cabinets but, having once broached the subject with the builder, his very vocal negative response quashed any further discussion. And the sales people further shared with me that they had not discussed other customer feedback with the builder as they knew he would not be receptive and they did not wish to encounter further abuse.

When I completed my analysis I found that, in fact, this builder had created the “price” position in his market, not the “value” position. Several other builders had far more attractive home designs and higher levels of standard features and had locked in the “value” position in that market. Because my client included certain unnecessary features which increased the price and he did not market his actual advantage, sales were being lost. Additionally, this builder had a substantial land position in two outlying areas – locations in which more expensive homes were not selling but those priced at the more affordable levels were enjoying good absorption.

My completed report was presented in a meeting attended only by myself and the builder; he did not wish his construction or marketing team members present (which I found rather unusual). I was proud of my work as, based on my analysis of the market, the builder’s operation and his land position I had created what I believed to be a very logical and detailed operational and marketing strategy to sell more homes, expand the builder’s market share and increase profitability utilizing the price position. I was rather surprised, therefore, when the builder rather vociferously rejected my conclusions and recommendations stating that “he would rather not make any money than be known as the cheapest builder in town”.

Quite possibly I had made an error, failing to properly communicate to the builder the facts and opportunities available and presenting them in such a way that they created the self-evident profit potential that I saw. And apparently the builder did not hear what I was saying as the interference of the less expensive product, which he interpreted as “cheap”, conflicted with his image of himself and his company. A failure to communicate that unfortunately resulted in the builder getting his wish as he is no longer in business.

CommunicationCommunication must be a two way process, giving and receiving. Certainly the builders have the final say in all decisions but If builders will not listen to the market, and to the sales people and consultants that speak for the market, then the most important people in the process, the customers, are being left out of the decision making process. Whether or not you like what is being said, there must be proper and open communication throughout the entire operation and process or sales are being lost and money is being left on the table. But that’s just my opinion.

Please visit our company web site to learn more about our services – www.levitanassociates.net

Comments are disabled